Park and Trail Facilities Funding, Potential Sales Tax Referendum

Background and Community Survey

As an active and growing community, the Rogers City Council, Park Board and City staff routinely hear from individuals and associations regarding their desire for expanded/new parks, trails and recreational facilities. In order to determine community opinions beyond those of vocal minorities/interest groups, the City undertook a statistically-valid, random-sample survey of residents (the “community survey”) in order to better gauge the true level of desire, willingness to pay and the specific types of facilities most and least desired by our residents. The results of that survey generally found that:

  • No property tax increase for these purposes would find sufficient support at the polls, with 55% opposed.
  • Sixty percent of likely voters would support a ¼ cent increase in the local sales tax for up to twenty years to fund construction.
  • An indoor pool/aquatics facilities, community center and trail connections lead the list of projects for which respondents were most willing to raise taxes (i.e., higher or new taxes).

Financing Considerations

Cities have very limited authority to bond/borrow for park and recreation capital improvements without approval by the voters through a general election referendum
Due to the size and cost of most of the identified facilities, the City would likely be required to bond/borrow for most of the larger improvements, if they are to be built in the relatively near future. Saving additional tax dollars or other revenues in advance for those improvements, rather than borrowing, is an option for the community. This type of “pay-as-you-go” approach would mean that it could take a significant number of years (upwards of 20) to build out all of the items on the list. Saving and paying-as-you-go for improvements would not, however, require a referendum.

Local Sales Tax Option

With regard to implementation of a local option sales tax, state statute authorizes cities to enact such a tax only upon affirmative approval by the voters at a general election, with subsequent approval also required by the State Legislature. Such sales taxes must be used for capital improvements, with the sales tax expiring when the debt on those projects has been fully paid.
A separate tax incidence study previously undertaken by the City illustrated that a new local option sales tax for park and trail improvements would result in lower tax impact to Rogers taxpayers as a whole (at a given level of revenue), when compared with a commensurate increase in property taxes. Information provided by the MN Department of Revenue indicate that a ¼ cent sales tax could produce funding in the range of $700,000 per year, based on the most recent data available. Such a tax would apply to all sales in the City of Rogers currently subject to state sales tax, with minor exceptions. The current sales tax rate in Hennepin County is 7.525% (6.875% statewide tax, plus County ballpark tax of 0.15% and County transit tax of 0.50%). If approved and implemented in Rogers, a ¼ cent sales tax would make the new Rogers rate 7.775% on all applicable purchases. For a $100 purchase, the additional tax would amount to $0.25 (25 cents), $2.50 on a $1,000 purchase, and so on.

Projects Under Consideration

Based on the results of the community survey, and the City’s Park and Trail Master Plan, the Rogers Park Board has recommended a collection of improvements/facilities to the City Council for funding consideration, per the chart below:

Project

Cost Est.

Notes/Description

   

 

I-94 Pedestrian Crossing

$2,200,000

Ped bridge spanning from Industrial Blvd to Lynch Park (pending State Bonding Bill or other funding)

CR144 Crossing

$750,000

Tunnel/crossing from Rogers High School to Middle School

Trails/Trail Connectivity

$3,000,000

Territorial View connection, Henry’s Woods Trailhead, Sunnyside Estates, Hassan Hills Neighborhood Trail, Fox Creek Trail connection to I-94 Ped Crossing, Edgewater Looping Trail

City Enhancements to School Pool

$2,000,000

Shallow water and aquatic play elements (pending School District funding)

Splash Pad

$1,000,000

Spray features, pumps and remodeled restroom facilities at Triangle Park

South Community Park

$2,000,000

Ballfields, outdoor ice rinks, multi-purpose field/greenspace

Community Center – Phase 1

$2,000,000

Pre-building site improvements to create pad-ready site/parking lot

Multi-Purpose Dome/Turf Facility

$2,500,000

Indoor soccer and multi-purpose turf area

Total

$15,450,000

 

 

The City Council then reviewed the Park Board’s list in light of the potential need to bond/borrow for such projects depending upon the desired timing of construction, and the need for additional revenue to retire any such debt (or an increase in current capital funding if a pay-as-you-go option were selected).
Based on the broad nature of the projects above and the need for additional partnerships for certain projects (e.g., School District or State of Minnesota funding), any proposed referendum/ballot question would likely be written to request authorization for the the tax to fund all or a portion of those projects – in other words, “up to” the entire list of projects, but possibly not all projects, pending availability of other funding sources, reasonable bid costs, etc.

Next Steps

Given the community survey results - which indicate that residents are not amenable to a property tax increase, but are potentially open to the concept of a sales tax increase under certain circumstances - the City Council has decided to further investigate the concept of posing the question of a sales tax to the voters via referendum at the November 6, 2018, general election. The City will be providing additional information in the coming weeks and months and will solicit feedback from residents and business representatives prior to deciding whether to ultimately place the issue on the 2018 ballot (the deadline to adopt a resolution placing the referendum question on the November ballot is July 24, 2018). But it should be noted that the City Council, as a body, and City staff will not be advocating for or against passage of any ballot question, but will simply provide information so that voters can make an informed choice.