Four More Years in Saint Paul?

Mike Wohnoutka

The St. Paul Pioneer Press has spoiled its city's mayor. Norm Coleman is so accustomed to favorable news analysis, fawning editorials, and feel-good features that he and his staff have been reduced to quibbling about story placement and headline size. "Did you see where they put the poll results? Do you see how small it was?" he asks, alluding to a front-page story that reports him leading challenger Sandy Pappas by 22 percentage points. "All I ask is that people be fair. All journalists don't have to be cynics."

It's hard to imagine any other public figure daring to air this complaint with a straight face. But Coleman is different. A pro-life Democrat turned "fiscally responsible" Republican, he's the region's premier politician, credited with turning St. Paul from a wanna-be ghost town into the state's gem city; a quaint, homey village with all the trimmings of a booming metropolis. The press loves his go-go swagger. The business community is drunk on his brand of trickle-down economics. Almost 60 percent of his constituents have given a thumbs up to his "optimistic" leadership style. In Minneapolis, where there's always been an air of superiority, those hoping to rid City Hall of Mayor Sharon Sayles Belton point across the river. Look at what Norm's done, those who support challenger Barbara Carlson say. Look at the excitement. Look at the promise. Just read Coleman's campaign buttons and believe: "The Pride is back."

Even the DFL-dominated St. Paul City Council hasn't dared get in the mayor's way. Because in Coleman's new world, criticism is cynicism, cynicism is defeatist, and the people of St. Paul have had enough bad vibes to last past the millennium. When Pappas questioned her opponent's record in an early October debate, daring to wonder whether Coleman's two biggest development schemes--the wooing of Lawson Software and the National Hockey League--were too risky, Council President David Thune accused her of demagoguery. Never mind that Thune is a vocal member of the DFL. Never mind that he considered Coleman public enemy number one a little over a year ago. Never mind that Council members such as the Fourth Ward's Bobbi Megard still say both deals make them nervous. The Council backed both projects with a 7-0 vote, a fact Coleman is quick to use when the critics wax cynical.

"It's tough, because Coleman has had the votes before he gets to the table," Megard says. "If you go against the grain you look like a naysayer. So you look at the thing and figure out how you can vote for it--is there something you can do? I have to be real honest, I believe there are imbalances in these deals. And questioning some of these things at the table is what I do consistently. But in some cases it is important that these big projects have a unanimous vote because we're saying we believe it's best for the city."

"I believe good politics leads to good policy," Coleman likes to say, and there's no question he has mastered the former. Pundits on both sides of the ideological fence are convinced he's already become a legitimate candidate for governor in 1998. Having learned that 66 percent of the St. Paul citizenry could care less if he abandons office after another year, Coleman can barely muster the energy to deny the certitude of this eventuality. "I'll make that decision at the beginning of next year," he says.

According to critics, many of whom won't comment on the record, Coleman's run at the governor's mansion is already in a full sprint. The advocacy group Minnesota ACORN found that his campaign already boasts a healthy roster of potential statewide-campaign givers: Two-thirds of those who've contributed to his mayoral bid live in the suburbs. Neighborhood activists speaking as citizens, such as the Urban Coalition's Yusef Mgeni, say the most expensive deals he's cut in the name of the city actually benefit the region. And DFL loyalists maintain that if Coleman can get away from City Hall before the economy takes a downturn or his heavily leveraged development deals go south, his reputation will remain unscathed.

"It's insanity," one St. Paul lawyer says. "But if Coleman can get to the state Capitol before everything goes to hell, the Pioneer Press can still give him fellatio. Meanwhile, some poor schlep will be sitting in the mayor's office scratching his head."

In the '80s, then-St. Paul Mayor George Latimer went on a development binge that produced, among other things, the World Trade Center and Galtier Plaza. In 1990, when Jim Scheibel took control of City Hall, downtown found itself stuck with empty buildings, empty streets, and a massive debt load. "In hindsight, there was too much development," recalls Scheibel, who says he inherited both good and bad from Latimer. "There was a recession. We were overbuilt and some of the property got pretty expensive."  

Coleman, like Latimer in his day, is being praised for bringing vitality back to St. Paul's metropolitan core. Specifically, he and a group of local and regional business people dubbed the Capitol City Partnership have been given credit for the expansion of St. Paul-based Ecolab, Inc., the luring of Lawson Software away from Minneapolis, the revitalization of the Radisson Hotel and the acquisition of a NHL hockey franchise. Of these projects, which all rely heavily on city-backed loans, the Lawson deal and the negotiations for a hockey team received the most favorable publicity. They also carry the most risk. Because if things don't go exactly as planned, St. Paul could once again be saddled with too much real estate and not enough capital.

In February 1997, real-estate developer David Frauenshuh, a campaign contributor to Coleman, approached the city in hopes of acquiring some free land, tax breaks, and "credit enhancement" to the tune of about $25 million. His plan was to construct a new building to attract Minneapolis-based Lawson Software to downtown St. Paul. At the time, a memo from St. Paul's HRA to the City Council indicated Frauenshuh would act as the developer and owner of the office tower and secure the necessary debt and equity financing. What the document didn't say was that said debt and equity financing would come almost exclusively from the city.

In late July, the City Council approved the Lawson project, the biggest tax-supported development deal in St. Paul history. Under its terms the city will construct a $101.5 million office tower and lease 270,000 square feet to Lawson, while the remaining 100,000 square feet will go to the St. Paul Companies. City money, generated from the purchase of general-obligation tax-increment bonds backed by city taxpayers will pay $96 million of the cost. Frauenshuh will pony up only $300,000 in cash and a $5 million letter of credit. Lawson will lease its space for 15 years at above-market rates while the St. Paul Companies are committed for six years. If everything runs on schedule, and if both Lawson and the St. Paul Companies stay in the space, Coleman says the lease payments will cover the loans, bondholders will make a profit, and the city will reap benefits from increased property values around the office tower. Not many are interested in talking about what happens if things go sour.

"He's maxing out our credit card," says St. Paul developer John McCarty. "This is a 100-percent deal on the city. I want my streets plowed, I want good fire protection, I want good police service, I want to be able to use my parks. What the hell are we doing playing developer, financier, and landlord? That's not the function of the city of St. Paul, that's the function of the private sector."

Coleman defends the unprecedented investment, saying it will bring additional jobs, income, and a new parking ramp downtown. And though he admits there's a "measure of risk" in the Lawson deal, he says the taxpayer will not be burdened "with a dime of cost." Megard says that although she and her colleagues voted for the project, she's worried about paying the city's yearly debt service on the GO bonds. If, say, the robust economy stalls out or the software industry falters, the city would have to come up with a "creative solution" for the Lawson building.

Critics who suspect that the Lawson tower is being built on shaky ground are flatly dumbfounded by Coleman's NHL deal. In June 1997, the St. Paul City Council approved financing plans to replace the St. Paul Civic Center with a $130-million arena. The prospective NHL franchise's private ownership group, stacked with Coleman contributors such as Stanley Hubbard, came up with $30 million. The city agreed to finance the other $35 million--again by buying general-obligation bonds, to be paid back through an extension of the city's sales tax and a $1.50 surcharge on arena tickets. They also agreed to pledge an additional $65 million of future city revenue to cover loans if the state refuses to help St. Paul fund the stadium. Coleman maintains Gov. Arne Carlson and the Legislature will deliver the $65 million in 1998.

But even if that happens, the deal involves some very optimistic forecasts. Just to keep up with the $35-million loan the city will be stuck with for sure, the hockey arena needs to enjoy an average attendance of 17,000 people for at least 43 events a year. That's 90 percent of capacity, and there's no evidence that a hockey franchise can draw this kind of support over a period of years. The North Stars drew like-sized crowds only about half the time.  

Once the new stadium is constructed, the NHL franchise will reap 100 percent of the revenues generated from all events, including the truck pulls, concerts, and other entertainment that will be available in between games or during the off-season. This includes all retail sales, merchandising, and TV revenue. It will also collect all parking revenue collected when the hockey team is on the ice. The city is entitled to host up to five, but no more than 10 events a year, but even then the franchise owners will get 50 percent of the profit. In return the team will pay the cost of management, operations and maintenance. Any out-of-pocket expenses incurred during non-hockey events will be paid by the city.

"It's absurd," McCarty says. "We're giving the only people who stand to make a direct profit subsidies. It's just like what's happening right now at the state level with the baseball stadium. The people with the most money have their hands out."

McCarty's baseball analogy, which has been all but ignored by both Coleman and the PiPress, is just now hitting the fan at the state level. Just last week, Senate Majority Leader Roger Moe sent a letter to the mayor advising him to link his NHL deal to the fate of the Minnesota Twins--slated to be decided at a special session starting Thursday. "Roger thinks that people are assuming hockey is a done deal," Moe's chief of staff Vic Moore says, "And that's not the case at all. There's very little support within our caucus to do [general-obligation] bonds for hockey."

With just three weeks left until Election Day, Coleman's crack campaign staff is shifting into gear. They haven't had to do much so far: Coleman's "Rose Garden strategy" of carefully timed official action has worked beautifully, due in good part to the cooperation of the city's daily newspaper. With headlines like "Why St. Paul is so Hot" (on an October PiPress business piece), observers note, there was little left for the campaign to do.

"I think [the PiPress] has been in Norm's back pocket. They're like another campaign worker," one St. Paul Council member says. "There were supportive editorials the day of the hockey deal and the Lawson deal, and that affects what the Council does. It's like a lobbying arm."

State Sen. Sandy Pappas, on the other hand, is still battling to be taken seriously as the DFL challenger. Last Wednesday morning, while the PiPress covered a Coleman speech at Hamline University on race relations, Pappas was going table to table down the street at a Ginkgo's coffee shop, still struggling to familiarize local voters with her face. "It's been very difficult getting even-handed coverage," she says. "There's a real institutional bias in this race. He gets credit for everything. I get credit for little, even though I've done a lot in the Legislature. That's because the Senate is a collaborative body, whereas the mayor is seen as a independent operator."

Even Coleman admits the PiPress's editorial board has been especially supportive. "Sure, the editorial board believes in what we're doing, but so does 66 percent of the community," Coleman says. "They're simply reflecting what's going on. And, let's face it, a newspaper's success is tied to the success of its community." Indeed: Though the PiPress is a metropolitan paper, it's based downtown, financed with downtown money, and owns a hefty chunk of downtown real estate. When Knight-Ridder chain scion Peter Ridder served as the paper's publisher, he was a frequent visitor to Coleman's office. To him and other company managers, it may have seemed obvious that what was good for downtown St. Paul--or at least its image--was good for the paper.

Of course there's no proof PiPress management is actively encouraging editorial to write fluff so the advertising department can make hay on downtown's newfound enthusiasm. But given the choice between "cynical" coverage--which examines the nuts and bolts of Coleman's revitalization--and stories about the city's renaissance, editors have a noticeable track record. A rah-rah approach to the NHL deal has meant that details about the team's profit margin have fallen through the cracks. And there are plenty of stories on which neighborhood and community newspapers have out-reported the daily. "There are a lot things [the PiPress] could've pointed out that they haven't," notes Mike Mischke, publisher of the Highland Villager and the Grand Gazette. "For instance, even with all the good news about downtown St. Paul, a lot of little guys have been closing up shop. There was a day when that would've gotten a lot more play."  

In defense of the PiPress's beat reporters, if there's no vocal opposition at City Council meetings or in public forums, it's tough to avoid a simplistic story. More than one Council member agrees with Pappas's complaint that Coleman gets credit for the sun shining. But because they're convinced she is doomed to lose, even the city's liberal politicos are reluctant to throw down the gauntlet. It seems lost on them that a refusal to publicly question Coleman only buffers his power base.

What Coleman--like Bill Clinton before him--seems to have figured out is that a good story doesn't have to be true to be popular with the press. Maybe it's because "hometown" newspapers everywhere are feeling pressure to be more positive, more like their counterparts on the nightly news; maybe it's just that journalists are lazy. It's easier, after all, to find sources in St. Paul who will praise Coleman than it is to find the critics. And of course it's always possible that the PiPress is saving up its bile for the poor schlep who must some day pay for Coleman's popularity.

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