Chicago - The Minnesota legislature approved a bill that would allow the issuance of up to $42 million of revenue bonds to help finance a public buyout of the privately-owned Target Center stadium in Minneapolis.
Legislative approval of the bond issue was key to sustaining negotiations aimed at keeping the Minnesota Timberwolves basketball franchise in Minneapolis.
It is not yet known whether the bonds will be tax-exempt or taxable, said John Moir, Minneapolis' finance director.
Richard Johnson, executive director of the Metropolitan Council, which would issue the bonds, said that the issue could be comprised of both tax-exempt and taxable bonds.
"Our hope is that the larger portion would be tax-exempt," Johnson said.
Gov. Arne Carlson, who is a strong supporter of a public buyout, is expected to sign the bill into law by today, according to Patrick Sexton, his spokesman.
Even with legislative approval of the bill, the public buyout is far from being a done deal.
Before the bonds can be issued, the basketball team must promise to remain in Minneapolis for 30 years.
However, such a commitment is up in the air because the team's future ownership is unclear at this point.
Marvin Wolfenson and Harvey Ratner, who own both the Target Center and Timberwolves, are talking with several groups that interested in buying the team, according to Richard Forschler, a lobbyist for the owners.
Under the public buyout bill, the arena would be purchased by the Metropolitan Sports Facilities Commission, a seven-member board comprised of six city council appointees and a chairman who is appointed by the governor, according to Moir.
The revenue bonds would be repaid with proceeds from a 10% tax and a $1 surcharge on all Target Center tickets. The state also would contribute $11.25 million over 15 years, or $750,000 a year, Moir said.
If necessary, the bill provides a backup "blink-on, blink off" mechanism that would allow special sales taxes to be levied on food, liquor, and lodging sold in downtown Minneapolis, Moir said.
Moir said he did not believe the special sales taxes would be needed to pay off the bonds.
"We're building a finance plan that will not require it," Moir said. Before special sales taxes are imposed, Moir said he hoped that the Metropolitan Council would first try to increase the $1 ticket surcharge to offset any revenue shortfalls.
In addition, Minneapolis will give the Target Center a break by exempting thestadium from a 3% entertainment tax, Moir said.
Moir is part of a three-member negotiating team appointed by Carlson to negotiate a buyout with either the current owners or new owners of the Minnesota Timberwolves.
Moir said the negotiating team firmly believes that the Timberwolves must be sold to stabilize the basketball franchise.
Wolfenson and Ratner are interested in selling the basketball team to help eliminate more than $72 million of the Target Center's debt. Prior to passage of the buyout bill, the owners said they would be willing to consider offers from groups interested in relocating the team to another city.
Though Wolfenson and Ratner would have liked a higher buyout offer, they were happy that the bill was approved by state lawmakers, Forschler said.
"The bill provides a reasonable framework for negotiations," Forschler said.