8.3. SR 06-17-2019
Request for Action
To Item Number
Mayor and City Council 8.3
Agenda Section Meeting Date Prepared by
General Business June 17, 2019 Cal Portner, City Administrator
Item Description Reviewed by
Ordinance Amendment: Adopting a Sales and Use Cal Portner, City Administrator
Tax
Reviewed by
Action Requested
Approve, by motion, and ordinance amendment adopting a sales and use tax.
Background/Discussion
Elk River voters approved by referendum a local option sales and use tax to finance $35 million in
recreation facilities and amenities. The bill for an act was recently signed into law and they City Council
has approved a resolution and certified the desire to initiate the tax to the Minnesota Office of the
Secretary of State.
The next step in the process is to establish and ordinance for the sales and use tax and remit the approved
ordinance to the Minnesota Department of Revenue.
Following the Department of Revenue’s receipt and notices, they are asked to begin collecting the tax
during the fourth quarter of 2019.
Financial Impact
N/A
Attachments
Ordinance Amendment
The Elk River Vision
A welcoming community with revolutionary and spirited resourcefulness, exceptional
service, and community engagement that encourages and inspires prosperity
ORDINANCE NO. 19-_____
AN ORDINANCE OF THE CITY OF ELK RIVER, MINNESOTA
ADOPTING A SALES AND USE TAX
The City Council of the City of Elk River hereby ordains as follows:
Section 1. ADOPTION OF MUNICIPAL CODE CHAPTER 2, ARTICLE IV, Finance.
Chapter 2, Division 1 of the Elk River Municipal Code is hereby amended as follows:
Article IV – FINANCE
Division 1. Sales and Use Tax
Sec. 2-161. – Authority.
(a) At the general election held November 6, 2018, the voters of the City of Elk River
approved the imposition of a one-half of one percent sales and use tax to pay for the
cost of collecting and administering the taxes and to pay for certain costs related to
the funding of certain Designated Projects, as defined in Section 2-162(d), below.
(b) The Minnesota Legislature has by Minnesota Laws 2019, First Special Session,
Chapter 6, Article 6, Section 17, authorized the City to impose a one-half of one
percent sales and use tax within the City to provide revenues to pay for the cost of
collecting and administering the taxes and to pay for certain costs related to the
funding of the Designated Projects, as defined in Section 2-163. The City approved
the act in accordance with applicable law.
Sec. 2-162. – Definitions.
The words, terms and phrases used in this Article shall have the meaning ascribed to
them in Minnesota Statutes, Section 297A.99, except where the context clearly indicates
otherwise. In addition, the following definitions shall apply:
(a) “Act” shall mean Minnesota Laws 2019, First Special Session, Chapter 6, Article 6,
Section 17, as amended.
(b) “City” shall mean the City of Elk River.
(c) “Commissioner” shall mean the Commissioner of Revenue for the State of
Minnesota, acting under the authority of an agreement entered into between the City
and the State of Minnesota pursuant to the Act, or such other person designated to
administer and collect the Elk River Sales and Use Tax.
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(d) “Designated Projects” shall mean the planning, design, and construction and any
other capital and administrative costs of any or all of the following projects in a total
amount not to exceed $35 million, plus the costs related to the issuance and paying
debt service on bonds for these projects:
(1) a multipurpose recreational facility such as ice arena, community meeting and
activity space, and a synthetic turf field house; and
(2) Senior Center Facility improvements; and
(3) Lion John Weicht Park improvements; and
(4) Lions Park Center space improvements and community picnic pavilion addition;
and
(5) Youth Athletic Complex improvements; and
(6) Orono Park improvements and
(7) Lake Orono dredging; and
(8) Citywide trail connection improvements.
(e) “Retailer”, or any like term, shall mean “Retailer” as defined in Minnesota Statutes,
Chapter 297A, as subsequently amended or recodified.
(f) “Elk River Sales and Use Tax” shall mean the sales and use tax imposed and
collected pursuant to this Article.
Sec. 2-163. – Elk River Sales and Use Tax.
Except as otherwise provided in this Article, there is hereby imposed an excise tax in the
amount of one-half of one percent on the gross receipts from sales at retail and the storage,
use, distribution or consumption of goods or services which are taxable, pursuant to
Minnesota Statutes, Chapter 297A and occur within the City of Elk River. The imposition,
administration, collection and enforcement of this tax shall be governed by the provisions of
Minnesota Statutes, Sections 270C, 289A and 297A.
Sec. 2-164. –Separate Statement; Collection from Purchaser; Advertising No
Tax; Minimum Uniform Tax Collection Methods.
The Elk River Sales and Use Tax shall be stated and charged separately from the sales
price or charge for service insofar as practical and should be a debt from the purchaser to
the seller recoverable at law in the same manner as other debts. In computing the tax to be
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collected as a result of any transaction, any amount of tax less than one-half of one cent may
be disregarded and amounts of tax less than one-half of one cent may be disregarded and
amounts of tax one-half cent or more may be considered an additional cent. If the sales
price of any sale at retail in ninety-nine cents or less, no tax shall be collected.
Sec. 2-165. –Exemption Certificates.
A fully completed exemption certificate taken from a purchaser to the effect that the
property purchased is for resale or that the sale is otherwise exempt from the application of
the tax imposed by this chapter will conclusively relieve the Retailer from collecting and
remitting the tax to the extent the seller is also relieved of liability for the sales and use tax
under Minnesota Statutes, Section 297A.665. A person who has obtained from the
Commissioner an exemption certificate pursuant to the Minnesota Statutes, Section 297A.72
may use such exemption certificate for the purposes of the sales tax imposed by the City.
Sec. 2-166. –Presumption of Purpose of Sale.
For the purpose of the proper administration and enforcement of Section 2-163 of this
Article, it shall be presumed that all retail sales for delivery in the City are for storage, use, or
other consumption in the City until the contrary is established.
Sec. 2-167. –Collection of Elk River Sales and Use Tax at Time of Sale.
(a) Any Retailer making deliveries within the City, any Retailer maintaining a place of
business in the City, or any other Retailer otherwise doing business within the City,
upon making sales of any items described in Section 2-163 which are not exempted
from the sales tax imposed under that section and which are to be delivered or
caused to be delivered within the City to the purchaser, shall at the time of making
such sales collect the Elk River Sales and Use Tax from the purchaser. The tax
collected by such Retailer shall be remitted to the Commissioner on behalf of the
City.
(b) Any Retailer required to collect the Elk River Sales and Use Tax and remit such tax
to the Commissioner pursuant to this section shall register with the Commissioner
and provide such other information as the Commissioner may require.
Sec. 2-168. –Agent of Retailer.
When in the opinion of the Commissioner it is necessary for the efficient administration
of the tax, the Commissioner may regard any salesman, representative, trucker, peddler or
canvasser as the agent of the dealer, distributor, supervisor, employer or other person under
whom such salesman, representative, trucker, peddler or canvasser operated or from whom
the tangible property is being sold is obtained, and may regard the dealer, distributor,
supervisor, employer or other person as a retailer for the purposes of this Article.
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Sec. 2-169. –Collection and Enforcement.
The Elk River Sales and Use Tax imposed by the City pursuant to this Article shall be
subject to the same interests, penalties, and other rules as are applicable to the State general
sales tax imposed by Minnesota Statutes Chapters 270C, 289A and 297A. The Elk River
Sales and Use Tax imposed by the City pursuant to this Article may be collected by the State
on behalf of the City as provided by an appropriate agreement with the Minnesota
Commissioner or Revenue. The Elk River Sales and Use Tax imposed by the City pursuant
to this Article shall expire at the earlier of (1) 25 years after the Elk River Sales and Use Tax
is first imposed, or (2) when the City Council determines that $35,000,000 has been received
from the Elk River Sales and Use Tax to pay for the Designated Projects, plus an amount
sufficient to pay the costs related to the issuance and paying debt service on the bonds. Any
funds remaining after payment of all such costs and retirement or redemption of the bonds
shall be placed in the general fund of the City. The Elk River Sales and Use Tax imposed by
the City pursuant to this Article may expire at any earlier time if the City Council so
determines by ordinance.
Sec. 2-170. –Tax Clearance; Issuance of Licenses.
The City may not issue or renew a license for the conduct of trade or business in the City
if the Commissioner notifies the City that the applicant for such license owes delinquent Elk
River Sales and Use Taxes as provided in this Article, or penalties or interest due on such
taxes. For the purposes of this section, the following terms have the following meanings:
(a) Elk River Sales and Use Taxes include all taxes as provided in this Article including
all penalties and interest due on said taxes.
(b) Delinquent taxes do not include a tax liability if:
(1) an administrative or court action which contests the amount or validity of the
liability has been filed or served;
(2) the appeal period to contest the tax liability has not expired; or
(3) the applicant has entered into a payment agreement and is current with the
payments.
(c) Applicant means an individual if the license is issued to or in the name of an
individual or the corporation, partnership or other entity if the license is issued to or
in the name of a corporation, partnership or other entity.
(d) A copy of the notice of delinquent taxes given to the City shall also be sent to the
applicant taxpayer. In the case of renewal of a license, if the applicant requests a
hearing in writing, within thirty (30) days of the receipt of the notice of delinquent
taxes, then a contested case hearing shall be held by the Commissioner under the
same procedures as provided in Minnesota Statutes, Section 270C.72 for the State
sales and use tax imposed under Minnesota Statutes, Chapter 297A, provided that if
a hearing must be held on the State sales and use tax, the hearings may be combined.
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Sec. 2-171. –Effective Date; Transitional Sales.
Except as otherwise provided herein, the Elk River Sales and Use Tax authorized by this
Article shall apply to sales made on or after October 1, 2019, and shall be in addition to all
other taxes now in effect. The Elk River Sales and Use Tax is governed by Minnesota
Statutes, Chapter 297A regarding sales that occur during any transition period described
therein and, in addition, the Elk River Sales and Use Tax shall not apply to the following:
(a) The gross receipts from retail sales or leases of tangible personal property made
pursuant to a bona fide written contract which unconditionally vests the rights and
obligations of the parties thereto, provided that such contracts were enforceable prior to
October 1, 2019, and that delivery of the tangible personal property subject thereto is made
on or before December 31, 2019.
(b) Payments made prior to October 1, 2019, for contracts to provide taxable services,
provided that such contracts were enforceable prior to October 1, 2019, however the Elk
River Sales and Use Tax shall apply to payments made pursuant to such contracts to provide
services on and after December 31, 2019.
Secs. 5-79-5-87. –Reserved.
Section 2. EFFECTIVE DATE. This ordinance shall take effect after its adoption and its
publication (or publication of a summary thereof in accordance with applicable law).
Passed by the City Council of the City of Elk River on this 17th day of June, 2019.
________________________________
John J. Dietz, Mayor
ATTEST:
____________________________
Tina Allard, City Clerk
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