Rybak to the Future?

Two quotes from recent Star Tribune articles:

In 2007, the city estimated that a West Broadway streetcar line would cost $154 million.

Minneapolis considers ways to get North Side rolling

Under the preliminary deal, the city would contribute $150 million in construction costs to the downtown Minneapolis project.

Tentative Vikings stadium deal is set

Not even the Mayor can make it across Mpls' traffic-choked streets

Mayor may not be good

R.T. Rybak hasn’t been a bad mayor.  I voted for him in 2009, when no one ran against him.  I also voted for him in 2005, because Peter McLaughlin, the better candidate, can do more as a Hennepin County Commissioner than as Mayor of Minneapolis.  I didn’t vote for him in 2001, although in retrospect he may have been the not-baddest candidate.

The problem with calling Rybak a good mayor is that he really hasn’t done anything good.  Looking closely at his accomplishments, you find that they are really more not-failures.  A lesser mayor might have fumbled the city’s finances, as happened to municipalities around the nation.  A lesser mayor might not have won the pension fund fight.  A lesser mayor might not have picked up the Nonmotorized Transportation Pilot Program handed to the City on a silver platter by Jim Oberstar.

Rybak would to have to be high to say no to free money for bikes

Not doing anything good doesn’t mean he’s done anything bad, but neither has there been anything that has noticeably improved quality of life in Minneapolis – nothing Rybak can really take credit for, anyway.  Sure, crime has plummeted, but that has been mirrored by a nationwide decline in crime.  Ok, there has been renewed investment in multifamily housing, but that is also a nationwide trend, and isn’t anything that hasn’t been seen in previous decades.  Cool, new bike lanes, but should Rybak be lauded for not rejecting free money from the Federal government?

Doing good things costs money, and Rybak has clearly chosen a cautious fiscal path over signature projects.  The problem is that not spending money can have a cost also – how much does it cost the city to lose Target IT jobs to Brooklyn Center?  To have flat population growth?  To have no change in the share of residents driving alone to work?  Most Minneapolitans have sat on our concerns, not really interested in arguing against fiscal stability in a time of recession and red ink.

Wintertime for the wise ant

Stop that dog! She's got Mpls' only revenue stream!

But now, it seems, Rybak has admitted that we do have some money to spend, which he is proposing to spend on a playground for millionaires that will be vacant 345 days out of the year.  My disposition is in favor of large public works projects, but after a decade of frugality, there are about a million things I’m ready to splurge on before a stadium.  MPR has the most details I’ve seen about the proposed financing plan, which apparently has a $55m hole.  I have to admit that I’m a bit puzzled by the documents provided by 35W Financial, but I think the hole is in up front costs (the city’s $314m contribution would be $164m in capital costs and the rest in operating, I think).  Still, one detail jumped out at my tiny brain:  around $31m over the 30 year life of the plan would come from parking revenue.  I’ll explain why that sounds familiar.

Around 50 years after the City’s Public Works Department decided that the area’s low-density development patterns did not “warrant the capital investment in a fixed rail rapid transit system”, they’ve decided to study fixed rail after all, albeit not rapid transit.  In Minneapolis streetcars are on the drawing board rather than on the street because the city sat on their preliminary planning efforts in the belief that there were no funds available, thereby missing all the free money that started raining down in 2009, when the federal money in programs like Small Starts, TIGER, and Urban Circulators was awarded to better-prepared cities.

Transit or stadiums?

For the most part, the feds dole out matching grants, so there needs to be a local source as well.  In addition, only capital costs come from Washington, so the City looked into sources of operating funds.  In various funding scenarios, the City looked at capturing $350k-665k per year from parking meter revenues, which the report implies would be 25-75% of a 25% increase in meter revenue.  Meanwhile the stadium plan captures 100% of revenue from 2,975 meters – almost half the City’s 6800 meters – at $25 and $30 a day, a 25-50% increase on the current max rate of $20 a day.  It seems unlikely there would be anything left for streetcars.  (Edit:  Minnescraper user newsole and commenter Brad below have both pointed out that it’s likely that only game-day revenue from the meters would be dedicated to the stadium.  That means there would likely be something left for streetcars.  However, there are still several problems with the plan to capture meter revenue for the stadium, and I’m collecting them into a miscellaneous stadium post that if you’re lucky I’ll never get around to actually posting.)

I’m not necessarily in favor of streetcars.  Although there are certainly some routes that would justify them, it seems likely that a wiser move would be to spread streetcar money out to a wider range of routes using much cheaper Baby BRT improvements.  (All the Minneapolis segments of the proposed Rapid Bus routes could be built for $145.6m, coincidentally close to the West Broadway streetcar estimate and Minneapolis’ contribution to the stadium capital costs.)  In addition, I’m skeptical that a short segment of streetcar would draw many users, or if implemented mostly in the Downtown Fare Zone it would generate as much revenue as a bus.  The point is that transit improvements are much more desperately needed in Minneapolis and would be a much bigger benefit to the city than a stadium would be.  Certainly building a stadium would be a huge and visible reminder of Rybak’s legacy, but he faces a tough job convincing Minneapolis voters that the Minnesota Vikings need to be paid for by Minneapolis.

Trouble, more trouble

Stolen from the NY Times

Besides, there’s another huge and visible reminder of Rybak’s legacy, although it’s one that he’d like to forget.  North Minneapolis was in rough shape before Rybak was first elected, of course, and he has made both visible and holistic efforts at addressing the area’s pervasive and unique problems.  But it was also on Rybak’s watch that the neighborhood lost 10,000 residents, suffered thousands of foreclosures (6,243 from 2006 to 2011, 45% of the city’s 13,842 total in that time frame), and consistently and deeply declined in median income.

I’m not so petty as to blame Rybak for market conditions that created ample credit or lax regulation that allowed mortgage brokers to stoop to new lows of fraud and discrimination.  And I’m not aware of any city that took matters into its own hands by creating its own loan modification program to assist underwater homeowners.  But there’s no question Minneapolis could have created such a program, at least after 2009, when restrictions were lifted on the sales tax that is now being proposed for use on a fancy playground for the Vikings.

Are the stars out tonight?

Minneapolis already dabbles in the mortgage game through the Minneapolis Advantage program, which was created in 2008 to create an incentive to buy homes that are “foreclosed, vacant, or in a high foreclosure-impacted neighborhood”.  This program is now funded by HUD Neighborhood Stabilization Program 2 funds and may be considered a success, in that it’s assisted almost 350 home purchases, presumably some of which wouldn’t have happened without the program.  In that case it would be a small success, notable if you compare those 350 purchases to the total number of foreclosures listed a couple paragraphs up.

A longer-standing program is the City Living program, a more complex program that provides both interest rate subsidy and second mortgages in Minneapolis and St Paul.  It’s hard for me to say for sure without more details than I can find on each of these programs, but it’s likely one or both could have been modified to provide refinancing to homeowners at risk of foreclosure, although probably at greater expense.  Home values in North Minneapolis dropped by at least 50% (probably more), which is a substantial amount for the City to make up.  But almost $30m a year of the sales tax would be diverted to Palazzo Wilf, so even if the City were eating up to $40k per mortgage, more than twice as many homes could be salvaged per year than the Minneapolis Advantage program has affected in its lifespan.

The sense of an ending

Why not let a city that can afford it pay for a stadium? Enter the SouthDome!

A big question with a City-sponsored mortgage modification program is whether the banks would participate; several have resisted a federal-level program with the cowboyish reasoning that modifications would encourage more widespread default.  I mention this to emphasize how many of the forces that have resulted in Rybak’s meh mayoralty were beyond his control.  One thing that is not beyond his control, though, is whether to spend the City’s long-awaited fiscal freedom on a sports facility that at best debatably benefits the city.  As a cynic, I can only assume that he thinks he can get the stadium built against the will of most Minneapolitans, then park in the mayor chair until a statewide office is up for nomination, which he’ll then use his Stadium Builder legacy to win.  He may be right about the third part of that plan, but he shouldn’t assume that he will be mayor by default.  A majority are against using city money on a stadium in the first place.  When they realize what they could have had, it seems likely that most will pass on their fourth chance to vote for him.

7 comments on “Rybak to the Future?

  1. Brad says:

    Hmmmm….not one mention of falling LGA grants. I know its hard to write a contrarian position, but failing to mention this crucial fact seems to me you are reaching.

    • Alex says:

      I certainly blame Tim Pawlenty for everything bad that’s happened in the state for the last 15 years, from disappointing ridership on Northstar to the death of Tiny Tim. But I would say that LGA cuts are merely the Minnesota symptom of a nationwide crisis in state and local government finances, which I believe I mentioned with a full four links.

      • brad says:

        I agree with the spirit of this article. Rybak is clearly looking for something to hang his hat on.

        Tow things, is the parking meter revenue diversions only for game days, or all days of operation?

        How many people left the south side of Chicago? I believe it was somewhere around 300,000, an area with similar demographics to the North Minneapolis.

        I like the blog, not trying to put down your work.

        • Alex says:

          Thanks for reading the blog, and especially for posting challenging comments. To me, pushback is the highest compliment.

          Yes it appears that only meter revenue for game days will be dedicated to the stadium. I’m going to edit this post in a moment, and I think I’ll have a new post about that.

          Regarding the ubiquity of population loss in low-income and/or minority neighborhoods, I don’t disagree with it, but I don’t think I was ever saying that the problems facing Minneapolis were unique. Nor was Rybak’s inability to overcome them unique. But I don’t think that even relatively good performance is worth praising when the outcome is still bad. I don’t necessarily blame him for it, but it’s not really a reason to vote for him either.

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