SF5283

Purpose

To authorize the City of La Crescent to impose a local sales and use tax, with the goal of funding the renovation and improvement of the La Crescent regional ice arena, including installing a rooftop solar energy system, and to finance related project costs through bonds if approved by voters.

Main Provisions

• Subd.1 – Sales and use tax authorization

  • The city may impose a local sales and use tax of up to a specified percent, with voter approval as required by law.
  • The tax is administered and collected under Minnesota law (section 297A.99) and, once approved, operates alongside any other local sales tax.

• Subd.2 – Use of tax revenues

  • Revenues from the tax must be used to cover the costs of collecting and administering the tax.
  • Revenues may finance up to $4,000,000 in design, construction, and equipment costs to renovate the ice arena, including replacing the ice system and installing a rooftop solar energy system.
  • Revenues must also cover costs of issuing bonds and debt service for the project.

• Subd.3 – Bonding authority

  • La Crescent may issue Minnesota general obligation bonds to finance all or part of the approved project costs.
  • The total bonds issued may not exceed $4,000,000 plus bond issuance costs.
  • Bonds may be issued as general obligations of the city and are not subject to certain debt limit statutes; they may be paid from any available funds, including tax revenues.
  • The levy to pay bond principal and interest is not subject to typical levy limitations.
  • A separate election to approve bonds is not required.

• Subd.4 – Termination of taxes

  • The tax expires at the earlier of a specified number of years after first imposition (the exact number is not clearly stated in the text) or when the city determines that enough revenue has been received to pay the project costs and debt service for approved projects.
  • Any remaining funds after paying project costs and debt service must go to the city’s general fund.
  • The city may terminate the tax earlier by ordinance.

Significant Changes to Existing Law

• Enables La Crescent to enact a local sales and use tax specifically to fund the renovation and upgrading of a municipal ice arena, including renewable energy enhancements.
• Allows the city to issue up to $4,000,000 in general obligation bonds (plus issuance costs) to finance these projects without a separate bond election, while requiring voter approval for the tax itself and for the project funding as applicable.
• Establishes a dedicated funding mechanism linking the tax to project costs, debt service, and costs of tax administration, with funds potentially used for an energy efficiency upgrade (rooftop solar) and ice arena improvements.
• Removes certain debt-limit constraints for this bond issuance and ties repayment to tax revenues, with a defined termination trigger tied to project completion and debt service.

Potential Impacts (layperson view)

• The city could raise local revenue to modernize the ice arena and add solar energy, potentially improving facilities and energy efficiency.
• Citizens will decide the tax through elections and may see effects on local prices until the project is funded or tax expires.
• The project could be financed with bonds that are repaid from the new tax revenues, not impacting other debt limits.

Relevant Terms - local sales and use tax - La Crescent - ice arena renovation - rooftop solar energy system - costs of issuing bonds - debt service - general obligation bonds - voter approval - Minnesota Statutes 297A.99 - Minnesota Statutes Chapter 475 - levy limitations - costs of administration - project costs - design construction and equipment costs - term/expiration of tax - administration and collection