SF4352

Purpose

This bill would allow the City of Forest Lake to raise local revenue by charging a local sales and use tax, but only if voters approve. The money would fund a specific project (a new public works facility) and related costs.

Authorized tax and voter approval

• The city could impose a local sales and use tax of up to 0.5% (one-half of one percent) if voters approve in an election.
• The tax is in addition to any other local sales tax.
• Approval for the tax relies on required voter authorization under Minnesota law (section 297A.99, subdivision 3).

How the tax proceeds would be used

• Revenues from the tax would first cover the costs of collecting and administering the tax.
• The remaining revenues could be used to finance the construction of a new public works facility, with up to $50,000,000 available for bonding plus the costs of issuing the bonds.

Bonding and debt details

• The city could issue bonds under Minnesota law (chapter 475) to finance all or part of the project.
• The total principal for bonds could not exceed $50,000,000 plus the costs of issuing the bonds.
• Bond proceeds and related payments could be paid from or secured by the tax revenue or other money available to the city.
• Bond issuance would not be subject to certain state debt rules (not subject to sections 275.60 and 275.61) and would not count toward the city’s debt limit.
• Any levy of taxes to pay principal and interest on the bonds would not be limited by typical levy limits.
• A separate election to approve bonds (under section 475.58) is not required.

Termination and sunset

• The tax would expire no later than 20 years after the tax is first imposed, or earlier if the city determines the project costs have been paid in full (including bond costs and interest) with voter-approved funding.
• Any money remaining after paying approved costs would go to the city’s general fund.
• The city could shorten the tax period by ordinance if desired.

Additional context

• This authority is subject to the general framework in Minnesota law (297A.99, and related statutes) and would operate as a local option, separate from other state taxes or taxes imposed under other special laws.

Significance of changes

• Enables Forest Lake to fund a major public works project more quickly through a local sales tax and bonded financing.
• Allows significant borrowing up to $50 million without affecting state debt limits or requiring a separate bond election.
• Sets a defined sunset (up to 20 years) and directs remaining funds to the city’s general fund if the project costs are fully paid.

Relevant Terms Forest Lake; local sales tax; sales and use tax; 0.5% (one-half of one percent); voter approval; Minnesota Statutes 297A.99; revenues; administration costs; collection costs; public works facility; bonding; bonds; Minnesota Statutes chapter 475; bond costs; not subject to 275.60; not subject to 275.61; debt limit; levy limitations; levy under 475.61; election; 475.58; general fund; sunset; ordinance.