The following article by Janet Moore was published in the January 15, 2014 issue of the Star Tribune:

Hennepin County judge to rule on ownership of park near Vikings stadium

City says delays could imperil bond sale for development

Photo: Ryan Cos.

Ryan Companies’ plans include a park next to the Vikings stadium. Litigants say the Park Board, not the City Council, should own the land

A lawsuit seeking to clarify who will own and operate a proposed park for downtown Minneapolis near the new Vikings stadium is now in the hands of a Hennepin County judge.

An amended complaint was filed last month in a suit lodged by two former mayoral candidates and a former City Council president claiming that the Minneapolis Park and Recreation Board has the sole authority to buy, own and operate parkland in the city.

This, the complaint alleges, is contrary to the City Council’s plan to buy nearly two blocks of land on the eastern side of downtown — part of a broader $400 million project that includes two office towers for Wells Fargo & Co., up to 400 residential units, retail shops and restaurants and a parking ramp.

In a Hennepin County court hearing Wednesday, Minneapolis City Attorney Susan Segal said the suit is hampering the city’s ability to move forward with its bond sale, slated for late March.
“This puts the project at a real risk,” she said.

Hennepin County District Judge Mel Dickstein on Wednesday took the Downtown East matter under advisement.

The narrative facing the city is eerily similar to one now facing state officials as they prepare to issue $468 million in bonds to help pay for the Vikings stadium. Late last Friday, three Minneapolis residents lodged a last-minute lawsuit with the Minnesota Supreme Court, causing state officials to cancel this week’s bond sale. The state’s highest court, which has requested briefs in that case by the end of Thursday, has not ruled on the matter.

Any uncertainty caused by litigation is enough to spook investors buying bonds, said Jay Kiedrowski of the University of Minnesota’s Humphrey School of Public Affairs, and the former Commissioner of Finance of Minnesota.

“If there are legal challenges, that increases the risk associated with the project,” said Kiedrowski, senior fellow of the school’s Public and Nonprofit Leadership Center.

He said the state acted properly in withdrawing the bond sale this week. “The interest rates that investors would have demanded with that kind of uncertainty would have been unacceptable,” he said. “The Supreme Court will hopefully act in a quick fashion” so the sale can move forward.

But some deadlines loom. The five-block area slated for the Downtown East project is now owned by the Star Tribune; the newspaper’s headquarters will be demolished to make way for a good portion of the park. Ryan is expected to close on the land deal Jan. 24 after a previous closing date for late December was delayed.

The Hennepin County suit was actually an amended version of a complaint filed against the city and its Park Board by former City Council President Paul Ostrow, software executive and city Audit Committee member Stephanie Woodruff and Planning Commission member Dan Cohen, which was largely thrown out by Dickstein last month. (Cohen and Woodruff ran for mayor last year.)

Later Wednesday, Ostrow, Woodruff and Cohen filed another amended complaint seeking a finding that the city has no authority to execute contracts or development agreements involving park land in the city.

Brian Rice, an attorney who represents the Park Board, said Wednesday the board is in favor of ultimately owning and operating the park. But it’s unclear how maintenance of the park will be paid for, and how much that will cost on an annual basis. Ostrow said the price is $5 million to $10 million a year.

The city has also requested that the plaintiffs in the lawsuit file a $10 million surety bond to cover any losses the project suffers if the suit fails.