Proposed Approval of Concept Plan for the Commons

The following letter from Paul Ostrow was sent on September 7, 2015 to the following individuals prior to the proposed approval of he Concept Plan for the Commons.

To: kevin.reich@minneapolismn.gov; cam.gordon@minneapolismn.gov; jacob.frey@minneapolismn.gov; barbara.johnson@minneapolismn.gov; blong.yang@minneapolismn.gov; abdi.warsame@minneapolismn.gov; lisa.goodman@minneapolismn.gov; elizabeth.glidden@minneapolismn.gov; alondra.cano@minneapolismn.gov; lisa.bender@minneapolismn.gov; john.quincy@minneapolismn.gov; andrew.johnson@minneapolismn.gov; linea.palmisano@minneapolismn.gov; betsy.hodges@minneapolismn.gov

Proposed Approval of Concept Plan for the Commons

Please find for your consideration my letter to the Council and Mayor Hodges urging postponement of this item in order that the significant public policy and financial issues be adequately addressed.

Thank you for your consideration.

Subject: Proposed Approval of Concept Plan for the Commons

Date: Mon, 7 Sep 2015

Council Member John Quincy, Chair, and Member of the Ways and Means Committee

Re:  Concept Plan Approval and Authorization of Terms with Ryan Development and Greening Minneapolis

Dear Chair Quincy and Committee Members:

            I am writing you today to urge postponement of this item at your committee meeting tomorrow.   The significant financial and public policy implications of ongoing capital, maintenance and operational subsidies to fund this largely private park require an open and public debate.  As you will recall Stephanie Woodruff, Dan Cohen and I first called upon the Council to publicly debate these issues in January of 2014.  We are still waiting.

            Council Members who approved the financial terms of the Downtown East project on December 13, 2013 will recall that many of the assumptions and projections presented to the Council have proven inaccurate.  Consider the following:

1)    The deal was promoted as “project financing” and not a “subsidy.”  We now know that internal projections from CPED staff released in December 2014 showed a likely exposure to property taxpayers in the tens of millions of dollars.    Subsequently CFO Carpenter acknowledged in a Star Tribune report in January 2015 a potential exposure of $31 million to property taxpayers over the life of the bonds;

 

2)            The Council approved terms of the development agreement for the use of “the Commons” limited the use of the park by the Vikings and MSFA to a total of  forty days.  Without any apparent authorization from the City Council CFO Carpenter signed a Use Agreement in February 2014 that increased the number of days inaccessible to the public to as many as 140 days.  Last summer former Mayor Rybak publicly called for the re-negotiation of the Use   Agreement in an opinion piece published in the Star Tribune;

3)            The December 2013 approval of “the Commons” as a part of the Downtown East development relied upon the City Council’s legal position that the MPRB does not have exclusive City Charter authority to operate and maintain parks.  Judge Dickstein rejected this interpretation of the City Charter in his ruling in Woodruff, v. City of Minneapolis;

4)            One of the assumptions during the approval process for Downtown East was  that proceeds from the sale of air rights above the new ramp could be used for the build out of the Commons.  No sale of those air rights has taken place and the air rights option price has been reduced nearly 70% from 5.6 million dollars to two million dollars.  We now know that both the likely proceeds  from the ramp and the value of the air rights are significantly impacted by the priority given for the use of those parking spaces to premium ticket holders;

5)                  The cost of the anticipated improvements to the Commons is currently $22 million.  The City’s stated goal is to complete as much of the build out as possible by July 2016.  Fundraising efforts have netted seven million dollars including the donations from the Vikings and Ryan Development.  The City’s own contribution of two million dollars for design appears to be included in the seven million dollars raised to date;

6)            Most estimates have placed the cost of annual maintenance and operation of             the Commons at three million dollars to five million dollars per year.   The  only potential source of revenue for operating and maintenance costs is a  proposed City Parking Facility Fee introduced in the 2015 legislative session without inclusion in the City’s legislative agenda and without City Council  approval or support;

7)             The Minneapolis Parks and Recreation Board recently released a report showing a $44 million gap in funds needed for basic operation and maintenance of the park system.  The MPRB is now considering a referendum to increase property taxes to support neighborhood parks;

8)             The governance structure of Greening Minneapolis remains unclear.  Since  the City Council is prohibited by the City Charter from operating or maintaining the Commons, the plan would appear to grant Greening Minneapolis, a private entity, with exclusive authority to operate, maintain  and improve the Commons.  To my knowledge the Council has had no debate regarding the significant policy implications of handing over the governance  of publicly purchased and maintained parkland to a private entity.

            The apparent refusal of the Council to openly discuss any of the major changes in the Commons development through the committee process has only one precedent in recent memory.  The Viking Stadium proposal itself was never vetted in a meaningful way in the committee process until it was too late.  We are now left with the loss of almost twenty million dollars per year of discretionary sales tax dollars that would otherwise be available for higher city priorities.  I fear that significant and ongoing public funding for  “the Commons” will similarly be a runaway train that cannot or will not be stopped if you allow this action to go forward.

            I would urge you to either postpone indefinitely or reject the proposed action.  If the City Council intends to dedicate public dollars to the construction, maintenance and ongoing operation of the Commons it should be addressed during the budget process.  The Commons is a capital improvement project and should be addressed as a part of your Long Range Capital Improvement process.  Similarly any ongoing annual city expenditures for operation and maintenance, regardless of the source of funds, should compete with other city priorities including police, fire, road repair and One Minneapolis.

            I would also urge you to discuss publicly the proposed parking facility fee and to determine prior to the next legislative session whether the Commons and other downtown park space is your highest priority for the use of this potential revenue.  Council Members that served with me will recall a lengthy public debate and vote as to whether the Council should support a sales tax increase to fund public safety.  It was unthinkable then and should be unthinkable now that without the Council’s endorsement city staff and representatives would lobby for a new fee dedicated to a single priority without any discussion of other possible uses of those revenues.

            The lack of transparency in your consideration of the public funding of the Commons is disappointing.  I appreciate Council Member Frey’s willingness to acknowledge that public funds will be used to pay for the two million dollar Hargreaves and Associates contract.   This fact, however, should have been obvious at the time the contract was first approved.   Perhaps a more spirited debate and more public concern regarding this contract would have occurred but for the representations that the public would be reimbursed.

            The City of Minneapolis has given enough money to the Viking stadium and the parking ramps, infrastructure and open space that will serve the stadium.  That participation now includes twenty million dollars to purchase the Commons and another two million dollars to pay the contract for Hargreaves and Associates.  Now is the time for the Council to state unequivocally that no more City funding regardless of the source of the funds will be contributed to the capital improvements, maintenance and operation of the Commons.

                                                                        Sincerely,

                                                                        Paul Ostrow

cc: Mayor Betsy Hodges and Council Members