The financing for event centers and arenas in Minneapolis, St. Paul, Rochester, St. Cloud, Duluth and now Bemidji all have significant levels of state bonding money and direct higher education financial support or other direct state subsidies.
In addition, most of the communities also have authority for local option sales taxes, hospitality taxes or beverage taxes to fund ongoing costs. Past legislators and governors determined that state support for these facilities was necessary because of the regional and economic significance.
Conversely, Mankato utilized a local option sales tax as the sole funding source to build an event center and arena to accommodate Minnesota State University hockey. No direct state funding support was used for the construction, operation, and maintenance of the center. The Legislature provided Mankato authority to utilize the local option sales tax for a defined period of time, but denied any long-term guarantee that the local option sales tax will continue after its expiration in 2015.
Mankato voters overwhelmingly supported amendments to the sales tax to help fund the improvements for the Mankato regional airport; financing the Minnesota State aviation airport space; and to allow the continued support, operation, and maintenance for the Civic Center.
This year Mankato, with the support of Minnesota State, pursued for the first time $975,000 of state bonding to fund architectural design for two future expansions and upgrades of facilities at the Civic Center. The funding would be used to design upgrades to the existing arena, design for a practice facility for MSU men’s and women’s hockey, and for a performing arts addition to the Civic Center that would provide additional meeting, convention, and auditorium space. In future years, the city would pursue state bond support for actual construction dollars.
Rep. Kathy Brynaert and Sen. Kathy Sheran, DFLers from Mankato, have been incredibly supportive in pursuing parity in funding for Mankato. Other legislative leaders have been supportive to the degree that Mankato’s request was included in the overall bonding bill that went to the governor’s office for approval.
Unfortunately, Mankato’s $975,000 request was one of the 50 bonding projects vetoed. Interestingly, $80 million of event center funding in other university cities, including Bemidji, St. Cloud and Duluth, was spared the governor’s veto pen. The governor emphasized that the projects are important to colleges and universities in those communities.
I hope that Mankato was not caught up in partisan politics, but rather the governor simply overlooked, or was uninformed of Mankato’s strong relationship with Minnesota State regarding the Civic Center. Our inclusion in the bill by the Senate and the House certainly supports the fact that the city, community, and Minnesota State essentially have evolved a fiscally sound model for building and supporting our Civic Center. By some estimates, Mankato’s partnership with the University provides the state with over $4 million of economic benefits, not to mention over $22 million of economic impact to the area.
In concert with the state bonding request, the city is also pursuing an extension to the sales tax beyond 2015 in order to maintain, operate, and upgrade the center. Keep in mind the city has the unique authority to utilize the sales tax to maintain and operate the center. In developing the legislation, tax committee chairs Sen. Tom Bakk (DFL-Cook) and Rep. Ann Lenczewski (DFL-Bloomington) suggested that they are not supportive of using local option sales tax for the continued operation of the Civic Center.
They suggest that it is more appropriate to use a hospitality tax (up to 1 percent) for operations, and direct the local option sales tax to capital improvements. It is estimated that upwards of 70 percent of local option sales taxes or hospitality taxes would be paid for by visitors. In the event the sales tax expires, the Mankato taxpayers become fully responsible for the cost of the Civic Center, which by some estimates could reach $1 million annually.
Rep. Tony Cornish, R-Good Thunder, who represents the rural Blue Earth County area, is running radio ads critical of Mankato’s pursuit of a local option sales tax extension and addition of a hospitality tax. Cornish’s campaign seems somewhat disingenuous, as he does not represent Mankato residents. He and his constituents are frequent attendees of Civic Center events, and do business in the Mankato marketplace.
I presume Cornish’s campaign is not motivated by partisan politics, but rather he, like the governor, simply is uninformed as to the inequities of state-financed event centers. I hope Cornish is not suggesting that Mankato taxpayers become solely responsible for the Civic Center.
As the legislative session concludes, Mankato’s citizens, business leaders, and university officials must make their voices known to the Legislature and the governor. Mankato taxpayers should not be expected to help fund stadiums, arenas and event centers around the state and at the same time take on the full burden of the ongoing liability of our Civic Center.
Your View
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