Bond-supported buyout could lure hockey team back to Minneapolis.

CHICAGO -- A Minnesota sports facilities commission is considering the issuance of taxable bonds to help acquire the privately owned Target Center in Minneapolis.

Supporters of a publicly financed buyout say that public ownership of the Target Center sports arena will help bring hockey back to the city and boost the local economy.

The Edmonton Oilers have expressed an interest in relocating to the city. Earlier this year, Minneapolis lost the Minnesota North Stars hockey franchise to Dallas.

Bill Lester, executive director of the state Metropolitan Sports Facilities Commission, said the commission last week voted to conduct a request for proposals from investment banking firms to draft a financing plan to acquire the center.

Lester said the financing package to buy out the Target Center, which has about $98 million of outstanding debt, could include the issuance of taxable bonds and the sale of the commission-owned Met Center sports facility in suburban Bloomington. The Met Center was the former home of the North Stars.

The commission under state law is charged with overseeing the Met Center, Lester said. Now that the North Stars have left, the commission has to determine the best use for the aging Met Center, which is older than the Target Center.

Paul Thatcher, a commission member, said the issuance of more than $100 million of taxable bonds could be part of the buyout plan.

Ogden Corp., which manages the Target Center, has expressed interest in guaranteeing debt service on any bonds that would be issued, according to a Target Center official.

Lester said the commission will meet with local and national investment banking firms today to discuss possible options.

Owners of the Target Center, which is home to the Minnesota Timberwolves basketball franchise, are subsidizing their debt with profits from the Timberwolves' franchise as well as a health club located in the center, according to Joe Pettirossi, vice president and chief financial officer of the Target Center, the Timberwolves, and the health club operations. If the buyout goes through, the Timberwolves would continue to play at the Target Center, Pettirossi said.

He said the Target Center has about $75 million of privately financed debt. It also has about $23 million of tax increment finance district debt that is being paid off with $3 million of the center's annual real estate taxes. The combined debt has a blended interest rate of about 8.5%, he said.

Pettirossi pointed out that a public buyout of the Target Center would would allow for the center's debt to be restructured, which would spread the debt service payments over a 30-year period. He said that the issuance of taxable bonds could result in an interest rate savings of about 200 basis points.

Spreading out the payments would "free up cash flow to the building that is now pledged to banks" so that the center could attract a hockey team, Pettirossi said.

One public finance official said a financial package offered to a hockey team by a public facility would be stronger than one offered by a private facility. He said a public facility would have financial advantages, such as an exemption from paying entertainment taxes.

Bill Tuele, director of public relations for the Edmonton Oilers, said that negotiations between the Oilers and elected officials in Minnesota are active." Tuele said the preliminary proposal, which includes a buyout of the Target Center, is an "incredible offer."

Tuele said the Oilers are seeking to relocate because the franchise is locked into a "crippling" lease with an Edmonton sports facility and is suffering below-average ticket sales revenues.

Patrick Sexton, spokesman for Minnesota Gov. Arne Carlson, said the governor supports the concept of luring a hockey team to the area because it would help the local and state economy and would keep the Timberwolves in town.

Minneapolis Mayor-elect Sharon Sayles Belton would support the public buyout of the Target Center only as a last resort measure.

Timothy Rose, communications director for Belton, said she "strongly supports" the idea of privately funded assistance for the center. However, if that alternative is not feasible,

she would consider supporting the public buyout because Minneapolis "cannot afford to lose the Target Center," Rose said.

Pettirossi responded that Target Center officials are not aware of any feasible privately funded solution.

Any buyout plan would be subject to a vote of the commission. The Legislature would also have to amend state law to allow the commission to oversee the Target Center.

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