Report calls for additional oversight of U.S. Bank Stadium reserves

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A new report from the Minnesota Legislative Auditor says the Legislature should take a closer look at a U.S. Bank Stadium reserve account that’s expected to increase by $149 million during the next five years.

The Minnesota Management and Budget office is primarily responsible for managing the reserve account, which uses gambling revenue to pay stadium debt service and related expenses. The state established the account in 2012.

Although the MMB has complied with its requirements, the Legislature should take a “more active oversight role in this extremely complex area,” according to a 48-page report released this week by Minnesota’s Office of the Legislative Auditor.

Revenue from electronic pull tabs, a big source of money for the stadium, has ebbed and flowed since the $1.1 billion stadium was approved in 2012. After revenue initially fell short of expectations, the flow of gambling money has picked up in recent years.

The reserve balance for the stadium now exceeds $44 million, and MMB expects that to reach $193 million in 2023.

That expected growth “merits a strategic conversation about future uses of the account,” the report said. Suggested changes call for “revisiting” the 2012 law approved by the Legislature to generate stadium reserves; paying off debt early; or working with the Minnesota Sports Facilities Authority on building improvements.

Also in the report, the OLA urges the Legislature to assess whether the MMB’s current spreadsheet-accounting approach provides “necessary transparency to oversee” the growing account.

The investigation looked at MMB’s use of the reserve account to pay down stadium debt, as well as its “ongoing computation of the reserve fund balance.”

The examination covered a period from July 1, 2012, to June 30, 2018.

A complaint to a state legislator led to the audit. The complaint “alleged that MMB improperly transferred $20 million” from the account, but the OLA found “no basis to substantiate that allegation,” the report said.

“I am very pleased that we have a clean report. The OLA is showing we complied with all legislative requirements over a really complex set of laws,” MMB Commissioner Myron Frans said in an interview on Wednesday.

In fiscal year 2018, the gross charitable-gambling sales in the state topped $2 billion, making Minnesota the No. 1 state in the country for such activity, according to the Minnesota Gambling Control Board’s 2018 annual report.

Pull tabs make up 93% of the $2 billion worth of sales. Minnesota has more than 2,800 charitable gambling-sales sites, primarily bars and veteran posts, according to the gambling control board report.

Expenditures out of the stadium reserve in 2018 totaled $41.3 million. That includes payments for state debt service ($20.9 million), city of Minneapolis debt service ($9 million), MSFA operating expenses ($6.28 million), the MSFA’s capital reserve ($1.66 million), city of St. Paul sports buildings ($2.7 million) and problem-gambling appropriations ($756,000).

Stadium money sources identified in the 2012 stadium legislation include the state of Minnesota ($348 million), the city of Minneapolis ($150 million) and the Minnesota Vikings (at least $477 million).