HF3596

Purpose

• Authorizes the city of Austin to impose a local sales and use tax of one-half of one percent (0.5%) if approved by voters. The tax would be used to fund costs related to collecting and administering the tax and to finance a law enforcement center project.

Subdivision 1: Sales and use tax authorization

• The city may impose the tax by ordinance, subject to voter approval under Minnesota law. The tax would be in addition to any other local sales and use taxes imposed under other laws. The administration, collection, and enforcement of the tax follow the applicable state law (Minnesota Statutes section 297A.99).

Subdivision 2: Use of revenues

• Revenues from the tax must be used to pay:
  • the costs of collecting and administering the tax, and
  • financing up to $28,400,000 plus associated bonding costs for a law enforcement center project. This includes the land purchase, utility site work and design services, construction, and maintenance related to the project.

Subdivision 3: Bonding authority

• The city may issue bonds under Minnesota Statutes chapter 475 to finance the project costs (up to the $28,400,000 cap plus bond issuance costs).
• Bond proceeds and tax revenue may be used to pay debt service. Bond issuance is not subject to certain debt-levy limits (specifically, sections 275.60 and 275.61), and the bonds would not be counted against a separate debt limit for the city.
• A separate election under section 475.58 is not required to approve the bonds.

Subdivision 4: Termination of taxes

• The tax would expire at the earlier of:
  • 20 years after it is first imposed, or
  • the date the city determines that the tax receipts are sufficient to pay the project costs ($28,400,000) plus related bond issuance costs (including interest) and any remaining funds, if any, would go to the city’s general fund.
• The city may terminate the tax earlier by ordinance.

Main changes to existing law

• Establishes a new local option for a 0.5% sales and use tax in the city of Austin, contingent on voter approval.
• Creates a dedicated use of revenues for a specific law enforcement center project, including land purchase and construction.
• Provides bonding authority up to $28.4 million with dedicated debt-financing terms and exemptions from certain debt and levy limits.
• Sets a 20-year potential duration for the tax, with explicit termination conditions and disposition of any remaining funds.

Relevant terms section follows.

Relevant Terms - local sales and use tax - one-half of one percent (0.5%) - city of Austin - authorization by voters - Minnesota Statutes section 297A.99 - administration and collection - bonding costs - law enforcement center - land purchase - utility site work - design services - construction - maintenance - Minnesota Statutes chapter 475 - aggregate principal - debt limitations - levy limitations - general fund - termination - 20 years - separate election (475.58) - project costs