For St. Paul’s soccer stadium, a behind-the-scenes tussle for federal approval

By Mike Kaszuba

As the plan to build a Major League Soccer stadium in Saint Paul gained momentum in 2015, a potential problem stood in the way:

Would the federal government let a sports stadium be built on property that had been purchased primarily with federal transit dollars?  And would it matter that the money was ostensibly given so that the land would be used for transit?

New documents obtained by Public Record Media (PRM), a non-profit based in Saint Paul, reveal that local officials worried about how the project would be received by the Federal Transit Administration (FTA) as the privately-financed Allianz Field was nearing local approval.  In one sign of an early disconnect, the records indicate that FTA officials in Chicago initially appeared to be unaware of the plan to build a soccer stadium on the federally-financed land – and only learned of the details from reading Twin Cities news accounts.

Taken together, the documents describe several unexpected issues that emerged as the soccer stadium -– financially supported by some of Minnesota’s most affluent citizens — was fast-tracked by officials in Saint Paul to keep the project from being built in neighboring Minneapolis.  The documents also show that while the FTA would eventually endorse the project, their approval was not a given.

FTA officials caught off guard by soccer proposal

E-mail messages indicate that FTA-Chicago regional administrator Marisol Simon was caught off guard when asked in early September of 2015 to provide a briefing for an upcoming phone call with then-Saint Paul Mayor Chris Coleman.  “You guys have a clue?” Simon asked four colleagues in an e-mail.

One FTA official – Timothy Steinitz – replied to Simon, noting that he had conducted a Google search to find out what the Saint Paul mayor wanted to talk about – but initially found few clues.

But less than two hours later – after more searching – Steinitz sent another message to Simon. “Interesting developments about this property in the news,” he wrote.  He attached a website link to a Minneapolis Star Tribune story, which featured the headline: “Soccer team owners close in on stadium deal for St. Paul, sources say.”   The project’s public unveiling would occur just seven weeks later.

The stadium’s potential location included a key 9.9-acre property – known as the “Bus Barn” site — whose purchase by local officials had originally been made with federal transit money.

Meanwhile, Angela Gates – another FTA official – e-mailed Simon the same afternoon.

“Mayor Coleman requested the phone call to discuss an agreement with [local transit officials] on land near University Avenue and Snelling Avenue in Saint Paul that requires [federal Department of Transportation]/FTA approval,” she wrote. “Please determine what, specifically, the Mayor would like to discuss.  [What] does the Mayor want [FTA] to approve?”

Saint Paul officials examine “Bus Barn” property in August of 2015

Three weeks before FTA officials tried to sort through what was happening, officials in Saint Paul already had their eyes on the property. 

“I got a call from the St. Paul mayor’s office and they would like to visit the Bus Barn site tomorrow late in the day, around 5:30-6 o’clock,” Metropolitan Council Chair Adam Duininck wrote on August. 10.  “Is there a gate out there that must be unlocked or how can they access the property?”

That same day, Metro Transit general manager Brian Lamb told Duininck there were indications that the Saint Paul mayor may not understand the complexities involved because the FTA had largely paid for the land.  “[I’m being told the mayor] does not understand why we can’t just sell them the property and get out of the way,” Lamb wrote in an e-mail.  (Metro Transit operates the Twin Cities’ buses, commuter trains and light rail lines, and is part of the Metropolitan Council, the Twin Cities’ regional planning agency).

Despite the initial confusion, local officials knew from the outset that the FTA’s approval would be critical.

 “Until FTA authorization is given, there can be no negotiations with the [stadium] developer on price,” Mary Gustafson, a grants manager for Metro Transit wrote in a July 2015 e-mail.

A month later, Lamb echoed Gustafson.  “Since there is more than 70% federal interest in the site, we need to ensure that the [FTA] is supportive,” he wrote in an August 2015 e-mail. In September 2015, with the public announcement on the stadium nearing, Lamb again wrote that “we will need to alert FTA about the impending announcement and assure them that we will not be short-cutting any of their required processes.”

As they turned to lobby the FTA, Minnesota officials acknowledged that the project was both unusual and moving rapidly – but represented a unique and hard-to-pass-up opportunity.  A December 2015 memo, which was part of a report prepared by a Met Council consultant, stated that the “proposed stadium use is rare for any entity, much less a transit agency,” and that the project had – at the time – only been under consideration for three months.

The FTA would eventually approve the project, concluding in April of 2016 that it would, among other things, “enhance economic development and incorporate private investment.” The federal agency also said that the project would “enhance the effectiveness and relate physically to a public transportation project” – an endorsement that paved the way for the 19,400-seat stadium for the Minnesota United soccer team that would be largely built with private money.

But the FTA’s approval would not be automatic.

A hurried push for approval

Records obtained by PRM outline how local officials, over the course of six months, engaged in a hurried behind-the-scenes effort to win the FTA’s support.

One of the first attempts came in late October of 2015 – just as officials in Saint Paul publicly announced that they wanted to put the stadium on the parcel, which sat near a light rail line and a major rapid bus route.

Documents indicate that Saint Paul officials initially tried to portray the multi-million-dollar stadium as an “incidental” use of the land that was permitted under FTA rules, hoping the argument would lead to the agency’s approval.  The agency, however, rejected the approach.  On November 11, FTA officials said that the site as it stood did not offer a “transit service” or active “transit purpose,” and that adding “a soccer stadium [would] not constitute a ‘limited’ authorized “non-transit use.”

In February of 2016 – even as the FTA was leaning toward approving the stadium project – records show that local officials tried another strategy.  Those attempts were likewise shot down.

This time, the FTA’s regional administrator disagreed with claims that the federal agency’s interest in the property had effectively expired with the passage of time.  (A federal grant was used to finance the property’s purchase in 1970).  “Because the land was purchased with federal assistance, the federal interest continues until the land is disposed of and/or the federal interest is extinguished,” the FTA’s Simon wrote to Lamb in March of 2016.

Simon also countered another claim by Lamb – that the land should be treated the same as “facilities and equipment” — and that like buildings and buses the land had depreciated over time, and the FTA’s interest had expired.  “It is a long-held principle of federal grant rules that real property [is not governed by a ‘useful life’ definition] because, by its very nature, it does not depreciate,” Simon instead replied.

Simon likewise appeared to turn down arguments that because the federal money had been awarded by the Urban Mass Transportation Administration (the federal government changed the name in 1991 to the FTA) the FTA had no ongoing interest in the property.  “The change in name [was] an administrative one that effected no substantive change,” Simon wrote.

Despite these obstacles, documents show that the FTA sent signals early on that it would be receptive to the unusual proposal to build a soccer stadium on land originally targeted for transit use.  And even in rejecting the stadium as a permitted “incidental” use, the FTA said that a soccer stadium offered “great potential for an increase in ridership” for the nearby light rail and bus rapid transit lines.

“There are a number of paths to a successful [project] outcome,” Matthew Welbes, the FTA’s executive director, wrote in a September 2015 e-mail.

Site had been unused for several years

Though the surrounding area had long been used for transit (the land once housed a street car barn) the federal financial interest dates to 1970 when a $9.7 million federal grant was used to help buy the property.  Another $1.1 million federal grant was awarded in 1976, meaning that federal funds made up nearly 68 percent of the money used to buy the property.

But for more than a decade before the soccer stadium came along, the property languished.

In the late 1990s, local transit officials decided to move the bus garage to another site.  Though buses would continue to be stored on the property, the last bus left the garage in 2001.  Through the ensuing years, plans to build retail and even a new state armory on the property emerged and fizzled.  From 2002 through 2010, part of the property was used as a park-and-ride lot for the annual Minnesota State Fair.

By 2015, the property was situated close to major transit routes.  The northwest corner of the site sat roughly 800 feet from the split platforms of the Snelling Avenue light rail station on the Green Line that had opened in 2014.  Snelling Avenue carries about 42,000 vehicles daily near the stadium and passes over Interstate 94 – the main highway connecting downtown Saint Paul and downtown Minneapolis.

Because the soccer stadium would now sit directly on that parcel, the FTA’s approval became critical.

A nine-page memo to the FTA stated that the parcel “is the key element in making the whole development work operationally, economically, and in accordance with the goals of the community.”

Adding to the equation were the players involved:  Former UnitedHeath Group chief executive Bill McGuire is the managing partner of the soccer team, and Minnesota Twins owner Jim Pohlad has been listed as an investor.  At least one company owned by Glen Taylor, Minnesota’s richest individual in 2018 (according to Forbes Magazine) is listed as a team corporate sponsor.  Taylor also owns the Minneapolis Star Tribune, and is majority owner of the Minnesota Timberwolves, the local National Basketball Association team.

Target, Allina Health and Blue Cross Blue Shield of Minnesota are likewise listed as “first team partners” for Minnesota United.

The memo to the FTA noted other financial aspects of the stadium plan that were being pieced together.  “Since the preliminary submittal, [we] understand that the adjacent property owner is now working with a development company that has cross-ownership with the soccer team,” the FTA was told.

Final plan designed to satisfy the FTA

In the end, the agreement between local transit officials, the City of Saint Paul, and the soccer team included several significant features that reflected the need to satisfy the FTA.

Under an unusual arrangement, Metro Transit would keep ownership and control of the property – even after the stadium was built.  And the team’s lease payments that would go to Metro Transit – totaling an estimated $27.8 million – were not only more than the land’s appraised value, but would be funneled by the local transit agency to its capital and/or operating budgets.

As the agreement was being drafted, documents indicate that local officials were concerned that the FTA would think the project was moving ahead before the agency had weighed in.  On October 12, with news reports focusing on the “bus barn” site in Saint Paul, Gustafson sent an article on the stadium negotiations to the FTA, and pointed out that the story “mentioned prominently that the FTA has to be involved.”

Local officials also discussed the need to be careful with how they chose their words when talking to the FTA.

When the FTA notified Metro Transit in October of 2015 that it was ready to discuss the soccer stadium, Metro Transit’s Lucy Galbraith had words of caution. “We need to do this right with the right expertise in the room.  We do not want to use words that trigger negative responses; once was enough for me!” Galbraith wrote to a Metro Transit colleague on October 29.

The urgency of getting the FTA on board likely had much to do with what was happening elsewhere in the Twin Cities regarding stadium speculation.  For much of the early part of 2015, there were widespread rumors in the media that the soccer stadium would be built in Minneapolis, rather than Saint Paul.  

In downtown Minneapolis – which already featured stadiums for both the Minnesota Twins and Minnesota Vikings – the business group 2020 Partners was deep into planning for a soccer team.  According to the group’s meeting minutes, an attorney for the team told 2020 Partners in March 2015 that McGuire and his business associates would soon be awarded a Major League Soccer franchise, and noted that the leading site was “purported to be in the vicinity of the Minneapolis Farmers Market.”

But as spring moved into summer – and as plans in Minneapolis stalled – Saint Paul officials saw an opening and began moving quickly.

However, even after the October 2015 announcement that the stadium would be built in Saint Paul, the deal was not yet final.  Just weeks before the FTA gave the project a preliminary approval, a January 2016 Met Council memo stated that time was of the essence.  “We do not know how long this opportunity will stay on the table,” the memo stated.  “We have been told that it is a matter of weeks.”

The same memo added: “This project is unusual in many respects, not least of which is the speed with which it is moving towards reality.”

Other e-mails also highlighted the urgency.

“As you are no doubt aware from media coverage, the use of the Snelling property is an extremely pressing topic here,” Metro Transit’s Gustafson wrote to the federal Department of Transportation’s Cyrell McLemore on January 26, 2016.  “In order to keep things moving forward, I am asking you to please provide a response to the [Met] Council’s last submission, sent on January 14, 2016, no later than Friday, January 29, 2016.”

“If responding by Friday does not work for you, please let me and/or [others locally] know that as soon as possible as well as when to expect a response from FTA,” Gustafson added.

FTA pressed for details of how the stadium would intersect with transit

But even with approval all but certain in March of 2016, records show that the FTA was still trying to fully understand how the soccer stadium would complement the nearby light rail and bus lines in the Twin Cities.

“[It] seems incorrect in stating that the project is physically related to transit, since the next section goes on to note that there’s a sidewalk between the site transit stations. Perhaps it’s a type-o,” wrote Kathryn Loster of the federal Department of Transportation in a March 24 e-mail to Metro Transit officials.

“We believe this project is both physically and functionally related to a public transportation project,” Metro Transit’s Galbraith replied.  “There is an existing pedestrian path [sidewalk] between the site and the [light rail] and [bus rapid transit] stations; the pedestrian access will be rebuilt and improved during construction of the stadium and the adjacent development.

“Thank you for the careful reading [and] please pardon our eagerness,” Galbraith added.  “This is quite an extraordinary project.”