Purpose

• This bill would let the city of Forest Lake seek voter approval to impose a local sales and use tax of up to 0.5% (one-half of one percent) for specified purposes.

Main provisions

• Subdivision 1 – Tax authorization

  • If voters approve at an election required by law, Forest Lake may adopt by ordinance a local sales and use tax of up to 0.5%.
  • The tax is in addition to any other local sales and use taxes and follows governing rules in Minnesota Statutes (297A.99).
  • The tax can be implemented only as described and requires voter approval for authorization.

• Subdivision 2 – Use of revenues

  • Revenues from the tax must be used to pay the costs of collecting and administering the tax.
  • Revenues may also finance up to $50,000,000 plus associated bond costs for construction of a new public works facility.

• Subdivision 3 – Bonding authority

  • Forest Lake may issue bonds under Minnesota Statutes, chapter 475, to finance all or part of the project costs.
  • The total principal amount of bonds may not exceed $50,000,000 plus costs of issuing the bonds.
  • Bonds can be paid from the tax revenues or other city funds; bond issuance is not subject to certain state debt rules.
  • The bonds are not counted in the city’s debt limit, and tax levies to pay debt service are not subject to levy limits.
  • A separate election to approve the bonds under a different statute is not required.

• Subdivision 4 – Termination

  • The tax would expire no later than 20 years after it is first imposed, or earlier if the city determines funds are sufficient to pay project and bond costs (including interest) as allowed by law.
  • Any remaining money after costs is placed in the city’s general fund, unless otherwise provided.
  • The tax may end earlier by city ordinance.

Significant changes to existing law

• Enables Forest Lake to add a local sales tax up to 0.5% with specific planned uses (notably construction of a new public works facility) and to fund that project through both tax revenue and bonds.
• Provides bonding authority up to $50 million (plus issuance costs) with certain exemptions from standard debt and levy rules.
• Removes need for a separate bond election for the project, while tying tax duration to project funding milestones and allowing termination by city action.

Relevant terms

• local sales and use tax
• Forest Lake
• 0.5% (one-half of one percent)
• public works facility
• bonding / bonds
• Minnesota Statutes 297A.99
• Minnesota Statutes chapter 475
• debt limit exemptions
• levy limitations (section 475.61)
• costs of issuing bonds
• termination / expiration (20 years)
• general fund of the city
• voter approval / election requirements

Relevant Terms - local sales tax, Forest Lake, 0.5%, public works facility, bonding, bonds, 297A.99, chapter 475, debt limit, levy, costs of issuing bonds, termination, general fund, voter approval