Purpose

Provide a targeted sales and use tax exemption for construction materials used in Woodbury’s water infrastructure projects. The exemption applies to materials funded by the City of Woodbury for building or upgrading a water treatment facility, water tower, and related water pipelines and infrastructure. The provision covers purchases made between January 31, 2024 and December 1, 2028, with refunds processed through the state tax system after mid-2025.

Main Provisions

• Exemption and refund mechanism: Materials, supplies, and equipment used in construction, reconstruction, upgrade, expansion, renovation, or remodeling of a water treatment facility, water tower, and related water infrastructure funded by Woodbury are exempt from sales and use tax under Minnesota law (Chapter 297A). The tax is collected as if the normal rate applied, then refunded in the same manner used for other approved projects.
• Eligible time window: Eligible purchases must be made after January 31, 2024 and before December 1, 2028.
• Refund timing: Refunds for eligible purchases are not issued until after June 30, 2025.
• Funding for refunds: The general fund provides the money needed to pay these refunds; the Commissioner of Revenue handles the refunds.

Significance and Changes to Law

• Adds a local sales and use tax exemption specifically for Woodbury’s water infrastructure projects, using existing state refund procedures.
• Creates a temporary, city-specific exemption window (2024–2028) and a later refund schedule, altering how these purchases would ordinarily be taxed and refunded.
• Requires an appropriation from the general fund to support the refunds, managed by the Department of Revenue.

Scope and Limitations

• Local focus: Only applies to the City of Woodbury and its funded water-related construction projects.
• Project types: Water treatment facility, water tower, water pipelines, infrastructure, and related improvements.
• Time limits: Purchases must occur within the stated window (2024–2028); refunds issued after mid-2025.

Administration and Implementation

• Administration: Refunds are processed under the existing Minnesota tax refund framework (as described by statutes referenced in the bill).
• Oversight: The Commissioner of Revenue administers refunds; funding for refunds comes from the general fund.

Practical Impact

• Lower project costs for Woodbury by eliminating sales and use tax on eligible construction materials, with refunds ensuring the tax is effectively returned.
• Government budget considerations include the necessary appropriation to fund the refunds.

Relevant Terms sales and use tax exemption; exemption refund; construction materials; materials and supplies; equipment; water treatment facility; water tower; water pipeline infrastructure; funded by the City of Woodbury; Minnesota Statutes chapter 297A; 297A.62; 297A.75; refunds; after June 30, 2025; general fund; Commissioner of Revenue; appropriation; 1/31/2024; 12/1/2028.