The Cost
The total construction cost of the both buildings is $76.9 million. The city developed a financing plan that would ensure the projects meet our community’s needs while trying to minimize the tax impact on local residents.
This November, the city is asking residents to consider a 0.5% local sales tax to finance the construction of a new Public Works and Parks Operations Facility and License and Passport Center.
The new Public Works and Parks Facility: $64.2 million.
The new License & Passport Center: $12.7 million.
If approved by Roseville voters, the local sales tax is expected to generate $76.9 million, plus interest and bond issuance costs, over a 20-year period.
64% of the sales tax would be paid by nonresidents, according to a study by the University of Minnesota Extension Center for Community Vitality,
Approximately $49 million of the construction costs would be paid by nonresidents who purchase goods and services in Roseville, according to the University of Minnesota study.
If the projects were funded through a property tax increase, the cost burden would only fall on those who own commercial and residential property in Roseville.
Why use a local sales tax?
Cities have two primary ways to pay for public service improvements: sales taxes and property taxes. By using a sales tax, the cost of the investment would be spread among residents and nonresidents who make purchases in the city and often benefit from city services.
Many communities in the Twin Cities have passed local sales taxes including St. Paul, Minneapolis, Edina, Bloomington, Golden Valley, Oakdale, and Maple Grove.
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A 0.5% local sales tax amounts to one cent for every $2 spent. In other words, five cents would be added to every $10 spent at local Roseville businesses to fund the approved projects.
The average cost of the 0.5% sales tax for each Roseville resident is estimated to be $4.62 per month, or $55.48 each year.
If the projects were funded through a property tax, the property tax bill for a median-value home would increase by approximately $30 per month or $360 per year.
The University of Minnesota analyzed the economic effects of a local sales tax increase in several cities and found little evidence that overall sales growth for businesses would be impacted.
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Local sales taxes are applied the same way as state sales tax.
Essential goods, including groceries, clothing, prescription and over-the-counter drugs, feminine hygiene products, and baby products, are exempt. For more information, view the complete list of tax-exempt items from the Minnesota Department of Revenue.
Dozens of cities and counties have adopted local sales taxes to help pay for various public projects that benefit the community, including new community centers, jails, libraries, parks and trails, and other public amenities.
If approved by Roseville voters, the city will only be allowed to use the local sales tax to help pay for the approved projects, as is state law. The sales tax cannot be extended or used for any other purpose unless approved by the State Legislature and Roseville voters.
