To help pay for environmental cleanup at the site of the Major League Soccer stadium in St. Paul’s Midway neighborhood, the city’s Port Authority is turning to a controversial funding source.

Cleaning up polluted soils at the former Metro Transit “bus barn” facility will cost city taxpayers $825,000 to $1.18 million more than initially hoped — a request item that is sure to trigger discussion among the St. Paul City Council. The funds would come from existing tax-increment financing sources.

The council is expected to vote July 19 on the Port Authority’s proposal.

“It’s less than ideal, but the staff report from the beginning did outline this as a possibility — as a Plan B,” said St. Paul City Council President Russ Stark.

In June 2016, the city council approved a plan that called for $18.4 million for public funding of infrastructure in and around the 20,000-seat stadium near Snelling and University avenues.

Of that total, the Port Authority promised to help find at least $1.5 million in environmental cleanup funds for the city, which could be reimbursed by grants from Ramsey County, the Metropolitan Council or state sources.

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St. Paul man threatened another man with a sword, charges say More recently, however, grants from the Met Council and the Minnesota Department of Employment and Economic Development have proven tricky to apply to the entire stadium area, particularly the Met Council’s vacant “bus barn” site south of Rainbow Foods.

“Once we got into the minutiae of the programmatic restrictions of those grants, it became clear those grants would not be eligible for the bus barn site,” said Monte Hilleman, a real estate director for the Port Authority. “We secured $3.1 million (in grants) to date, but … restrictions have meant only $325,000 can be used for the Met Council-owned bus barn site.”

As a result, officials project a shortfall of $825,000 to $1.18 million for cleanup, depending upon whether a final grant comes through from Ramsey County.

“This is not new money. This is not adding to the budget. This is simply using existing Port Authority TIF money,” said St. Paul City Finance Director Todd Hurley.

TAPPING TIF

The Port Authority said there’s sufficient funding in two “tax increment finance” districts to cover the gap, but funneling that money toward the stadium cleanup requires city approval.

The two TIF districts take money that would otherwise go toward the city general fund and use it to pay for on-site improvements at business centers off Dale Street and off Energy Park Drive. In effect, each project’s tax dollars are redirected to help a real estate development get off the ground, usually in the form of money for soil cleanup and public infrastructure such as sewers.

“There’s all this sort of public improvement work that doesn’t get grant funding,” Hilleman said.

The tax districts are located at the Great Northern Business Center “Phase II Redevelopment” off Dale Street and the Energy Lane Business Center Redevelopment north of Energy Park Drive.

“I’m going to vote in support of it,” said Council Member Dai Thao, who represents the ward where the soccer stadium will be built. “It’s fulfilling our obligation that we committed to the cleanup. … It’s not new TIF. It’s existing TIF (money).”

While TIF can be scheduled and organized in a variety of ways, developers or public entities such as the Port Authority historically have received a private loan or municipal bond money for public improvements upfront. They then use TIF dollars to pay off those debts over the course of 25 years.

With municipal bond markets tightening, the Port Authority has more recently been using its own cash accounts to fund public improvements at future business centers, and then using proceeds from the centers to pay itself back.

“This stuff takes decades,” said Hilleman. He noted the two districts will still pay off their debt obligations in less than 25 years.

“These (two) districts were scheduled to be decertified early. They will still decertify early,” he said. “One went to 2030 and one went to 2032. This will extend them by a couple years, but still within their (sunset dates).”

For stadium supporters, cleanup costs aren’t the only wild card on the table. The Port Authority has yet to secure a final agreement with Irgens, a Milwaukee developer, who is expected to take a leading role in readying the Midway Shopping Center for the stadium and new tenants.

Plans call for the stadium’s northern edges and a plaza to be situated where Rainbow Foods is now, but the grocer, owned by SuperValu, appears no closer to closing than it did a year ago, when stadium construction was planned to begin.

Minnesota United team owner Bill McGuire and others close to the stadium project have said progress has been complicated, in part, by a series of mortgage loans associated with the various tax parcels within the shopping center.

In an unprecedented move for Minnesota, McGuire plans to build the Major League Soccer stadium with roughly $150 million in private funding and then convey it to the city.

Historically, professional sports facilities within the state have been largely publicly funded.