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REQUEST FOR COUNCIL ACTION Date:January 24, 2022 Item No.: 7.c Department Approval City Manager Approval Item Description: Consider Adopting a Resolution supporting the creation of a local sales tax in Roseville 1 B ACKGROUND 2 At itsOctober 25, 2021 meeting, the City Council adopted its 2022 Legislative Priorities which 3 included pursuing approval of a local option sales tax for Roseville with the Minnesota Legislature. 4 On January 10, 2022, the City Council received additional information regarding potential capital 5 projects that could be funded with the creation of a local sales tax. Subsequent to that meeting, staff 6 learned that road transportation projects are not eligible to be funded through a local sales based on 7 new law passed in the August 2021 special legislative session. Current law states that that following 8 items can be funded through a local sales tax: 9 10 1) A single building or structure, including the associated infrastructure; 11 2) Improvements within a single park or recreation area; or 12 3) A contiguous trail 13 14 Based on those restrictions, staff is proposing three projects totaling $60 millionto be funded by a 15 local sales tax: 16 17 1) City Maintenance Facility at a cost of $37 million 18 2) City License and Passport Center at a cost of $7million 19 3) Pedestrian Bridge over Hwy. 36 west of Snelling Ave. at a cost of $16 million 20 21 To fund these project improvements as well as the debt issuance and interest costs, staff is proposing 22 the City ask the Legislature the ability ask via voter referendum to impose a 0.5% local sales tax for 23 a period of 15 years in Roseville. According the Minnesota Department of Revenue, it is estimated 24 that a 0.5% sales tax in Roseville will generate $5.4 million annually based on 2019 sales figures. 25 From initial financial review, it is estimated that there will be $665,000 ofbond issuance costs and 26 $17 million of interest costs. Over 15 years, the sales tax will raise an estimated $81 million dollars 27 which will be sufficient to cover all of the three project and debt issuance and interest costs. If the 28 project costs come in lower and/or sale tax revenue exceeds our projections, the debt and sale tax 29 authority will expire earlier. 30 For the City Council’s information, Attachment A shows a listing of the local sales tax rates within 31 the Twin Cities metro area and selected cities in Minnesota. 32 The sales tax approval process at the Legislature is as follows: 33 1. City must pass a resolution that includes: 34 a. Proposed tax rate 35 b. Detailed description of up to five capital projects to be funded with the tax Page 1 of 2