Trouble in RiverCentre

St. Paul built a new hockey arena for the Wild and a new convention center for the city. Guess which one is losing money?

[Editor's note: A correction ran concerning this story; see end of article.]

During the eight years that Norm Coleman reigned as mayor of St. Paul, he transformed the psychological state of his city's downtown core from an inferiority complex into a proud, corporate field of dreams. If you build it, they will come, Norm relentlessly intoned, as the crane operators and concrete pourers hopped from museum to hockey arena to office tower. Sure enough, figures compiled by the city's planning and economic development department claim that since Coleman first took office, as many as two million more people are visiting the capital city each year.

While former Minneapolis Mayor Sharon Sayles Belton was resoundingly defeated in her bid for reelection last November, in large measure owing to voter resentment over public subsidies for downtown projects such as the Target store and Block E, Coleman's boom-boom development philosophy has played to rave reviews in St. Paul, generating momentum for this year's U.S. senate race against incumbent Paul Wellstone. The man he endorsed to succeed him as mayor, Randy Kelly, triumphed in November by casting himself as a Coleman clone who would continue pursuing pet projects such as a new baseball stadium and expansion of the city's Union Depot.

For reasons as obvious as Sayles Belton's defeat, most politicians fear being perceived as blindly following the dictates of big business. Buoyed by the response to his performance as mayor, however, Coleman has been remarkably unabashed about his fealty to corporate interests. Last month, in a Star Tribune story reviewing his eight years in office, he told a reporter that "the agenda of the Chamber of Commerce is the agenda of the city."

Conventional wisdom says that Coleman's staunch pro-business philosophy is difficult to rebut. St. Paul is facing a budget shortfall in 2002 that will likely compel Kelly to lay off city workers and perhaps reduce services to libraries and recreation centers, but the situation can be blamed on a national recession and impending cuts in state aid to local governments. What's more, if there is a price to be paid for increasing the city's debt load by nearly 50 percent in the past eight years, to well over $400 million, it won't happen on Coleman's watch.

There is, however, one tangible example of where Coleman's willingness to sacrifice public dollars for the benefit of private enterprise constitutes both an immediate and long-term threat to the city's financial health: the situation at the downtown entertainment complex known as RiverCentre.


Until just a few years ago, the RiverCentre complex, located in the heart of downtown St. Paul, consisted of the Roy Wilkins Auditorium and the St. Paul Civic Center. Today the Civic Center is gone and Roy Wilkins has been connected by walkways with two other structures: the Xcel Energy Center, a hockey arena that opened in July of 2000, and Touchstone Energy Place, a convention center that began operations in January of 1998.

When the $80 million Touchstone convention center was approved in 1994, the tab was to be paid with revenues generated by a half-cent sales tax approved by the city council just before Coleman's first term. In 1997 Coleman convinced the National Hockey League to award a franchise to St. Paul, contingent on the construction of a new arena. Plans were made to tear down the Civic Center and build the Xcel Energy Center. The $130 million needed for construction came from the state, the city, and the hockey franchise, which was later named the Minnesota Wild.

The financial problems now confronting RiverCentre stem from changes in the control and management of the facilities. Up until the time the new hockey arena was completed, all the buildings on the site were managed by the RiverCentre Authority, a volunteer board made up of two St. Paul City Council members and seven citizens appointed by the mayor. The city council set the budget and monitored performance. The deal that brought pro hockey to St. Paul changed that management scheme. The Wild leases the Xcel Energy Center from the city for a nominal fee, and all of the franchise's expenses and revenues are handled by its management firm, the St. Paul Arena Company (SPAC).

Shortly before the arena opened in July of 2000, the city decided it could save money and expand profit margins by entering into a joint operating agreement with the Wild franchise. The city is paying SPAC to operate both the Touchstone convention center and Roy Wilkins Auditorium. City workers at the facilities negotiated new union contracts and became private-sector employees. Since then, SPAC has managed all three facilities on the RiverCentre site. The Wild absorbs whatever profits or losses are accrued at the Xcel arena. The city is responsible for the gains and losses at Touchstone and Roy Wilkins. The RiverCentre Authority still exists to monitor SPAC's performance; the city council keeps watch over the Authority.

The arrangement has worked out well for the Wild. In 2001, after its first season of operation, the franchise announced that it was one of only 16 teams in the 28-team NHL to turn a profit. Meanwhile, the city's side of the RiverCentre ledger is bleeding red. Last November, during the final weeks of the Coleman administration, Deputy Mayor Susan Kimberley told the city council that if RiverCentre were required to meet all of its debt obligations in 2002, it would run out of cash by year's end, which would violate its contractual agreement with SPAC. To remedy the problem, the Coleman administration proposed that the council write off $1.5 million in RiverCentre debt, defer $1.3 million in debt payments, and dip into the city's general fund for another million in hotel and motel taxes.

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