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Tax Exemptions and Subsidies for Athletic Facilities Face Opposition in Minnesota

2015 April 15
by Phil Miller

From my local paper (The Mankato Free Press):

In a setback for Mankato and North Mankato’s effort to extend their local sales taxes, a key legislator has stripped the regional athletic facility spending from the House version of the bill.

Rep. Steve Drazkowski, R-Mazeppa, said Tuesday his fellow Republicans wanted to stop the proliferation of sales tax-funded athletic facilities.

Cities such as Rochester, St. Cloud and Marshall have used sales taxes to build ice rinks, gyms and other athletic amenities.

Drazkowski, chair of the property tax and local government finance subcommittee, said Rochester’s use of the sales tax generated “outrage,” especially among visitors who came into the city to shop. He said cities end up “taxing neighbors to provide themselves a big athletic facility.”

In other related news in the state.

Dr. Bill McGuire, who owns the Minnesota United FC, said the group is seeking a property tax exemption and a sales tax break on construction materials for the new stadium near the MinneapolisFarmers Market. The new stadium would host about 20 professional games a year.

The ownership group would pay $30 million to buy the land, a $100 million franchise fee and $120 million to build the new, open-air stadium.

Despite the tax exemptions — which could amount to $3 million in the case of the sales taxes — McGuire characterized the deal as having “no public subsidy whatsoever.” The amount of deferred property taxes had not been estimated.

“No public subsidy whatsoever” may be technically true, but a property tax exemption and a sales tax break on construction materials would qualify as an implicit subsidy.

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