HF4583

Purpose

Authorize the city of Audubon to impose a local sales and use tax of 0.5% (one-half percent) if approved by voters, in order to fund a Fire Hall Project and related costs, and to cover administration and collection expenses.

Key Provisions

• Local tax authorization

  • Audubon may impose a 0.5% local sales and use tax for the Fire Hall Project, subject to voter approval as required by law.
  • The tax is in addition to any other local sales and use taxes that may exist.

• Use of tax revenues

  • Revenues from the tax must be used to pay the costs of collecting and administering the tax.
  • Revenues may also be used to finance up to $3,000,000 plus associated bonding costs for the Fire Hall Project.

• Bonding authority

  • The city may issue bonds under Minnesota Statutes chapter 475 to finance all or part of the Fire Hall Project costs.
  • The total principal amount of bonds cannot exceed $3,000,000 plus issuance costs.
  • Bonds may be paid from, or secured by, money available to the city, including tax revenue from the new tax.
  • Bond issuance is not subject to certain debt and levy limits (specific statutes referenced).

• Relationship to debt and levies

  • The bonds are not included in the city’s debt limit.
  • Any levy of taxes under the referenced statutes to pay bond principal and interest is not subject to levy limitations.
  • A separate election to approve the bonds under some statutes is not required.

• Sunset / termination

  • The tax expires at the earlier of:
  • 20 years after the tax is first imposed, or
  • when the city determines the collected amount is sufficient to pay project costs (and related bond costs including interest) as approved by voters.
  • Remaining funds after paying allowed costs are placed in the city’s general fund.
  • The tax may expire earlier by city ordinance.

Significant Changes to Law

• Creates a new local option tax for the City of Audubon to fund a Fire Hall Project.
• Allows the city to issue bonds without a separate bond election under certain authorities and limits debt impact by excluding bonds from the debt limit.
• Dedicates tax revenue first to collection/administration costs and then to financing the Fire Hall Project, with a defined cap on bonded debt.
• Establishes a 20-year sunset for the new tax, with the possibility of an earlier termination by city action.

Practical implications

• Local control: Voters in Audubon must approve the tax (and thus the project) before it takes effect.
• Financing: The project can be funded through a combination of tax revenues and bonds, with a defined cap and specific debt/levy treatment.
• Timeframe: The tax has a defined lifespan (up to 20 years) unless terminated earlier by ordinance.

Relationship to Existing Law

• The new tax operates under Minnesota statutes governing local sales taxes and voter-approved financing, including sections related to taxation, bonding, debt limits, and sunset provisions.
• It remains in addition to any other local taxes unless specifically stated otherwise.

Relevant terms - Audubon - local sales and use tax - 0.5% / one-half percent - Fire Hall Project - revenues - administration and collection costs - bonding / bonds - Minnesota Statutes chapter 475 - debt limit - levy limitations - 297A.99 subdivision 3 - 475.58 - 275.60 - 275.61 - sunset / termination - general fund