HF3390

Purpose

• Authorizes the city of Owatonna to adopt a local sales and use tax to fund a community center project. The tax is optional and would require voter approval in a general election.

Tax Authority and How It Works

• Tax rate: a local sales and use tax of one-half of one percent (0.5%).
• Administered under Minnesota law (Minnesota Statutes 297A.99) and would operate in addition to any other local sales and use taxes.
• The tax is subject to approval by voters in a general election as required by state law.

Use of Revenue

• Revenues from the tax must be used to cover the costs of collecting and administering the tax.
• The primary purpose funded by the tax is to finance construction of a community center, with an initial funding target of $75,000,000 plus associated bonding costs.

Bonding Authority

• The city may issue bonds (debt) to finance all or part of the project costs, up to $75,000,000 plus issuance costs.
• Bonds may be paid from the tax revenues and the city’s full faith and credit.
• The bonds are not counted toward certain debt limitations and are not subject to some standard debt-levy restrictions.
• A separate election to approve the bonds under existing rules is not required (no separate bond election required under the specified provisions).

Termination of the Tax

• The tax would expire at the earlier of:
  • 25 years after it is first imposed, or
  • When the city determines the tax revenue is sufficient to pay for the project costs and related bond costs, including interest.
• Money remaining after paying allowable costs may go to the city’s general fund. The tax may also be terminated earlier by city ordinance.

Use of Revenues from Previously Authorized Local Taxes

• The city may use remaining revenues from revenues collected under a previously authorized local tax (Laws 2006 chapter 259 article 3 section 12) for the same purposes specified for the new tax’s use.

Related Statutory References

• The bill references various Minnesota statutes and sections related to local taxes, bonding, debt limits, and election requirements:
  • Minnesota Statutes section 297A.99
  • Minnesota Statutes section 475 (bonding authority)
  • Minnesota Statutes section 275.60 and 275.61 (debt and levy considerations)
  • Minnesota Statutes section 475.58 (bond election provisions)
  • Laws 2006 chapter 259 article 3 section 12 (existing local tax revenues)

Overall Impact

• Enables Owatonna to fund a community center through a dedicated, voters-approved 0.5% sales tax.
• Creates a pathway to issue up to $75 million in bonds to finance construction, with repayments supported by the tax revenues and city backing.
• Sets sunset provisions and potential reallocation of any excess or remaining funds according to the plan and state law.

Relevant Terms - local sales and use tax - one-half of one percent (0.5%) - community center - bonding costs - bonds - full faith and credit - debt limitations - general election - Minnesota Statutes 297A.99 - Minnesota Statutes 475 - Laws 2006 chapter 259 article 3 section 12 - 275.60, 275.61 - 475.58 - termination / sunset - administration costs - collection costs