12-08-2022, 01:51 PM
The U.S. Bank Stadium reserve fund has swelled so much that the state could pay off the bonds for the six-year-old building in the spring — 20 years ahead of schedule.The reserve fund will hit $368 million by the end of June, according to this week's projections from Minnesota Management and Budget (MMB). The cost to pay off the debt entirely in June is an estimated $377 million, meaning the state could be debt-free on the $1.1 billion building by mid-2023.
"There's no question there's a benefit to refinancing or paying off those bonds, and if we're not going to do it with a surplus of this size, we're never going to do it," incoming DFL Assistant Senate Majority Leader Nick Frentz of North Mankato said Wednesday.
The gigantic stadium reserve — projected to top $1 billion by 2027 if untapped — was part of a healthy economic forecast released Tuesday, which also projected an overall state budget surplus of $17.6 billion
The stadium reserve fund has swelled despite the pandemic and related economic pressures. The account is funded by taxes on charitable gambling, including electronic pulltabs that were legalized by the Legislature and Gov. Mark Dayton in 2012 to pay for the state's share of the stadium.
When the stadium was built, the state issued almost $500 million in bonds. The Minnesota Vikings, the building's primary tenant, were responsible for the remainder of the $1.1 billion cost.
The state now makes annual debt payments of about $30 million to cover the public portion of the building, including $12 million in debt service that comes from Minneapolis hospitality taxes. Initially, the state covered the annual debt service; Minneapolis payments started last year.
As sales of both paper and electronic pulltabs have grown at a pace exceeding projections, so have state tax collections on them. Electronic pulltab sales were initially shaky, but consumers adapted and sales took flight. Sales of all pulltabs continued to soar even in 2020 when bars were shuttered for part of the year because of the pandemic.
The charitable gambling tax collections bring in more than enough revenue to cover the annual stadium debt payments. After the state's annual obligations are met, the excess remains in the reserve fund, which was created as a backup to cover the bond payments in case of a downturn.
But the state has never tapped the fund.
In the past, the Minnesota Vikings and supportive lawmakers have floated the idea of using the reserve to refinance or pay off the bonds a few years earlier than anticipated, but paying them off entirely in 2023 wasn't an option until now
https://www.startribune.com/u-s-bank-stadium-reserves-are-robust-enough-to-pay-off-building-20-years-early/600233912/
"There's no question there's a benefit to refinancing or paying off those bonds, and if we're not going to do it with a surplus of this size, we're never going to do it," incoming DFL Assistant Senate Majority Leader Nick Frentz of North Mankato said Wednesday.
The gigantic stadium reserve — projected to top $1 billion by 2027 if untapped — was part of a healthy economic forecast released Tuesday, which also projected an overall state budget surplus of $17.6 billion
The stadium reserve fund has swelled despite the pandemic and related economic pressures. The account is funded by taxes on charitable gambling, including electronic pulltabs that were legalized by the Legislature and Gov. Mark Dayton in 2012 to pay for the state's share of the stadium.
When the stadium was built, the state issued almost $500 million in bonds. The Minnesota Vikings, the building's primary tenant, were responsible for the remainder of the $1.1 billion cost.
The state now makes annual debt payments of about $30 million to cover the public portion of the building, including $12 million in debt service that comes from Minneapolis hospitality taxes. Initially, the state covered the annual debt service; Minneapolis payments started last year.
As sales of both paper and electronic pulltabs have grown at a pace exceeding projections, so have state tax collections on them. Electronic pulltab sales were initially shaky, but consumers adapted and sales took flight. Sales of all pulltabs continued to soar even in 2020 when bars were shuttered for part of the year because of the pandemic.
The charitable gambling tax collections bring in more than enough revenue to cover the annual stadium debt payments. After the state's annual obligations are met, the excess remains in the reserve fund, which was created as a backup to cover the bond payments in case of a downturn.
But the state has never tapped the fund.
In the past, the Minnesota Vikings and supportive lawmakers have floated the idea of using the reserve to refinance or pay off the bonds a few years earlier than anticipated, but paying them off entirely in 2023 wasn't an option until now
https://www.startribune.com/u-s-bank-stadium-reserves-are-robust-enough-to-pay-off-building-20-years-early/600233912/
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