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Eclty1� ,.,�� Request for Action <br /> River <br /> To Item Number <br /> Mayor and City Council 8.3 <br /> Agenda Section Meeting Date Prepared by <br /> General Business October 16, 2017 Cal Portner, City Administrator <br /> Item Description Reviewed by <br /> Local Option Sales Tax Consideration <br /> Reviewed by <br /> Action Requested <br /> Receive and discuss information and provide staff direction as desired. <br /> Background/Discussion <br /> During the discussion regarding the selection of architectural services for the ice arena improvement, <br /> Mayor Dietz suggested the consideration of a local option sales tax to pay the anticipated bond payment <br /> costs on a$20-25 million bond issue. The mayor also asked staff to identify potential sales tax revenues. <br /> According to the Minnesota Department of Revenue,within the City of Elk River in 2015 there were <br /> $1,194,672,896 in gross sales, of which $388,667,017 were taxable which at 1%would account for <br /> approximately$3.8 million in annual city tax revenue. <br /> Other neighboring communities are subject to local option sales taxes including taxing a 0.25% tax in <br /> Wright and Anoka Counties and 0.65% in Hennepin County. The mayor has suggested consideration of <br /> a 0.5%local option sales tax which would likely cover the anticipated annual bond payment on a$25 <br /> million issue over 25 years. <br /> Enacting a local option sales tax requires council approval by resolution,voter approval by referendum, <br /> and finally special legislation approved by the legislature and signed by the governor. The mayor has <br /> solicited the counsel and support of Representative Nick Zerwas. <br /> As a quasi-regional center,local option sales taxes can be a more equitable means to finance a public <br /> facility than property taxes as the tax is consumption-based,includes taxable purchases from visiting <br /> shoppers, and captures taxes on expenditures that may have escaped other taxing options. <br /> Financial Impact <br /> N/A <br /> Attachments <br /> ■ MN Dept. of Revenue Sales and Use Taxes Guide <br /> ■ MN Stat 297A 99 <br /> The Elk River Vision <br /> A PehoMing community 2a itb revolutionary and spirited resourcefulness, exceptional POWERED By <br /> service, and community engagement that encourages and inspires prosperity INAMIRE1 <br />