March 14, 2006
Last week the illustrious spycake challenged my notion that the Hennepin County plan would be able to pay off the debt early like in Denver:
Shane, I'm no bond expert, but I wouldn't be so confident that these bonds will be retired early. The Coors Field sales tax in Denver covered a six county region, in a rapidly growing metro area during a generally improving economy throughout the 1990s. I don't quite see the same conditions here, especially if big new suburban developments in Blaine (*ahem* Vikings *ahem*) or Maplewood (Target) divert some retail spending from Hennepin County.
Well, believe it or not more than just anti-stadium people read this blog. I got an interesting anonymous rebuttle to spycake's comment:
In order to secure the lowest interest rate on the bonds (the cheapest debt), the rating agencies require a 'coverage ratio.' This means the proposed tax must generate more than the scheduled debt service. For a tax-exempt revenue bonds supported by a general sales tax, the coverage ratio is 30%. So even if there was zero growth in Hennepin's economy (doubtful), HC would still be collecting 30% more than was needed for annual debt service--and the opportunity for early debt retirement would still be there. This state-wide sale tax chart does show a dip in sale tax revenues the late 1990's, but ... overall the trend line shows steady growth and you can bet a good deal of the state's growth was generated in Hennepin County.
Lastly, Target's proposed $1.7 billion development is in Brooklyn Park--Mike Opat's district.
So, there you have it. I think it is safe to say the debt will be paid off early. And while there may be more money flowing to Anoka County thanks to a new Vikings stadium, there will be a lot of new money coming to Hennepin County thanks to the Target development spycake speaks of.
A little birdy tells me that Phil Krinkie has been making threats that he won't hear any Twins stadium proposal in his House Taxes Committee until May 15. In my opinion, this threat is very real given that Krinkie did the exact same thing last year. Last year's Twins stadium bill passed the Government Operations Committee, and the Local Government Committee before finally coming to the Taxes Committee where it was never heard. Granted, Krinkie and the other legislators had a possible government shutdown to deal with, but delaying a bill's hearing at the committee level is a tried a true method of killing it, especially in a shortened session.
Remember, even if the Twins stadium bill passes the Taxes Committee it has to go to the Ways and Means Committee next where it will continue to get hammered and delayed.
I am hopeful that Sviggum, as Speaker of the House, can speed things along in the case of an inevitable delay, but who knows. I am also told that May 7th is the 6th Congressional District's caucus to endorse candidates for the federal House of Reps. Krikie wants desperately to win this endorsement. Could Krinkie be delaying because he wants the endorsement? Could there be a conflict of interest here? While I would love to see Krinkie recuse himself over a possible conflict of interest with the Twins stadium bill (what is the color of the sky in my world?) it is very unlikely to happen.
I'll keep you posted as I hear more.
The Gopher's stadium bill will receive its first hearing today in the Capital Investment Committee. Here is hoping it can be quickly passed so they can move to the Twins bill.
Finally, if you didn't see the Viking Underground yesterday, you should check it out. Mr. Cheer or Die interviews the great Larry Spooner in a new podcast discussing the new Vikings stadium in Anoka County. Larry Spooner is the fan representative on the Minnesota Momentum campaign and he's got some interesting things to say about the positive effects of that development.
That's all I got for now. Pretty good, heh?
Posted by snackeru at March 14, 2006 8:34 AM | Stadiums 2006
Who is this anonymous bond expert? I appreciate the input, but I'd like some specifics, especially in relation to the proposed Hennepin County plan. Hamilton County (Cincinnati) is facing a growing deficit on their half-cent sales tax for a Bengals stadium:
They apparently projected a 3% yearly increase in sales tax receipts, but they're only growing at 1.3% and now they have a potentially large deficit. I'm not sure of the specifics of that plan, but if all sales tax bonds require a whopping 30% "coverage ratio" this wouldn't be an issue in Cincinnati, correct?
Like I said, I'm no expert on this stuff, and I don't foresee any problems paying off the debt, but I'd like to hear more specifics about the Hennepin County bonds before I trumpet the likelihood that the debt will be retired ahead of schedule. (Although I do admit I incorrectly attributed the Target development to Maplewood instead of Brooklyn Park -- my bad!)
Posted by: spycake at March 14, 2006 12:35 PM