HF3473

Purpose

• Authorizes the city of Oak Park Heights to create a local sales and use tax to fund water infrastructure.

Local sales and use tax authorized

• Oak Park Heights may impose a sales and use tax of 0.5% (one-half of one percent) after voters approve it at a general election.
• The tax is in addition to any local sales and use taxes already allowed under other laws.

Revenue use and purposes

• Revenues from the tax must be used to:
  • pay the costs of collecting and administering the tax, and
  • finance up to $41,000,000, plus associated bonding costs, for water infrastructure.
• This use is in addition to other law, and some existing statutes related to tax collection are overridden for this purpose.

Bonding authority and debt

• The city may issue bonds under Minnesota Statutes chapter 475 to fund all or part of the water infrastructure costs approved by voters.
• Total bond principal may not exceed $41,000,000 for the project, plus costs of issuing bonds.
• Bonds may be paid from tax revenues or other funds, and from the city’s full faith and credit.
• Bond issuance is not subject to certain debt-limit laws, and the bonds are not counted toward the city’s debt limit. A separate election to approve the bonds is not required.

Termination and duration

• The tax expires at the earlier of:
  • 20 years after it is first imposed, or
  • the time when $41,000,000 has been received to fund the project plus enough to pay bond issuance costs (including interest).
• Any money remaining after paying allowed costs goes into the city’s general fund.
• The city can end the tax earlier by ordinance.

Relationship to existing law

• The bill uses a general “notwithstanding” clause to override certain statutes (e.g., 297A.99 and others) to allow this local tax and bonding arrangement for water infrastructure.

What changes this bill would make

• Creates a new, voter-approved 0.5% local sales tax for Oak Park Heights specifically earmarked for water infrastructure.
• Establishes a dedicated bond funding limit ($41 million) and a plan to fund debt service through the tax and other city resources.
• Allows faster or alternative financing for water projects by bypassing some standard debt and election requirements.

Relevant Terms - Oak Park Heights - local sales and use tax - 0.5% (one-half of one percent) - water infrastructure - general election - Minnesota Statutes 297A.99 - bonding under Minnesota Statutes chapter 475 - full faith and credit - debt limitations - costs of issuing bonds - termination of tax - general fund - revenue collection and administration