Purpose

This bill would let the City of Blaine create and collect new local taxes in a designated redevelopment area (the 105th Redevelopment Area) to finance capital improvements there. The taxes are intended to support development-related projects and facilities in that area, with the city able to issue bonds to help fund them. The tax authority is a special provision that overrides some other state and local rules for this area.

Main Provisions

• Scope

  • Blaine may by ordinance impose one or more taxes on sales transactions that occur within or into the 105th Redevelopment Area.

• Definitions

  • City: the City of Blaine
  • Tax: a tax imposed under this special law
  • Taxing area: the geographic area within Blaine known as the 105th Redevelopment Area

• Taxes authorized (three types, each up to 3% of gross receipts) 1) Restaurant tax: up to 3% on the gross receipts from food and beverages sold by restaurants or places of refreshment in the taxing area, including on-sale of intoxicating liquor and fermented malt beverages, for consumption on or off premises. 2) Lodging tax: up to 3% on the gross receipts from lodging for periods of less than 30 days at hotels, motels, rooming houses, tourist courts, or trailer camps in the taxing area by hotels/motels with more than 50 rooms. This is in addition to any tax under state lodging tax law, and the total of this tax plus the state lodging tax cannot exceed 6% in total. 3) Admission tax: up to 3% on the gross receipts from admission to places of amusement or athletic events and from use of amusement devices within the taxing area.

• Rate adjustments

  • The city council may adjust the tax rates periodically to ensure the revenue needed for the authorized purposes.

• Use of revenues

  • Revenues from these taxes must be used only for initial and ongoing financing of capital improvements within the taxing area.
  • Allowed uses include paying debt service (principal, interest, premiums), paying costs to design, equip, construct, improve, maintain, operate, administer, or promote facilities and capital improvements, and maintaining reserves deemed reasonable.

• Bond authority

  • Blaine may issue bonds under Minnesota statutes to finance all or part of the development and construction costs within the taxing area.
  • Bonds are not counted toward the city’s general debt limit, and certain levy limitations do not apply to payments on these bonds.

• Collection and enforcement

  • The state and the city may enter an agreement to have the state collect the taxes on behalf of the city.
  • The taxes carry the same interest, penalties, and enforcement provisions as used for similar state taxes (under the referenced statutes).

• Termination (sunset)

  • The taxes created under this section cannot terminate before January 1, 2055.

How the Taxes Work (at a glance)

• Taxes apply to transactions within the 105th Redevelopment Area.
• Three tax types up to 3% each: restaurant food/beverages, lodging (short stays), and admission to amusements or use of amusement devices.
• Lodging tax adds to the state lodging tax, with a combined cap of 6%.
• Revenue funds capital improvements in the area; can be used for bond-related costs and reserves.
• State collection is an option; enforcement mirrors related state tax rules.
• Taxation is set to run at least until 2055.

Significant Changes to Existing Law

• Establishes a new, area-specific local tax authority for Blaine (the 105th Redevelopment Area) with up to three new tax types.
• Introduces a dedicated funding stream (revenues) for capital improvements in the redevelopment area and allows bonds tied to those improvements.
• Allows state collection of these taxes if the city and state agree.
• Creates a long-term sunset (not terminated before 2055) for these taxes, providing a predictable funding horizon.
• Sets a cap on lodging tax when combined with the state lodging tax (maximum 6%).

Relevant terms section follows.

Relevant Terms - 105th Redevelopment Area - City of Blaine - restaurant tax - lodging tax - admission tax - gross receipts - food and beverages - places of amusement - amusement devices - capital improvements - bonds (Minnesota Statutes chapter 475) - debt limit - levy limitations (Minnesota Statutes sections 275.60 and 275.61) - collection and enforcement - Minnesota Statutes section 469.190 - Minnesota Statutes chapter 297A - sunset date (January 1, 2055) - taxing area - sales transactions - redevelopment area financing