SF4269

Purpose

• This bill would let the city of Coon Rapids adopt a local sales and use tax of up to one-half of one percent, but only if voters approve it in an election.

What the tax would fund

• Revenues from the tax would be used to pay for:
  • Renovation and expansion of the police department and the city center facility (including the city hall and civic center).
  • Construction of a new community center.
  • Expansion of the Coon Rapids Ice Center.
  • Costs of collecting and administering the tax.
  • Debt service on bonds issued to finance these projects.

How it would be implemented

• The city may impose the tax by ordinance, subject to voter approval as required by state law.
• The tax is in addition to any other local sales and use taxes.
• The city would follow state rules for administering and collecting the tax (Minnesota Statutes section 297A.99).

Bonding and debt

• The city may issue bonds (under Minnesota Statutes chapter 475) to finance project costs.
• The total debt cannot exceed $80,000,000, plus costs of issuing the bonds.
• Bonds may be paid from the tax revenues or other available money.
• Bond issuance is not subject to certain state debt limitation provisions (sections 275.60 and 275.61), and the bonds are not counted toward the city’s debt limit.
• Tax levy to repay principal and interest on the bonds is not subject to levy limits.
• A separate election to approve the bonds is not required.

Termination and sunset

• The tax would expire at the earlier of:
  • 25 years after the tax is first imposed, or
  • when the city council determines that enough tax revenue has been collected to pay the project costs (including bond issuance costs) for the approved projects.
• Any money remaining after paying allowed costs would go to the city’s general fund.
• The tax could end earlier if the city passes an ordinance to terminate it.

Significance and changes to current law

• Creates a new local option sales tax for Coon Rapids (up to 0.5%) with voter approval.
• Allows bonding to finance major city projects without separate bond referendums for each bond issue.
• Exempts bond debt from certain state debt-limit calculations and allows levy flexibility for debt service.
• Establishes a defined sunset period (up to 25 years) and rules for remaining funds.

Terminology alignment note

• Key terms from the bill include: local sales and use tax, up to one-half of one percent, voter approval, Minnesota Statutes section 297A.99, revenues, debt service, bonds, Minnesota Statutes chapter 475, renovation and expansion of the police department and city center facility (including city hall and civic center), new community center, expansion of the Coon Rapids Ice Center, administration and collection, and general fund.

Relevant Terms - local sales and use tax - one-half of one percent (0.5%) - voter approval / referendum - Minnesota Statutes section 297A.99 - revenues - debt service - bonds - Minnesota Statutes chapter 475 - bond issuance costs - city of Coon Rapids - police department - city center facility (city hall and civic center) - community center - Coon Rapids Ice Center - administration and collection - general fund - sunset / expiration (25 years)