Booming economy is bad news for Target Center project

Even ignoring the likely disappearance of a big picture of Kevin Love, the renovated Target Center probably won’t look like this.

The original plan to renovate Target Center, home of the NBA Timberwolves and Garth Brooks, is a shell of its former self.

When it was announced in February 2011, the Timberwolves and then Mayor R.T. Rybak were looking for $155 million to gut the present arena.

But when the Vikings stadium took the lion’s share of the political capital behind more than $400 million of state money, the Target Center renovation depending on redirecting money originally earmarked for the Minneapolis Convention Center, and negotiations with Timberwolves owner Glen Taylor delayed the project.

In the end, a combination of Taylor and taxpayer cash totaled about $97 million, but the buying power of that money has evaporated.

Minneapolis St. Paul Business Journal reports that the delays and the improving economy has sliced $11 million of spending power off the deal, lowering the project’s funding to nearly half of the original vision for the arena.

“The market has moved on us pretty dramatically over the last 18 months,” Wright said. “So the $100 million that we are proposing to spend on Target Center is actually valued today around $86 million.”
Reached for follow-up comment, Wright said it was premature to discuss if amenities would have to be cut or if the budget would need to increase. “It’s way too early in the process to understand how that might be managed,” he said.

Wright, at the luncheon hosted by Association for Corporate Growth Minnesota, blamed the rising costs of labor and materials.

“Cost of labor is extraordinarily high right now. There are certain products that we use inside of the renovation as well that are skyrocketing as a result of the global market, but also what is going on down the street with the Vikings stadium and the St. Paul Saints to a degree. Mariucci is being redeveloped.”

Mortenson said several factors have led to rising construction costs, ranging from a shortage of laborers in the Twin Cities to railroad routes clogged by the North Dakota oil boom to rising prices for materials like glass and cement. Overall construction prices are expected to jump 6 percent in the next 12 months.

“From when they did the budgeting to when the construction will occur, there’s been an unprecedented escalation in the construction market,” said Dan Mehls, Mortenson’s vice president and Target Center renovation director.

The obvious question now focuses on whether the project will somehow be scaled back or will the team owners and arena manager look for more public cash?

All options are on the table, a team official said.