HF4768

Purpose

• Authorize the city of La Crescent to adopt a local sales and use tax (subject to voter approval) to fund improvements to the La Crescent Regional Ice Arena, including replacing the ice system and adding a rooftop solar energy system, plus related costs.

Key Provisions

• Subd.1 – Tax authorization

  • La Crescent may impose a local sales and use tax by ordinance, up to a specified rate, for purposes described in subdivision 2, if approved by voters as required by state law.

• Subd.2 – Use of tax revenues

  • Revenues from the tax must first cover the costs of collecting and administering the tax.
  • After that, revenues can be used to finance up to $4,000,000 for design, construction, and equipment for renovations to the La Crescent Regional Ice Arena. This includes replacing the ice system and installing a rooftop solar energy system, along with costs of issuing bonds and debt service.

• Subd.3 – Bonding authority

  • La Crescent may issue bonds under state law (chapter 475) to finance all or part of the project costs approved by voters.
  • The total principal amount may not exceed $4,000,000 plus issuance costs. Bonds may be issued as general obligations of the city and may be repaid from any money available to the city, including tax revenues.
  • Bond issuance is not subject to certain state debt limits, and no separate election for bond approval is required (beyond the voter authorization for the tax).

• Subd.4 – Termination (sunset)

  • The tax expires at the earlier of: (a) one year after the tax is first imposed, or (b) when the city determines the collected amount is sufficient to pay project costs and any related bond costs (including interest) plus costs of issuance.
  • Any remaining money after paying authorized costs must go to the city’s general fund.
  • The city may end the tax earlier by ordinance.

Relationship to Existing Law & Changes

• The tax is authorized under the state framework for local taxes and is in addition to any other local sales/use taxes.
• Revenues and spending are governed in part by existing state provisions (e.g., voter approval requirements under 297A.99) but the bill provides specific use cases (ice arena renovations and solar) and special bonding provisions.
• The measure creates a targeted, temporary funding stream for a municipal project and allows debt financing with limited or no impact on existing debt levy limitations.

Significant Changes or Clarifications

• Establishes a dedicated local sales tax mechanism tied to a specific capital project (ice arena renovation and solar system).
• Enables up to $4,000,000 in bonds funded by the tax, with bonds treated as general obligations but not counted against certain debt limits.
• Removes the need for a separate bond election (bonds can proceed once the tax is approved by voters).
• Sets a short-term sunset for the tax, tied to project funding milestones or a fixed one-year minimum, with potential earlier termination by city ordinance.

Potential Implications

• Local decision-making: Requires voter approval to authorize the tax.
• Infrastructure and energy: Funds upgrades to a public sports facility and adds solar energy capacity.
• Financial structure: Provides a mechanism to issue debt for the project with a defined cap and sunset, funded by the new tax.
• Sunset risk: If project costs are not fully funded, the tax may end sooner, and any remaining funds would revert to the general fund.

Relevant Terms

• local sales and use tax
• La Crescent
• voter approval / election under 297A.99
• La Crescent Regional Ice Arena
• ice arena renovation
• replacement of ice system
• rooftop solar energy system
• costs of issuing bonds
• debt service
• Minnesota Statutes section 297A.99
• Minnesota Statutes chapter 475
• general obligation bonds
• levy and debt limits
• design construction and equipment
• costs of collecting and administering
• sunset / termination of tax
• bonds not subject to certain debt limits
• separate election not required for bonds

Relevant Terms