HF4086

Purpose

authorize the City of Lanesboro to create a local option sales and use tax to fund specific city projects, with voter approval required, and to provide a framework for issuing bonds to cover project costs.

Main Provisions

• The City of Lanesboro may impose a local sales and use tax of up to 0.5% (one-half of one percent) if voters approve it.
• The tax would be in addition to any other local taxes and would be governed by the state rules on imposition, administration, collection, and enforcement (Minnesota Statutes section 297A.99).
• Revenues from the tax must be used for designated city projects and related costs, including the costs to collect and administer the tax and to pay debt service on bonds issued to finance the projects.

Use of Revenues

• $1,500,000 for rehabilitation and improvements to Sylvan Park.
• $2,000,000 for the Trunk Highway 250 road improvement project.
• The revenue may also be used to pay debt service on bonds issued to finance these projects, including bond issuance costs.

Bonding Authority

• The city may issue bonds under Minnesota Statutes chapter 475 to finance all or part of the project costs, with the total principal not to exceed $2,500,000 plus costs of issuing the bonds.
• Bond principal and issuance costs may be paid from any money available to the city, including the tax revenues.
• Bond issuance is not subject to certain debt-limit statutes (Minnesota Statutes sections 275.60 and 275.61) and bonds are not counted toward the city’s debt limit.
• Any levy of taxes to pay principal and interest on the bonds is not subject to levy limitations.
• A separate election to approve bonds under Minnesota Statutes section 475.58 is not required. However, the bonds (and projects) must be approved by voters as required under Minnesota Statutes section 297A.99 subdivision 3, paragraph a.

Termination / Sunset

• The tax expires at the earlier of 30 years after the tax is first imposed or when the city determines that the funds are sufficient to pay the project costs approved by voters plus any costs related to issuing the bonds (including interest).
• Any money remaining after paying allowed costs, due to timing of termination, must be placed in the city’s general fund.
• The tax may end earlier by city ordinance if the city determines to do so.

Relationship to Existing Law

• The bill includes a Notwithstanding clause: it overrides certain state laws (e.g., Mn Stat 477A.016 or other laws, ordinances, or city charters) to authorize the local option tax, subject to voter approval.
• Revenues must be used for the specified projects and related administrative and debt service costs, with the imposition and enforcement governed by Minn. Stat. 297A.99.
• The new local tax is in addition to any other local sales tax authorized by law.

Significance

• This bill would empower Lanesboro to fund park and road improvements through a locally approved sales tax and to issue bonds to accelerate project funding, with a defined sunset and clear restrictions on how funds are used.

Potential Impacts

• Local residents and visitors could face a new 0.5% sales tax uplift for specified projects if voters approve.
• The city gains a funding mechanism and bonding option to advance Sylvan Park and Highway 250 improvements.
• Debt and tax levy rules are adjusted for this local financing, with protections and sunset provisions.

Relevant Terms - local sales and use tax, 0.5%, voter approval, Lanesboro, Sylvan Park, Trunk Highway 250, debt service, bonds, bonding authority, issuance costs, debt limit, levy, Sunset, 297A.99, 475, 477A.016, Notwithstanding.