Corporate subsidies not in city’s interest

Last Friday, the Minneapolis City Council approved by a 7-5 vote $11 million for the already overfunded Nicollet Mall Target Stores project. The additional funding for the project disturbed some council members who were bothered by the city’s copious financing of such a large corporation. With its continually escalating costs, the building is quickly becoming a money pit for Minneapolis taxpayers and should serve as a lesson to council members not to devote fiscal priority to large corporate projects.
Council support for the building began in 1996 when the city estimated that its share of the project’s cost would be at most $35 million. Since then, the city’s total expense has risen to about $126 million, according to John Muir, the former city financing officer. The city’s contract with Ryan Construction, the project’s contractor, gives Minneapolis the responsibility to pay land acquisition fees. The escalating subsidy, which has astounded some council members, is a result of higher-than-expected condemnation fees. As the condemnation case is still in court, the $11 million appropriated is only an estimate of how much the land acquisition will cost. The final award to the site’s previous owners could be much higher.
The council originally supported the project on the basis that a mid-priced retail store downtown would be an attractive addition to Nicollet Mall. Council member Lisa Goodman, who voted against the appropriation and is a downtown resident, says, “I don’t believe people citywide should be paying that price so people like me can carry our toilet paper home.”
Council member Jim Niland, who also voted against the extra funding, was disappointed at the vast sums of money appropriated to such a large corporation. “This council is in the habit of enormous corporate subsidizing.”
Ironically, council member Joan Cambell, who represents the University and its mass of low-income students, has supported the project since 1996, even though the increased subsidies mean higher property taxes.
The completion of the Target Stores building will have substantial benefits for the city of Minneapolis and, according to council member Lisa McDonald, the city “bent over backwards” to get the contract. As Target Stores is not a financially needy corporation, the council could have spent the money elsewhere — small business subsidies and community programs are worthy examples.
Minneapolis constituents would be better served if their city council would support a variety of social and economic programs rather than a few large corporate projects. The money pit that the Target Stores building has become should teach council members that when it comes to corporate subsidies, utmost discretion is needed.