CHICAGO Minnesota launched
The deadline for proposals is 4:30 P.M. Central Time Oct. 9. Proceeds will help finance construction, improvements, and equipping of the stadium. The state will repay $350 million of the debt with the city of Minneapolis covering the rest of the borrowing. The team will contribute $475 million.
The public agency overseeing the project is still in the process of finalizing various lease and use and other financial agreements with the team, but they are expected soon.
“In order to allow the state to proceed on a timely basis with its financing, we are putting together the state’s financing team and this notification is a step in that process. This does not commit the state to enter into any sort of financing,” Minnesota Management and Budget Commissioner Jim Schowalter said in a statement. The state further cautions that it reserves the right to cancel the RFP and is not obligated to use a negotiated transaction. The state would serve as the issuer.
State legislation allows for the sale of up to $600 million with the goal of raising a maximum of $498 million of net proceeds.
Public Financial Management Inc. is financial advisor and Kutak Rock LLP is bond counsel. The state expects to announce senior manager and co-manager underwriting pools by Oct. 21, according to the RFP. The pools would remain in place through June 2017.
In addition to experience, the RFP seeks information from firms on their past support on competitive state transactions, retail capabilities, service provided to the state on market updates, and whether the firm has worked with an NFL team within the last year.
The RFP provides some insights into the state’s preliminary thinking so far about the borrowing and structure. The state contemplates tapping the authorization in more than one market outing over the next two years. Each transaction may include tax-exempt and/or taxable bonds and may be sold on a competitive or negotiated basis.
“The state is still collecting information to determine the tax status, specific size or term of the transaction and structure expected to be sold. Describe a plan of finance for this initial bond issuance assuming approximate proceeds of $250 million,” the RFP reads. “Delineate the differences in approach for a tax-exempt issuance versus a taxable issuance including recommended call provisions. Discuss whether the plan of finance would differ for a 20-year versus 30-year transaction.”
The state currently carries general obligation ratings in the high-double-A category from all three rating agencies and appropriation-backed ratings of AA from Fitch Ratings and Standard & Poor’s.
Final work between the Minnesota Sports Facilities Authority and team had been held up after the authority launched an audit over the summer on the team’s ability to cover its share. That move came after a New Jersey judge found Vikings owner Zygi Wilf liable in a civil lawsuit involving a real estate deal.
The family may face a criminal probe in New Jersey because of the case, but that finding was not sufficient to raise red flags over the team’s financing package, the authority-commissioned review found. About $200 million of the team’s contribution will come from an NFL loan.
The state originally intended to repay its share of the bonding with increased revenues from an expansion of charitable gambling. Revenues have fallen short, so the state will set aside funds from a cigarette tax increase and corporate tax changes approved earlier this year if needed. Minneapolis will repay its $150 million share of the borrowing beginning in 2021 by redirecting a portion of its existing 0.5% convention sales taxes and hospitality taxes.
The 65,000-seat stadium is expected to be completed for the 2016 season. It’s being built adjacent to the team’s current home, the 31-year-old Hubert H. Humphrey Metrodome.
State statutes require state GO bonds to be sold competitively, so the state rarely uses negotiated sales.
In recent years, legislation allowing for a tobacco bond sale and then a tobacco refunding permitted the use of negotiated sales. State budgets over the last four years had also allowed for negotiated sales on GOs due to market conditions following the 2008 financial crisis but the two-year budget adopted this year did not extend that authority.
MMB officials said they intend to seek permanent authority for flexibility in its use of sale types for GOs.
