Saturday, July 7, 2012

Joe Mullery - "Why I Voted Against the Stadium"

Post and photo from Rep. Joe Mullery's email newsletter.

This week Joe Mullery sent out a very detailed explanation about his vote on the Vikings' Stadium bill, and his vote against it.  The letter affirmed my support for him and served as a reminder that I need Mullery lawn signs for my new house.  Mullery's words appear after the jump and are unedited.




WHY I VOTED AGAINST THE STADIUM, AS DID 9 OF 11 MINNEAPOLIS REPRESENTATIVE

I received hundreds of pro and con e-mails on the Vikings stadium bill.  When it came time to vote, I did what I thought was the responsible thing to do.  When the facts came out, the stadium financing plan was a bad deal for people living in Minneapolis - worse than for the rest of the state - and most people in our district opposed the proposal when they learned the facts.

 As your state representative, I take your opinions very seriously.  I have sent out about 7000 surveys each year, and responses showed around 80% opposition to substantial government monies being put into a pro football stadium.  Our district voted 70% in favor of a cap of $10 million on what the city could put into a stadium.  An independent poll a few years ago showed similar results.  Moreover, most people in our district who supported the stadium bill didn't know the real facts – many just listened to media reports of Viking’s claims rather than in-depth studies of the true facts.  Some people advocated for building a stadium, regardless of whether or not the financing was fair.  Many stadium supporters based their views on half-truths about economics and the Vikings threat to leave Minnesota.

Supporting construction of a Vikings stadium really comes down to whether the quality of life benefit outweighs the poor economics.  And as for job creation, there were far more construction jobs in the bonding bills we passed this term.  In fact, if the money for the stadium had gone into a state bonding bill, more jobs would have been created than at the stadium.

Please review the following facts about the Vikings stadium bill:


Vikings Stadium:  Quality of Life Benefits, But Do Vikings’ Claims of Public Economic Benefits Stand Up?

THE PUBLIC SUBSIDY PER TICKET IS $72
The total public dollars, including cost of construction, operating costs paid by the city (even though they don't own it) and debt service interest, is around $1.4 billion.  There are 65,000 seats for ten games per year for 30 years.  So the public is subsidizing each single game ticketholder by roughly $72 per game.

THE CITY OF MINNEAPOLIS IS PUTTING IN $467 MILLION, NOT 150 AS REPORTED
Even though the stadium will belong to The Stadium Authority (an entity controlled by the State), the city agreed to pay operating costs every year which will total $317 million, in addition to the $150 million the city is paying in construction costs.  Moreover, although Minneapolis is putting in as much money as the State, the State gets the stadium use every day it's not used by the Vikings.  The city gets no dates.

MINNEAPOLIS PAYS WHILE OTHERS BENEFIT
The half-cent sales tax is on purchases anywhere in Minneapolis.  Studies indicate most of that revenue is paid by people living in our city.  Yet, our tax will be used only for structures that mainly benefit suburbs and the State.  Studies show most motels used by pro sports fans are in the suburbs, and the statistics for restaurants and bars and retail shopping are similar.  Most of St. Paul's sales tax goes to community economic development.  But we lost that right under the new law.  We won't even get money for extra police and clean up.  And, of course, the state gets 13/14 of the overall sales tax in Minneapolis.

THE VIKINGS CLAIM OF GREATLY INCREASED ECONOMIC BENEFITS AND TAXES DOESN'T STAND UP
Forbes magazine (one of the top business publications) stated, "Independent academic research studies consistently conclude that new stadiums and arenas have no measurable effect on the level of real income or employment in the metropolitan areas in which they are located.  Feasibility studies for professional sports facilities often fail to account for the substitution effect.  Individuals generally maintain a consistent level of entertainment spending so money spent on sporting events typically comes at the expense of cash spent in restaurants, on travel, and at movie theaters.”  Respected economists who are not hired by pro teams, such as Noll of Stanford, Sanderson of U. of Chicago, Baade of Lake Forest College, Zimbalist at Smith and many others, plus Art Rolnick (formerly of the Minneapolis Federal Reserve Bank) completely debunk the claims of people hired by the pro teams.  The claim of the team owner for one of the new stadiums was that there would be $238 million per year in economic activity.  When an independent analysis was done, it showed there was so much corresponding lost economic activity that the public was spending $20 million per year in subsidies (which is far more than the net new tax revenues of $1.8 million per year).  The teams always like to tout the development that occurred around Jacob Field in Cleveland; however, an independent study found that development that would have occurred in other parts of the Cleveland area didn't because of the development around the Field.

STATE TAXES WILL PROBABLY HAVE TO BE RAISED TO PAY FOR STADIUM
The state's way to pay for its share of the construction costs is a proposed tripling of the present amount of dollars people spend on pull-tabs and bingo.  Most people don't believe that people will spend three times as much money on this form of gambling just because there will be electronic machines.  If that huge increase doesn't happen, the state will either raise taxes or cut programs (usually health care) to pay for the stadium.

THE PUBLIC SUBSIDY COMPARED TO EACH THREE-YEAR FULL TIME CONSTRUCTION JOB WILL BE ROUGHLY $2 MILLION
If you take the total dollars the government will put into the project including construction costs, operating expenses, and payments of interest on the debt created, it is about 1.4 billion dollars.  There will be the equivalent of about 750 full-time three-year construction jobs.  That is over $2 million per job.

THE CLAIMED NUMBER OF INCREASED JOBS WAS VERY MISLEADING
When the state looks at subsidies for other businesses, it looks at the number of permanent jobs.  However, for the stadium and other construction projects the figures quoted were for a person working one construction season.  In other words, if a carpenter was hired to build a structure and it took him or her ten years, that would be called ten construction jobs.  When the numbers of jobs estimated by the general contractor are broken down into a full time job for one person, the stadium will be equivalent to between 700 and 800 construction workers working full time for the three years it will take to build.  It's good to create jobs but each three-year job will cost the taxpayers roughly two million dollars.  Moreover, they kept claiming there would be 3400 ongoing jobs at the stadium.  In actuality, 2800 of those are only on Viking game days (even that seems hard to believe---an employee for each 20 fans).  Employing someone for 10 days a year, mostly at low-paying jobs, is not a great success.  We weren’t told how many would be full-time permanent jobs.  One group even claimed 50,000 jobs but their own numbers when broken down didn't come anywhere near that, even when factoring in possible tertiary and more distant effect jobs. 

THERE WAS LITTLE CHANCE THE VIKINGS WOULD MOVE TO L.A.
The other NFL teams didn't want the Vikings to move to L.A.  If they did, they would only pay the other teams about $200 million, whereas if the NFL puts an expansion team in L.A. the other teams will get about $1.2 billion.  The proposals coming from L.A. have no public subsidy for the stadium---both use revenues to pay for the stadium and the team owner gets the excess profits.

THE CITY'S PARTICIPATION WAS CLEARLY IN CONTRAVENTION OF THE CHARTER AMENDMENT ENACTED BY VOTERS A FEW YEARS AGO
The Charter amendment prohibited the city from using city resources over $10 million (specifically including sales and other taxes and bonds) for financing professional sports facilities.  Minneapolis officials claimed that the half-cent sales tax and the liquor and food, entertainment and lodging taxes in Minneapolis weren't Minneapolis taxes because they were collected by the state.  I thought that argument was absurd.  If that applied then Minneapolis property taxes wouldn't be Minneapolis taxes because they are collected by the county.  Also, since Minneapolis gets the dollars how could they not be Minneapolis resources?  In reality, the city sought the existing sales taxes and voted to have these put into effect, and it could not have been enacted without council approval (because the state constitution requires all taxes that are local taxes to be approved by the local city council).  If the city's argument had been valid, then the protection in the constitution would not protect our city from having the state set up a new tax on everyone in Minneapolis and nowhere else and yet have the proceeds go entirely to other parts of the state.  I knew the arguments were invalid and asked for an opinion from expert legal staff.  When the people backing the stadium saw the legal opinion, they knew I was right and they put language in the law that overrode the Minneapolis Charter provision.

THERE WERE A LOT MORE CONSTRUCTION JOBS IN THE "BONDING" BILLS THIS TERM
The two bonding bills enacted this term carried projects that amounted to around $1.4 billion.  That is one and a half times the stadium.  Moreover, while there won't be many stadium construction jobs for the trades that are out of work until the third year, most of the jobs in the bonding bill are for this year and next (when we know there is high unemployment).  Additionally, a higher percentage of the dollars for a project in the bonding bill actually go into the pockets of the construction workers, because on a stadium a much higher percent of the dollars go to expensive fixtures and materials, as well as attorneys, architects, engineers, etc.

WE LOST A SOURCE FOR ECONOMIC DEVELOPMENT OPPORTUNITIES
After Minneapolis paid off the bonds for the convention center around 2020, the city had the right to use its sales tax for capital projects for housing, culture, commercial and economic development throughout the city.  We desperately need more economic development on the northside.  In the stadium bill there is new language that takes that money after 2020 and applies most or all of it to the Vikings stadium, the Target Center and the convention center, not to economic development in our communities.

CONCLUSION
There is a fairly strong argument that from an economic standpoint, the Vikings stadium doesn’t make sense.  I strongly support government programs to create jobs and/or boost our economy, but they should be designed to be effective and efficient.  There are a lot more benefits that were given to the Vikings which would normally belong to the owner of the stadium (the government).  And the Vikings talk about contributing to the construction and operations of the stadium, but that is in lieu of rent.  On the other hand, there is definitely a value to the community to have the Vikings, both as a quality of life factor and maybe having a slight influence on the heads of some companies to keep their company here.  But, I think the true facts should be looked at and balanced against the quality of life, while at the same time looking at the facts on whether the Vikings were likely to leave.  Every year, the surveys from my constituents showed over 80% opposed to a large public subsidy for the Vikings stadium.

1 comment:

  1. It is refreshing to have a representative that actually hears what the public favors and has the convictions to sort through rhetoric piled on the public by profit oriented entities. Thanks Joe.

    ReplyDelete