Michael,
You make a good point that government bonds are cheaper due to being guaranteed by the taxpayer. However, you are incorrect in suggesting that Minneapolis had its bond rating downgraded due to issuing too much debt. The Minneapolis downgrade was due to problems they had in keeping their books straight between their various departments, not with excessive participation in development projects. And again, I would like to point out that my argument is for STATE issuance of bonds for financing a ballpark, NOT Minneapolis. So comparisions to MRI aren't really accurate. A more appropriate comparison might be to the $20+ million in state money that is expected to be requested for the Planetarium next year. Sure, it's educational and I fully support funding this project even though I may never go see it if it's built, but will it draw 1.8 million visitors downtown for 81 dates? Accounting for the smaller request and being open year-round, will it draw 400,000 visitors a year? Are there lots of folks who will stay in hotels or visit restaurants or bars after they've visited the Planetarium? Can it pay back a bond issuance through ticket surcharges or are us taxpayers on the hook right from the get-go? How many are out there who support funding the Planetarium (or funding for any facility for the arts, for that matter) but not a stadium, even though either would theoretically put the taxpayer on the hook. Does that make you a hypocrite or a snob? What argument do you offer for why you should get your theater or museum but I can't have my ballpark? Also, I would venture to argue that the public does have some upside in the deal. We get to keep our baseball team. I consider that a pretty big upside as do 61 percent of those responding to the Minnesota Poll that the Strib published on December 5th who agreed that losing the Twins would be a big loss for the state. I'd also like to respectfully point out that in the same poll, 72 percent of those polled favored (56 percent strongly!) a financing plan using surcharges on tickets, parking and/or concessions. So much for there being a majority of the public adamantly opposed to any sort of public financing proposals. How about this, though: Since public financing would supposedly offer much benefit to a team's owners and little to the taxpayer, shouldn't that be spurring all the more interest in a community ownership plan like the one Rep. Kahn posted not that long ago? Wouldn't that be a total win-win for the public? Mark Snyder Ward 1/Windom Park [EMAIL PROTECTED] Responding to the message of <[EMAIL PROTECTED]> from "Michael Hohmann" <[EMAIL PROTECTED]>: > > A few comments on financing a stadium... in general... > > Mark Snyder says in part, regarding public financing of stadiums, > > >That's why public financing is desired, not because stadium financing such a > >"bad deal" that business owners are "too smart" to get involved in it. It's > >because the State has a great credit rating that lets it get investment > >rates that nobody else can. > > (MH) The state (or city) gets lower interest rates because the bonds are > usually guaranteed by the taxpayer in case of default (general obligation > bonds). When revenue bonds are issued they are guaranteed by project cash > revenues, and other special assessment obligations rely on taxes levied to > finance a particular project. The bottom line is that public bonds hold > less risk for purchasers, hence they pay a lower rate-- because they are > backed in some fashion by some segment of the public rather than a specific > business entity. And as usual, even with state or municipal bonds, the > devil's in the details of the indenture agreement. > > Thus, the business owners (MLB owners in this case) are smart enough to seek > public subsidies that reduce their level of risk in the overall project. > They seek to maximize their profits while minimizing their risks-- a > commendable strategy on their part! In similar fashion, the government can > only issue so much debt and assume so much risk without jeopardizing its > credit rating which would then result in the public paying higher interest > rates for projects across the board, and may in fact necessitate a tax > increase. Recall one credit agency lowered Mpls.' credit rating only a few > short months ago. This isn't rocket science or wild speculation. > > There is no free (or reduced price) lunch, unless you own the private sector > business being subsidized, in which case the general public or some segment > thereof is picking up part of your tab. And since we're talking debt > instruments, the public has no equity as part of such a deal, thus remaining > potentially liable for shortfalls while reaping no upside gains if the > project is successful. A pretty shabby arrangement if you are just a > taxpayer and have no equity in the project, or don't own a restaurant across > the street from the project, etc. And it's never just 'one' project... > there are dozens and dozens of these things on the books! Who's minding the > store? > > Michael Hohmann > 13th Ward > > [Oh yeh, almost forgot-- tell the Osseo school district how insignificant > $100 million is in the overall scheme of things... they're desperate for > about $9 million in a hurry. Or, consider that MRI picks up and hauls about > half the city's solid waste all year for about $5.4 million... a little > perspective on these numbers.] _______________________________________ Minneapolis Issues Forum - A Civil City Civic Discussion - Mn E-Democracy Post messages to: [EMAIL PROTECTED] Subscribe, Unsubscribe, Digest option, and more: http://e-democracy.org/mpls
