4.5. SR 08-05-2019 EGty1� ,.,�� Request for Action
River
To Item Number
Mayor and City Council 4.5
Agenda Section Meeting Date Prepared by
Consent August 5, 2019 Cal Portner, City Administrator
Item Description Reviewed by
Ordinance Amendment for Local Option Sales Tax
Reviewed by
Action Requested
Enact,by motion, an ordinance amendment for a Local Option Sales Tax.
Background/Discussion
Following legislative approval of the Local Option Sales Tax (LOST), an ordinance was required to
enable collection by the Minnesota Department of Revenue (DOR).
In order to begin collections during the fourth quarter of this year, an enabling ordinance and resolution
needed to be submitted to DOR by July 1, 2019, so they could review and post proper notices as
prescribed by law.
Following DOR review of the multitude of 2019 LOST approvals and the rather recent U.S. Supreme
Court Wayfair Decision,DOR and the League of Minnesota Cities collaborated to draft a template
ordinance for cities to use which would ensure the full tax could be collected.
The Council adopted an ordinance on June 19, 2019,which will be superseded by this amendment. We
have been notified by DOR that all of our enabling submissions are complete and our collection will
begin on October 1, 2019,with the approval of this amendment.
Financial Impact
N/A
Attachments
■ Ordinance Amendment
The Elk River Vision
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City of
Elk
River
Ordinance 19 -
An Ordinance Repealing and Replacing Chapter 2, Article IV. Finance, Division I,
Relating to Enactment of Local Sales and Use Tax, of the City of Elk River,
Minnesota, City Code
The City Council of the City of Elk River does hereby ordain as follows:
SECTION I.
Chapter 2,Article IV, Finance,Division 1. Sales and Use Tax Sections 2-161 through 2-171 are
hereby repealed and replaced with the following.
2-161. Authority
Pursuant to Minnesota Laws 2019, First Special Session, Chapter 6,Article 6, Section 17, the
Minnesota Legislature has authorized the City of Elk River to impose a local sales and use tax to
provide revenues to pay the costs of collecting and administering the tax to the commissioner of
revenue of the state of Minnesota and to finance the capital and administrative costs related to the
funding of designated projects as defined in Minnesota Laws 2019, First Special Session, Chapter 6,
Article 6, Section 17 and approved by the voters at the November 6, 2018,referendum.
2-162. Definitions
For purposes of this chapter, the following words, terms, and phrases have the meanings given them
in this section unless the language or context clearly indicates a different meaning is intended.
(a) City. "City" means the City of Elk River,Minnesota.
(b) Commissioner. "Commissioner" means the commissioner of revenue of the state of
Minnesota or a person to whom the commissioner has delegated functions.
(c) Designated projects. "Designated projects" means 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 the 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
as authorized by the Minnesota Legislature in Minnesota Laws 2019, First Special Session, Chapter
6,Article 6, Section 17 and approved by the voters at the November 6, 2018,referendum.
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(d) State sales and use tax laws and rules. "State sales and use tax laws and rules" means
those provisions of the state revenue laws applicable to state sales and use tax imposition,
administration, collection, and enforcement,including Minnesota Statutes, chapters 270C, 289A,
297A, and Minnesota Rules, chapter 8130, as amended from time to time.
2-163. Local sales and use tax imposed; amount of tax; coordination with state sales and use
tax laws and rules.
A local sales tax is imposed in the amount of one-half of one percent on the gross receipts from
sales at retail sourced within city limits which are taxable under the state sales and use tax laws and
rules. A local use tax is imposed in the amount of one-half of one percent on the storage, use,
distribution or consumption of goods or services sourced within city limits which are taxable under
the state sales and use tax laws and rules. All of the provisions of the state sales and use tax laws and
rules apply to the local sales and use tax imposed by this chapter. The local sales and use tax
imposed by this chapter shall be collected and remitted to the commissioner on any sale or purchase
when the state sales tax must be collected and remitted to the commissioner under the state sales
and use tax laws and rules and is in addition to the state sales and use tax.
2-164. Effective date of tax; transitional sales.
Except as otherwise provided herein, the local sales and use tax imposed by this chapter shall apply
to sales and purchases made on or after October 1, 2019. The local sales and use tax imposed by
this chapter shall not apply to:
(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 contract was enforceable prior to October 1, 2019, and that delivery
of the tangible personal property subject thereto is made on or before October 1, 2019.
(b) The gross receipts from retail sales made pursuant to a bona fide lump sum or fixed price
construction contract,which unconditionally vests the rights and obligations of the parties
thereto and which does not make provision or allocation of future taxes,provided that such
contract was enforceable prior to October 1, 2019, and that delivery of the tangible personal
property used in performing such construction contract is made before April 1, 2020.
(c) The purchase of taxable services,including utility services,if the billing period includes charges
for services furnished before and after October 1, 2019,but the local sales and use tax imposed
by this chapter shall apply on the first billing period not including charges for services furnished
before October 1, 2019.
(d) Lease payments for tangible personal property and motor vehicles that includes a period before
and after October 1, 2019,but the local sales and use tax imposed by this chapter shall apply on
a prorated basis to lease payment amounts attributable to that portion of the lease payment
period on or after October 1, 2019, and on the entire lease payment for all lease payment periods
thereafter.
2-165. Tax Clearance; Issuance of Licenses.
(a) The city may not issue or renew a license for the conduct of a trade or business within the city if
the commissioner notified the licensing division of the city that the applicant owes delinquent
city taxes as provided in this chapter, or penalties or interest due on such taxes.
1) City taxes include sales and use taxes provided in this article. Penalties and interest are
penalties and interest due on taxes included in this definition.
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(b) Delinquent taxes does not include a tax liability if. (i) an administrative or court action which
contests the amount or validity of the liability has been filed or served, (ii) the appeal period to
contest the tax liability has not expired, or (iii) 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 or partnership if the license is issued to or in the name of a corporation or
partnership.
1) A copy of the notice of delinquent taxes given to the licensing division of the city
shall also be sent to the applicant taxpayer. In the case of renewal of a license,if the
applicant requests in writing,within 30 days of receipt of the notice of hearing, then,
a contested hearing shall be held under the same procedures as provided in Minn.
Stat. 270A for the state sales and use tax imposed under Minn. Stat. 297A;provided
further that if a hearing must be held on the state sales and use tax,hearings must be
combined.
2-166. Deposit of revenues; costs of administration; termination of tax.
(a) All of the revenues,interest, and penalties derived from the local sales and use tax imposed by
this chapter collected by the commissioner and remitted to the city shall be deposited by the city
finance director in the city treasury and shall be credited to the fund established to pay the costs of
collecting the local sales and use tax imposed by this chapter and to finance the capital and
administrative costs directly related to completing the designated projects.
(b) The local sales and use tax imposed by this chapter shall terminate at the earlier of. (1)
Minnesota Laws 2019, First Special Session, Chapter 6,Article 6, Section 17; or (2) when the City
Council determines that$35 million,plus an amount sufficient to pay the costs related to issuing
bonds and interest on the bonds has been received from the local sales and use tax imposed by this
chapter to pay for all the capital and administrative costs directly related to completing the
designated projects. 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 local sales and use tax
imposed by this chapter may terminate at an earlier time if the City Council so determines by
ordinance.
2-167. Agreement with the commissioner.
The city may enter into an agreement with the commissioner regarding each party's respective roles
and responsibilities related to the imposition, administration, collection, enforcement, and
termination of the local sales and use tax imposed by this chapter. Any such agreement shall not
abrogate, alter, or otherwise conflict with the state sales and use tax laws and rules, this ordinance, or
Minnesota Laws 2019, First Special Session, Chapter 6,Article 6, Section 17.
SECTION 2.
Summary Publication: The following summary is approved by the City Council and shall be
published in lieu of publishing the entire ordinance pursuant to Minnesota Statutes section 412.191:
Pursuant to a voter-approved referendum, the city is authorized to and will impose a local sales and
use tax of one-half of one percent on retail sales made on and after October 1,2019, to be used to
fund certain designated projects related to the following
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1. A multipurpose recreational facility such as the 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.
SECTION 3.
This Ordinance shall be in full force and effect from and after its passage and publication.
Passed and adopted by the City Council of the City of Elk River this 5th day of August, 2019.
John J. Dietz,Mayor
ATTEST:
Tina Allard, City Clerk
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