Purpose

Authorizes the city of Minnetonka to adopt a local sales and use tax with voter approval, to raise funds for specific city projects and to support debt service on bonds issued to finance those projects.

Key Provisions

• Subdivision 1 — Sales and use tax authorization

  • Minnetonka may impose by ordinance a local sales and use tax of up to one-half of one percent.
  • The tax requires voter approval at an election as required under Minnesota Statutes section 297A.99 subdivision 3.
  • The tax is administered, collected, and enforced under the rules in section 297A.99 and would be in addition to any other local sales and use taxes.

• Subdivision 2 — Use of revenues

  • Revenues from the tax, including the costs of collecting the tax, can be used to pay for specific city projects and to fund bond debt service for those projects, including:
  • New construction of Fire Station 2
  • New construction of Fire Station 3
  • Construction of missing trail segments identified in the city’s trail improvement plan that connect to the regional trail network
  • Renovations to The Marsh health and wellness center
  • Construction of The Opus Area community public park and open space

• Subdivision 3 — Bonding authority

  • The city may issue bonds to finance all or part of the project costs, up to a total principal amount of $116,100,000 plus the amount needed to pay bond issuance costs, with voter approval as required.
  • Bonds may be paid from or secured by any money available to the city, including the tax revenue.
  • Bond issuance is not subject to certain state debt rules (including sections 275.60 and 275.61) and does not count toward the city’s debt limit.
  • Levy authority to pay principal and interest on the bonds is not subject to levy limits.
  • A separate election to authorize the bonds under section 475.58 is not required.

• Subdivision 4 — Termination of taxes

  • The tax expires at the earlier of 30 years from when it is first imposed or when the city council determines the tax revenue is enough to pay the project costs (plus bond issuance costs and interest).
  • Any remaining money after paying eligible costs must go to the city’s general fund.
  • The tax may end earlier if the city adopts a different termination date by ordinance.

Administration and Oversight

• The tax, its administration, collection, and enforcement follow the rules in Minnesota Statutes section 297A.99.
• The tax purpose and project list are set by subdivision 2, with bond financing as described in subdivision 3.

Significant Changes to Existing Law

• Creates a new local option sales and use tax for Minnetonka up to 0.5% with voter approval.
• Enables substantial bonding to fund listed projects without being counted toward the city’s standard debt limit.
• Allows use of tax revenue specifically for the four major projects plus bond costs, and enables termination with sunset rules.
• Removes necessity for a separate bond election (under certain statutes) and removes some traditional debt levy restrictions for this bond program.

Potential Impacts (plain-language view)

• Minnetonka could raise a new revenue stream to fund the listed capital projects and associated bond debt service.
• The measure would require a public vote to approve the tax and the bond financing.
• The city could issue bonds and use the tax revenue to pay those bonds, with special rules that ease debt limits and avoid some standard statutory processes.
• The tax would end after 30 years (or sooner if enough money is collected), with any leftovers returned to the general fund.

Practical Implications for Residents

• If approved, residents and visitors who buy taxable goods in Minnetonka could see a small increase in local sales tax rate (up to 0.5%).
• Funding would go toward specific projects: Fire Station 2 and 3, trail connections, a health center renovation, and a new park/open space.
• The city would borrow money to finance these projects and repay it with the tax revenue over time.

Relevant Terms

sales and use tax; Minnetonka; voter approval; local option tax; Minnesota Statutes 297A.99; bonding authority; Minnesota Statutes chapter 475; bond issuance costs; debt service; Fire Station 2; Fire Station 3; trail improvement plan; missing trail segments; regional trail network; The Marsh health and wellness center; The Opus Area; park and open space; levy limits; debt limit; termination; sunset; general fund.

Relevant Terms sales and use tax Minnetonka voter approval bonding debt service Fire Station 2 Fire Station 3 trail improvement plan The Marsh health and wellness center The Opus Area public park Minnesota Statutes 297A.99 Minnesota Statutes chapter 475 275.60 275.61 475.58 sunset general fund