Target Field cost plan ahead of schedulePublished 10:44am Monday, December 31, 2012
MINNEAPOLIS — Hennepin County’s plan to pay back debt for Target Field is five to 10 years ahead of schedule, putting the county on pace to save at least $54 million in interest expenses.
The county has taken advantage of low interest rates and a stable revenue stream to speed up its payments, according to a report.
“The bottom line is promises made, promises kept,” said Dan Kenny, executive director of the Minnesota Ballpark Authority. “We said this deal would work, and it has.”
Hennepin County’s initial plan was to make the final debt payment on the $555 million ballpark in 2037, but the last payment could be made five or 10 years sooner, said Dave Lawless, the county budget and finance director. The county issued bonds to cover the $350 million public share of the cost, and levied a 0.15 percent sales tax to cover its payments.
Officials with the county and the Minnesota Twins say the key factor that helped make it possible to speed up debt payments despite the recession was a sales tax that was low but applied widely across the county. The 0.15 percent rate comes out to 3 cents on a $20 purchase.
So even though collections dipped along with the economy, the fluctuation was manageable. Also, the sour economy brought low interest rates that the county was able to leverage, thanks to its stellar AAA bond rating.
Other communities weren’t so lucky. When sales tax revenues came up short in Hamilton County, Ohio, the county backtracked on a promised property-tax rebate to cover a shortfall in the fund for stadiums for the Cincinnati Bengals and Cincinnati Reds.
The sale tax is only around as long as any debt remains. So paying back the debt early would also mean an early end to the tax.
“We’re not in love with having a tax on for as long as we can have it,” said Hennepin County Board Chairman Mike Opat. “When there’s the money, we pay down the debt.”