CHICAGO — Low borrowing rates, high unemployment in the construction trades, and an expiring lease at its current home give urgency to the Minnesota Vikings’ desire for a new home, team officials told lawmakers at a Minnesota Senate committee hearing this week.

A public funding plan for a new stadium for the National Football League team remains stalled, with no action expected until the Legislature convenes next month.

The team’s preferred local government partner in a $1.1 billion stadium proposal said it is awaiting legislative direction to come up with a new funding stream for its share of the costs after a local sales tax increase was taken off the table by state officials.

“We have thoughts on financing options … We want to have a dialogue,” said Ramsey County’s chief financial officer, Lee Mehrkens. The county said it was reviewing various user-related fees and wants direction from state lawmakers on whether there is interest in giving the county power to impose local hospitality taxes.

The county could raise $25 million annually if allowed to impose food, beverage, and hotel taxes similar to those imposed in Minneapolis, Mehrkens said. Committee members told him to return with a resolution from the county board with financing options.

In May, the Vikings and Ramsey County unveiled a plan for a 65,000-seat stadium on the site of a former ammunition plant. It relied on a $407 million contribution from the Vikings, $300 million from the state, and $350 million from the county through a bond issue primarily repaid with revenue collected from a 0.5% sales tax.

Gov. Mark Dayton and lawmakers have said it is unlikely legislation could pass that raises the local sales tax without requiring a voter referendum.

In competition with Ramsey County, Minneapolis Mayor R.T. Rybak told lawmakers his city will press to rebuild the Hubert H. Humphrey Metrodome, the team’s aging home downtown.

Rybak said at the hearing the city would contribute $300 million toward the Metrodome site, repaying bonds with hospitality taxes once its convention center debt is retired.

Those taxes include a citywide sales tax and downtown levies on liquor, restaurants, and lodging. Rybak promoted the plan as more affordable than the Vikings-Ramsey County plan, at about $200 million less.

“We are prepared with existing revenue streams to put $300 million on the table,” Rybak said. A near-term funding gap in taxes exists until convention center debt is retired, so the plan still needs fine tuning, Rybak added.

Team officials said the combination of their expiring Metrodome lease along with low borrowing rates and construction trade unemployment lend urgency to the effort to win passage of a new stadium.

The team contends it needs a more profitable stadium to remain competitive in the league, and the facilities commission’s chairman echoed those concerns.

“If the Vikings continue to be at the lowest point of revenue … then sooner or later they will leave,” said board chairman Ted Mondale, adding that each year of delay means another $46 million in construction costs.

Minnesota’s debt manager, Kristin Hanson, outlined the state’s bonding options. The state’s general obligation statutes require that property financed be publicly owned, represent a capital expense, and serve a public purpose. Debt is limited to 20 years and requires a 60% vote of the Legislature. Revenue-backed borrowing requires only a 50% approval rate and cannot be secured with a statewide tax. To issue debt with an appropriation pledge, the state might first have to undertake a court validation.

The state has capacity to issue nearly $2 billion of additional GOs under its current bonding guidelines based on state revenue projections.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.