HF3873

Purpose

Authorize the city of Osseo to implement a local 1% sales and use tax to fund specific capital projects and related financing, with oversight and voter approval requirements.

Main provisions

• Tax authorization and voting
  • Osseo may impose a local sales and use tax of 1% by ordinance, but only if approved by voters in accordance with Minnesota law (297A.99).
  • The tax is in addition to any other local sales taxes.
• Use of tax revenues
  • Revenues from the tax must be used to cover the costs of collecting and administering the tax, and to fund three specific projects in Osseo:
  • Boerboom Park Community Hub Project (up to $10,000,000), as part of the City Campus Project
  • City Hall Renovations Project (up to $3,000,000), as part of the City Campus Project
  • Sipe Park Project (up to $3,500,000)
• Bond financing
  • Osseo may issue bonds under Minnesota Statutes chapter 475 to finance all or part of the project costs, with voter approval as required.
  • The total bond principal allowed equals the sum of the project costs plus amounts for issuing bonds (i.e., $10,000,000 + $3,000,000 + $3,500,000, plus issuance costs).
  • Bonds may be paid from the tax revenues or other city money, and issuance is not subject to certain debt-levy limits.
  • Bonds are not counted toward the city’s debt limits, and the levy for bond principal and interest is not subject to standard levy limits.
  • A separate election to approve the bonds is not required.
• Termination and remaining funds
  • The tax expires at the earlier of 20 years after it first is imposed or when approved project costs (plus issuance costs) are fully paid, including debt service.
  • If funds remain after all costs are paid, the excess must be placed in the city’s general fund.
  • The city can terminate the tax earlier by ordinance if desired.

Significant changes to existing law

• Establishes a new, city-specific, time-limited local sales tax in Osseo to fund defined capital projects and debt service.
• Allows bonds to be issued to finance project costs with authority and terms set by state law, bypassing some state debt restrictions.
• Ties tax duration to project funding needs (up to 20 years) and specifies how funds are used, repaid, and, if any funds remain, where they go.
• Requires voter approval for the tax, and clarifies administration, collection, and enforcement under existing state provisions (297A.99).

Relevant terms - local sales and use tax - 1% - Osseo - Boerboom Park Community Hub Project - City Campus Project - City Hall Renovations Project - Sipe Park Project - bonds / bonding authority - Minnesota Statutes chapter 475 - 297A.99 - debt service - issuance costs - termination / expiration - general fund - election / voter approval - separate election not required - tax collection and administration - levy limits - not subject to 275.60 and 275.61 - administration and enforcement - 20 years