SF4647

Purpose

• Authorizes the city of Caledonia to impose a local sales and use tax to fund the construction of a Public Safety Center, if approved by voters.

Key Provisions

• Tax Authorization and Rate

  • Caledonia may impose a local sales and use tax of 0.25% (one-quarter percent) by ordinance, contingent on voter approval as required by statute.
  • The tax is in addition to any other local sales and use taxes that may exist.

• Use of Revenues

  • Revenues from the tax must be used to cover the costs of collecting and administering the tax.
  • Revenues may also finance up to $1,600,000 plus associated bonding costs and interest for the construction of the Public Safety Center.

• Bonding Authority

  • The city may issue bonds under Minnesota Statutes chapter 475 to finance all or part of the project costs, up to the $1,600,000 cap plus issuance costs.
  • Bonds can be paid from the tax revenues or from any money available to the city, including the tax revenues.
  • Bond issuance is not subject to certain debt statutes (specifically, not subject to Minnesota Statutes sections 275.60 and 275.61) and the bonds are not counted toward the city's debt limit.
  • A separate election to approve the bonds under Minnesota Statutes section 475.58 is not required.
  • Levy payments to cover bond principal and interest under Minnesota Statutes section 475.61 are not subject to levy limitations.

• Termination and Sunset

  • The tax expires at the earlier of: (a) ten years after the tax is first imposed, or (b) when the city determines the amount received is sufficient to pay the project costs authorized, plus remaining bond-related costs including interest, if voters approved as required.
  • Any remaining funds after approved costs are paid, timing considered, must be placed in the city’s general fund.
  • The city may terminate the tax earlier by ordinance.

• Election and Approval

  • The tax (and its use) is subject to voter approval as required under Minnesota Statutes section 297A.99, subdivision 3.
  • The bond authorization itself does not require a separate election.

How It Works with Existing Law

• The measure references the general framework for local option sales taxes and voter authorization (297A.99) and uses bonding authority (chapter 475) for project financing.
• It explicitly sets protections and limitations for debt funding (not counted toward debt limits; not subject to certain levy limits) and clarifies administration and collection responsibilities.

Overall Impact

• Creates a dedicated funding mechanism for Caledonia to build a Public Safety Center, funded through a local 0.25% sales tax with a defined 10-year (or shorter) sunset and bond-backed financing structure.
• Provides a clear path for voter approval, bond issuance, and use of proceeds, while limiting long-term fiscal burden through sunset provisions and debt exclusions.

Significant Changes From Current Law

• Introduces a new 0.25% local sales and use tax in Caledonia specifically earmarked for a Public Safety Center.
• Enables a capped bond issuance (up to $1.6 million plus issuance costs) backed by the tax revenue, with several debt-related protections and exemptions from certain levy limits.
• Removes the need for a separate bond election, while tying the tax’s existence to a sunset or project-funding sufficiency.
• Explicitly directs revenues to administration/collection costs and project financing, with excess funds governed by general fund transfers if applicable.

Relevant Terms - local sales and use tax - Caledonia - one-quarter percent (0.25%) - Public Safety Center - Minnesota Statutes section 297A.99 - bonding costs and interest - Minnesota Statutes chapter 475 - debt limit / levy limits - 275.60 and 275.61 (statutory exemptions) - election / voter approval - bond issuance under 475.58 - termination / sunset (ten years)