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HomeMy WebLinkAboutResolution No. 290-22 - Resolution - 2023 Local Option Sales Tax RESOLUTION Supporting the Extension of the Authority of the City of Rochester to Impose a Local Sales Tax, Establish the Duration of the Tax and the Associated Revenue, and Authorizing the City to Issue Bonds Supported by This Revenue. WHEREAS, Minn. Stat. § 297A.99 authorizes the imposition of a general sales tax to fund capital improvement if permitted by special law of the Minnesota Legislature; and WHEREAS, Minn. Stat. § 297A.99 requires the City to pass a Resolution authorizing such a local tax and to obtain Legislative approval prior to approval by the local voters to enact the local tax; and WHEREAS, the City of Rochester has had an established local sales tax providing regional benefit since the first Legislative approval in 1983; and WHEREAS, the most recent general local option sales tax was enacted in 2013, and is projected to meet all of its funding obligations by 2024; and WHEREAS, the Common Council of the City of Rochester has identified four current projects for local option sales tax spending consideration, briefly described as follows: 1. Economic Vitality Fund Project ($50,000,000) Additional, flexible tools and resources for local governments and businesses related to economic development is key to thriving communities, regional centers, and the state. Economic development is a priority in Rochester and a component of the Council’s adopted strategic priorities related to Affordable Living, Economic Vibrancy, and Growth Management. Housing, regional revitalization, workforce development, and childcare infrastructure are examples of key components to economic development strategies for communities. Additional resources from the sales tax could focus on missing middle housing, rehab/renovation, naturally occurring affordable housing, and housing innovation. The 2020 Affordable Housing Study conducted by Maxfield Research of the City of Rochester and Olmsted County demonstrated a need for over 18,000 housing units through 2030, including over 5,400 senior housing units, over 5,000 rental units (including market rate, naturally occurring affordable, and subsidized), and over 5,600 new and existing single-family homes. Approximately one-third of Rochester’s households have a need for affordable housing. The greatest need is for housing options at 30-55% Area Median Income (AMI), housing options at 70-90% AMI level are also needed to address majority of new job growth in construction, education and health care sectors in the region. 2. Street Reconstruction ($50,000,000) More than 100 miles (24%) of the City’s 394 miles of streets are at least 50 years or older. Over 23% of the City’s streets are rated poor or fair. The City’s Capital Improvement Plan includes a list of annual Pavement Preservation Projects that address the deficiencies identified in the Pavement Management Plan. The 2019 Pavement Management Plan states if no action is taken over the next 50 years, there will be 354 miles of roadways in “poor” condition and requiring reconstruction. In addition to Rochester’s residents, these streets serve the 21,000 workers who commute from the region into Rochester and the 3.1 million visitors each year. Rochester is facing an annual shortfall of $23 million to adequately address current and future street needs for the City for the next 50 years. 3. Flood Control and Water Quality ($40,000,000) The City has an extensive flood control system constructed in the 1980’s, funded in part from local sales tax, that provides protection to Rochester residents as well as people and property in the region. In particular, the system features over 2500 acres of reservoirs in and outside of Rochester to hold back flood water within the City as well as downstream. The system is designed to reduce the peak floodwater discharge by over 16%, positively mitigating flood potential in and downstream of Rochester. It is now necessary to reinvest in the existing system, improve performance, and mitigate sediment coming into the system so flooding capacity is not diminished, while also enhancing water quality for the Zumbro River. This will be accomplished through a number of integrated projects that ensure the performance of the system long term. Specific project elements include regional detention for additional rate control and sediment removal; reinvesting and enhancing the existing 10,000 feet of floodwalls; and bank stabilization along with other strategies to minimize sediment from getting into the Zumbro River. 4. Regional Sports and Recreation Complex ($65,000,000) Rochester provides services to over three million visitors annually with a particular strength in the medical tourism market. With strong weekend hotel room availability, the second strongest segment of tourism is focused on amateur sports and recreation. To further align our strengths as a community, a Regional Sports and Recreation Complex is envisioned. Specific project elements will be further defined through substantial community and stakeholder engagement with an equity focus. Initial concepts include a turf field complex, a tournament quality pickleball complex, outdoor recreation features, supportive indoor recreation features, and related community focused elements; and WHEREAS, the projects will result in benefits to both the residents and businesses of the City of Rochester and to non-resident visitors and businesses; and WHEREAS, the City of Rochester is an established regional center as home to the State's largest employer while hosting over three million visitors per year, and is a significant tax contributor to the State of Minnesota particularly through sales, income, and provider tax revenues; and WHEREAS, funding the projects with a local sales tax will more closely distribute the cost of the project(s) to the users of the facilities; and WHEREAS, the projects are estimated to cost approximately $205,000,000; and WHEREAS, the City estimates that a local sales tax of 0.5 percent would generate $205,000,000 over 16.4 years; and WHEREAS, the City has provided documentation of the regional significance of each project, including the share of the economic benefit to, or use of, each project by persons residing, or businesses located, outside of the jurisdiction; and WHEREAS, the City has included written commentary on the regional significance and economic benefits in the document attached as Exhibit A to the Resolution; and WHEREAS, the estimated local sales tax revenue and estimated time needed to raise that amount of revenue for each project is as follows:  For Economic Vitality Fund: The City will collect $50,000,000 over four years.  For Street Reconstruction: The City will collect $50,000,000 over four years.  For Flood Control and Water Quality: the City will collect $40,000,000 over 3.2 years.  For Regional Sports and Recreation Complex: the City will collect $65,000,000 over 5.2 years. NOW, THEREFORE, BE IT RESOLVED, by the Common Council of the City of Rochester that the City Council supports the authority to impose a continuation of the general local sales tax of 0.5 percent for a period of 16.4 years to fund the aforementioned project(s). BE IT FURTHER RESOLVED by the Common Council of the City of Rochester that that upon approval of this Resolution, the City will submit the adopted Resolution and documentation attached as Exhibit A to the chairs and ranking minority members of the House and Senate Taxes Committees for approval and passage of a special law authorizing the tax, by January 31 of the year that it is seeking the special law. BE IT FURTHER RESOLVED by the Common Council of the City of Rochester that upon Legislative approval and passage of the special law authorizing the tax, the City will adopt a Resolution accepting the new law, which will be filed with a local approval certificate to the Office of the Secretary of State before the following Legislative session. BE IT FURTHER RESOLVED by the Common Council of the City of Rochester that the City will put detailed ballot questions, which includes separate questions for each project, on a general election ballot for local voter approval within two years of receiving legislative authority. BE IT FURTHER RESOLVED by the Common Council of the City of Rochester that if one or more ballot questions pass, the City will also pass an Ordinance imposing the tax and notify the Commissioner of Revenue of the extension. BE IT FINALLY RESOLVED by the Common Council of the City of Rochester that upon completion of the aforementioned requirements, the local sales tax will commence and run until April 30, 2040, or until a sum is raised sufficient to fund the voter approved project(s), including related debt costs, whichever comes first. PASSED AND ADOPTED BY THE COMMON COUNCIL OF THE CITY OF ROCHESTER, MINNESOTA, THIS __________ DAY OF _______________, 2022. ___________________________________ PRESIDENT OF SAID COMMON COUNCIL ATTEST: __________________________ CITY CLERK APPROVED THIS _____ DAY OF ______________________, 2022. ___________________________________ MAYOR OF SAID CITY (Seal of the City of Rochester, Minnesota)