Loading...
HomeMy WebLinkAbout2021 09-27 CCM Special Work SessionMINUTES OF THE PROCEEDINGS OF "I"HE CITY COUNCIL/ECONOMIC DEVI:'LOPMENTAUTHORITY OF THE CITY OF BROOKLYN CENTER IN THE COUNTY OF HENNEPIN AND THE STATE OF MINNESOTA SPECIA1. WORK SESSION SEPT EMBER 27, 2021 VIA ZOOM CALL TO ORDER The Brooklyn (enter City Council/Economic Development Authority (EDA) met in Work Session called to order by Mayor/President Mike Elliott at 5:00 p.m. Mayor/President Mike Elliott and Cotiticilmeinbers/C'oriiniissiotiet°s Marquita Butler (arrived at.. - p.m.), April Graves (arrived at,_,_,_, p.m.), Kris Lawrence -Anderson, and Dan Ryan. Also present were City Manager Reggie Edwards, Community Development Director Meg Beekman, and City Clerk Barb Suem. PRESENTATION OF SALES TAX LEGISLATION FOR FUNDING COMMUNITY CENTER IMPROVEMENTS AND WATER PARK a. Sales Tax Levy Discussion City Manager Reggie Edwards noted there is only one other city with a double-digit poverty rate like Brooklyn Center's with a comparable population, and that. is New Hope. lie stated Brooklyn Center's poverty rate is 15,10%amend the City also has a lower average income rate than comparable cities. Dr. Edwards stated the City has to look at alternative resources due to their economic standing, and staff is looking at ways to introduce alternative revenue streams. Fie hopes that this leverages the limited resources of the City while bringing significant opportunities without being a burden financially. Dr. Edwards provided a summary of the item and introduced Ms. Beekman to continue the presentation. Community Development Director Meg Beekman stated they have identified some major gaps when it comes to recreation in the City for residents. She stated a study has undertaken a master planning process to see if the City can provide an opportunity to grow and expand recreation services. part of that is thinking about partnerships and ways to leverage a facility that could serve beyond the City of Brooklyn Center residents, but also have a regional significance. Ms. Beekman stated as they looked at the Opportunity Site, they considered the idea of a regional draw and what that could look like or do in terms of providing a place for the community to gather and for people to recreate together, but also a place that people outside of the community can enjoy and their use other businesses and services that the City has to offer, 09/27/21 Ms. Beekman stated in their conversations with Ehlers, the City's public finance consultants, staff has talked about options in terms of financing. Ms. Beekman explained that a sales tax is one option they wanted to discuss so they asked Ehlers to do an analysis and explain what the process would be and the potential revenue it could bring into the community. Ms. Beekman stated they also looked at eligibility for the funds and how would the funds get spent. Ms. Beekman introduced Jason Aarsvold and Stacie Kvilvang, consultants from Ehlers who had been working with the staff. Jason Aarsvold, Ehlers, stated they looked at various things such as what types of local prqjects can be funded with the sales tax, who would be paying that local sales tax, and what type of funds would a local sales tax generate. Mr. Aarsvold stated there is a fairly lengthy process to follow through on to put a sales tax in place. Mr. Aarsvold explained, in terms of the kinds of projects that can be funded by a local sales tax, it is focused on only those that are capital projects and it must include projects that are of regional significance, Mr. Aarsvold noted Ms. Beekman talked about a couple of those projects being contemplating in Brooklyn (,enter, and Ehlers thinks those potential projects meet that qualification of showing a regional significance to establish a local sales tax, Mr. Aarsvold stated the projects that they had been looking at during this process were the new Opportunity Site and the Community Center. Mr. Aarsvold stated as for who would be paying the local sales tax, that is why it is appealing for communities to consider this. Mr. Aarsvold noted when the City raises a property tax levy, that is paid 100% by the taxpayers in Brooklyn Center, One of the appealing things that come along with a local sales tax is when anyone pays a sales tax in your community, the general sales tax will pay the local sales tax as well. That is a benefit because most studies indicate that about 55% of that sales tax is probably paid by residents,, but that leaves about 45% of that sales tax that is paid by those outsides of the community. Mr. Aarsvold stated when you pay for a facility of regional significance, folks trorn around Brooklyn Center are also contributing to the regional benefit. He explained the City would not be paying for the Community Center solely frona the money of Brooklyn Center residents. Mr. Aarsvold stated the percentage is a generalization that can vary, and that number can even be flipped for communities that draw significantly from their surrounding areas. He stated if the City could do a very specific study to see where that money is going to come from. Mr. Aarsvold stated another thing to add is that these sales taxes do include vehicle sales. Mr. Aarsvold stated Brooklyn Center has many dealerships, and those sales have been taken out of their calculations, and they will see how that flows through. Mr. Aarsvold stated they took data from the Minnesota Department of Revenue about the taxable retail sales in Brooklyn Center through 2019. He noted the 2020 data will not be available until the first part off next year, so there is a little bit of a lag in data availability, Mr. Aarsvold stated this infonnation can show what the amount of sales tax could potentially generate in Brooklyn Center. Mr. Aarsvold stated they took the amount of taxable retail sales, minus motor vehicle sales just to be conservative, and that left a net number of taxable retail sales. 09/27/21 -2- Mr. Aarsvold stated they then estimated what a sales tax could generate at .25%, .5%, and I % Mr. Aarsvold stated the important thing is as the project moves forward to 2021, they used a simple I%inflation. They had about $1.2 million for a.25% sales tax up to $5.1 million for the ]% local sales tax. Mr. Aarsvold stated lie thinks the important numbers are how much they could generate today from the sale of bonds, for example, to pay for the facilities at each of those levels of funding. Mr. Aarsvold stated if it is a.25%, then they are looking at about $21 million in funding, so if they issued a bond at 2% over 20 years, that is the order of magnitude of what they could raise for local sales tax. Mr. Aarsvold stated at .5%, it would be $42 million and up to 1% sales tax would be $84 million, Mr. Aarsvold noted this assumes it is collected over 20 years, which is the most typical duration for those types of taxes to run. Mr. Aarsvold explained there is a very specific process and they need to follow through on all the steps. Mr. Aarsvold stated the legislature recently changed this process and flipped it to putting I the onus on the City to go to the legislature first, so it requires the City to adopt a resolution indicating the proposed tax rate that they wish to institute in Brooklyn Center. Mr. Aarsvold stated .5% is a typical amount used by cities. Mr. Aarsvold stated the City would need to detail and describe all of the proposed projects that they intend to finance with that sales tax and document the regional significance of those projects. Mr. Aarsvold stated when they have worked with several communities that have done this, they think that the City could do this quite easily. lie stated the Community Center already has data to see where people are coming from, and they can probably demonstrate today the fact that it is a regional facility. lie knows from living in Champlin, he has used that facility t'or swimming lessons for his kids. Mr. Aarsvold stated people are coming from places outside of` Brooklyn Center to use the Community Center so demonstration of regional significance is not a problem, but it is something they need to be aware of. Mr. Aarsvold stated the resolution needs to include an amount to raise for each project, adding they would need to point out what the length of firne for that sales tax will be. Mr. Aarsvold stated, as mentioned, 20 years is most typical and is generally enough time to finance the projects that are contemplated within your plan. Mr. Aarsvold stated some cities after the 20 years have gone back to renew the tax, but that would be something to consider at a later time. Mr. Aarsvold stated the resolution passed would be submitted to the State tax committees during the legislative sessions, so there is a deadline to do that. The deadline is January 31 in the year in which you are seeking to institute the tax, Mr. Aarsvold stated if they were looking to have that done in the next legislative session, January 31 is the deadline to get it in the queue for consideration by the legislature. Mr. Aarsvold stated all of the data and documentation about the regional benefit would need to be included in the package for submittal, The City would need to get the legislature to approve their local tax so oftentimes, communities work through their local legislatures to get it introduced and secure approval. Mr. Aarsvold stated hurdle number one is to get the legislature to approve the tax. Once that is done, the City needs to adopt another resolution accepting that law and then file it with the Secretary of State to acknowledge that the law is in place. Mr. Aarsvold stated after all that is done, the City would need to go to voters with a referendum, and voters will decide whether or not the sales tax would be instituted in Brooklyn 09/27/21 -3- Center. Mr, Aarsvold stated that the process has been flip-flopped in the past, but this is the current law. Mr. Aarsvold stated the referendum must be conducted within two years to impose the tax, and then it goes on to specify that they need to include a separate question on the ballot for every project the City is contemplating for funding. Mr. Aarsvold stated of that is done, if approved, then the City would pass an ordinance, impose the tax, and then notify the Commissar of Revenue that the tax is in place, Mr. Aarsvold stated once they do all of that then the question is how do they collect that tax and how is it administered. Mr. Aarsvold explained that once everything is set up, the City has to notify the Department of Revenue that the City has the tax. At least 90 days before you want it imposed, those taxes will be collected with other taxes, Mr. Aarsvold stated the Department of Revenue will remit the portion of the local tax to the City, generally quarterly. Mr. Aarsvold stated the City would be able to use the money for debts or other projects depending on how they choose to use the finances. Mr. Aarsvold stated that is the extent of the formal points he wanted to cover, but he is open to more questions or to go into further detail about processes or other concerns the Council/EDA may have. QUESTIONS & NEXT STEPS Mayor/President Illion asked if there were any questions or comments from the Couticil/EDA. Couiiciliiieiiiber/Coi-timissioner Butler asked how thorough education to the community is important or necessary before trying to put something like this on the ballot and what have they seen done in other cities, Mr. Aarsvold noted other communities have spent several meetings with engagement around, the issue and solicited feedback if the tax should be imposed. Other cities have put out a. community survey or separate polls in individual community meetings. Mr. Aarsvold stated that is up to the Council/EDA to decide how it would best have a dialogue in the community, noting there is a definite need to share why it would be beneficial for the community and how that revenue is going to come into the community. Mr. Aarsvold stated in his experience, discussing what projects it is going toward is very important, Councilroternber/Commissioner Ryan stated he was very pleased that they would have the discretion to exclude certain types of sales. fie noted he had done a little bit of reading and talked to some people about this, and the fact that. the City could exclude vehicle sales never came up, which was a concern ot'his. (.ouilciliiiember/Comniissioner Ryan stated another facet that has a lot of appeals is that the City would gain from revenue is generated by sales from people outside of the City. Councilmember/Commissioner Ryan asked if there had been any work on studying the effects on retail generally with increases in sales taxes. He stated there was a lot of hyperbole around that when talking about the stadium tax, but lie was curious if there was something Mr. Aarsvold could share with them on that facet. 09/27/21 -4- Mr. Aarsvold stated he cannot cite a particular study but studies have been, conducted to show that it is not a deterrent. Mr. Aarsvold stated they can fielp locate some of that information if that is useful For them and to have in place for future community dialogue. Ile noted the piece on emitting sales tax from vehicles is written into the statute, so it is not discretionary. Councilmember/Commissioner Graves asked how much of the proceeds the Department of Revenue gets to keep and if that is reflected in the chart Mr. Aarsvold prepared. Mr. Aarsvold stated they will keep the cost of administration of the tax and it is not specified in statute exactly how much that is. Mr. Aarsvold stated Ehlers has been conservative in the numbers presented, so it is not something that is going to change the magnitude of the numbers they would be receiving. Couneilmember/Cornmissioner Graves stated she was asking because, on a much smaller scale, she was thinking about the child support system and how frustrating that has been for her as an individual. She understands the need to take money out for administration, but it is money taken away from a particular family. Councilmeiiiber/('otiimissioiiei- Graves stated it is a different situation, but it is what piqued her interest. Councilmember/Cornmissioner Lawrence -Anderson stated she appreciated the presentation. She stated she is neutral at this point, wants to hear from the public, and encouraged anyone from the public to email or call. Council-,neiiibei•/(ommissioner Lawrence -Anderson stated she thinks it sounds like a wonderful venue, but everyone is at different places in their lives and it is not something she would use. She looks forward to hearing what the residents think and thanked Mr. Aarsvold for his presentation and questions. Stacie Kvilvang, Ehlers, stated she thinks Mr. Aarsvold alluded to this in the beginning, but if it is something that the Council/EDA is interested in moving forward with, there will likely be very tight time frames, so it is something that requires a lot of direction to staff. Ms. Kvilvang stated if' it is something the Council/I DA wanted to pursue with either one or both of the projects, they would be looking at the 2022 session. Ms. Kvilvang added if they are lucky enough to have a tax bill, that would come typically at the end of June or July that things would be approved. From there, it would move onto 2023 to have on their referendum in November, and the earliest they Would be doing construction on any of the facilities would be 2024. Ms. Kvilvang stated it is not one of those things they can do the next year as it still takes time. She stated they have to consider if they are still, going to move forward on the Community Center and it if firs that timeline. Ms. Kvilvang stated if this is something they are truly interested in and wanted to pursue this year, January will be here before they know it. Councilmember/Connnissioner Graves stated she understands the shortness of the time frame in terms of submitting something by the January 31 deadline. She wondered what kind of community input they could get before that and is curious what staff has to say about that in terms of what is feasible. 09/27/21 -5- Dr. Edwards stated he thinks they certainly can put together information sessions and surveys, noting the primary challenge would be explaining to residents what it is and the funding of the taxes, such as who would pay. Ile thought they could embark upon engagement to get a sense of what residents may think about it if the Council/EDA had ail interest. Dr. Edwards stated, they would find out as much as they can about how the community sits on this issue. Ms. Kvilvang stated traditionally what they see in the communities that move forward with this, they don't have the level of community engagement at the front end. Ms. Kvilvang stated it is first about the desires of the Council/EDA, and what they want to pursue projects. She noted when they go to the legislature, there is no guarantee that you are going to get what they ask, for. Ms,Kvilvang stated they haven't seen other cities get as much input oil the front end, but the hard work, starts once they get authorization and decide what projects they want to pursue, what they want to put on the ballot, and how they will educate the public, Ms. Kvilvang added she is not saying it is not great to get some initial feedback -from folks, but it doesn't have to be the end -all -be-all if they decide to move forward, Dr. Eldwards added be thinks Ms. Beekman might weigh in more about engagement. Ms. Beekman stated she just wanted to underscore that this discussion has been borne out of the need for a new Community Center, Ms. Beekman stated the City has applied for State bonding to help pay for that project and if the funding comes through, the City would be responsible for a portion of the total cost. Ms. Beekman stated this conversation is in response to the question about where the funding would come from to pay for the Clity's portion, Ms. Beekman added there has been exploration around some type of recreation use that provides regional significance oil the Opportunity Site. She wanted to underscore in fleshing out the details ofthe projects, there are certainly no plans that are ready to go or have been developed, but this is the first step to see if there is an appetite at the legislature to help the City pay for these things. Ms—Beekirian stated the planning for the projects would ramp up at a later time. C'ouncilmember/Cornmissioner Graves stated she understands there isn't much point in getting a tot of community engagement if they aren't even sure if they will have something to engage them about. She has a general interest and thinks the Community Center needs work-, but with some of their priorities beyond recreation such as health and wellness, having some leverage to have a more welcoming Community Center to host more cultural events and that serve the youth in a better capacity, are all preventative measures for the City to make sure it is a safe place for people to live and visit and play. Councilmember/Cornmissioner Graves stated she is not completely sure at what level of tax, but she is more interested in the .25% or the .5% range. Councilmember/Commissioner Graves asked how much of an increase or significance it would be reflected on someone's receipt or oil an average person's salary. Mr. Aarsvold explained, the State has studies that estimate the sales tax impact on varying levels of income and if that information is of interest to the Council, he can provide it. Mr. Aarsvold stated lie call gather that with the other data that was requested to give a better sense of how it would impact a person. He stated the most simple level is the.25% or the .5% that would be tacked onto a simple purchase, but it seems 09/27/21 -6- like Councilmember/Commissioner Graves is getting at more of the policy implications and the impact over the year. ('.otinciltiieiiiber/Coti,imissiotier Graves stated she would appreciate that information. She understands this is just the beginning stages and nothing has been decided until a final vote. Councilti-tember/Cot,iiii,iissioti,er Graves stated she is willing to move lorward at the .25% or the .5% local taxes and then would defer to staff to decide further to the bonding bill that will be submitted. Councilmernber/Commissioner Ryan clarified if they don't get their as on the bonding bill, then the local sales tax is moot because they wouldn't have a regional significance. tie asked if it would otherwise apply to projects coming up in the Opportunity Site. Ms. Beekman stated the sales tax could only be used for capital projects that are included in the legislation to ask for the sales tax. She added the City can ask for multiple projects in that ask, though each project has to meet the eligibility requirements in that it be a capital prcject and have regional significance that could be demonstrated. Ms. Beekman explained if the State bonding does not come through for the Community Center, then she thinks there are a couple of other options available to the City as ail alternative. Ms. Beekman stated this is a topic they have been exploring for a couple of years, noting some people have been calling the new regional site a "white water park" and some have called it a "waterpark". Ms. Beekman stated they are looking at a year-round and outdoor adventure park. She thinks the details of what types of facilities are available on it are probably less important than it being something that is of regional significance that provides year-round play, adventure, and outdoor activities for individuals. Ms. Beekman stated this has always been conceived of a public/private partnership between the City and a private business that would operate the facility. Ms. Beekman stated because of its regional significance, Brooklyn Center residents would receive benefits such as free or reduced access, which has been part of that conversation. Ms, Beekman stated that has taken a rest during the pandemic, and it is something they have not worked on in the last year or so but the conversation has begun to kick Lip a little bit. She thinks that, is an option and it is not necessarily dependent upon State bonding being successful. Ms. Beekman noted another thing about the Community Center itself is they went into the State legislature around a new Community Center facility. Ms. Beekman noted as a part of the master planning process, they looked at other options that may include an expansion of the existing facility and renovation, a new facility, or a new facility with a field house. Ms. Beekinan stated there are significant improvements to the Community Center that could take place even without State bonding, though they would not be as significant. She thinks it is important to note that the sales tax could be an avenue to do some regionally significant improvements to the Community Center that could benefit the community. Ms. Beekman stated this does leave quite a few options available and any multitude of outcomes could occur for both of these projects, so this needs to remain adaptable and flexible -until the point that taxpayers vote. Ms. Kvilvang stated what they are trying to do is to add tools to the City's toolbox. She noted if the City doesn't get their full bonding amount or only a small amount, they are trying to provide 09/27/21 -7- another option, Ms. Kvilvang stated if it is important to renovate or expand the Community Center facility, this is j List another tool so it is not 100% of the costs borne by residents ol'Brooklyn Center, Ms. Kvilvang stated as they do some expansions, there will be a more regional draw. Mayor/President Elliott noted there was a comment in the chatbox asking if the sales tax would affect tax services at the car dealerships. Mr. Aarsvold explained the statute expressly excludes motor vehicle sales, but everything else that is subject to sales tax would be subject to this local sales tax because there are no other specific exclusions identified in the statute. Arvid Sorenson stated his understanding that about 55% of the money would be coming from local which is quite a fair amount. Ile asked what other local cities also have a local sales tax, noting the City is already having to attract retail, so what would the effect be on that issue, Mr. Aarsvold stated Maple Grove has legislative approval for a sales tax that is related to a community center and Rogers recently went through that process. Mr, Aarsvold stated those are the closest neighbors doing a similar process and while there are others, he didn't have a full list in front of hini, Mr. Aarsvold stated they can share that information as a part of the follow-up. Mr. Aarsvold stated, regarding the effect on retailers, there will be some concerns that. fle noted if they go another way with 100% property tax paid improvement, there are impacts there as well, Mr. Aarsvold stated there is no avoiding some kind of an impact but studies have not shown a deterrent for shoppers in communities that impose a sales tax. Mr. Aarsvold stated, lie will, find more reports that can be cited in future conversations. Councilnieniber/(.',omniission,er Graves thanked Mr. Sorenson for his questions and stated she had thought about one of those earlier about businesses, Councilmeniber/Commissioner Graves stated Mr. Aarsvold noted a local sales tax in Maple Grove and Rogers related to a community center and asked if Mr. Aarsvold had examples of a local sales tax for other projects not specific to a community center. Mr. Aarsvold stated there are others and he will provide more information in a follow -Lip meeting, Mr. Aarsvold stated Rogers, for example, used theirs for several different things including trails and arto-dyer facility beyond a community center. Mr. Aarsvold stated it has to be limited to the realm of capital projects, so that is why a community center is a common item since it is a regional benefit and a capital project. Councilmeniber/Commissioner Graves stated she would be interested in more information on the reports Mr. Aarsvold cited. Mayor/President Elliott stated he is interested in understanding what the impact is on the poor people in a community with a sales tax. Dr. Edwards stated he was looking for general interest from the Council/ETA to see if this was something they were interested in pursuing. Dr. Edwards stated they will come back with an 09/27/21 -8- assessment related to concerns that were brought up in the meeting and if this is something worth pursuing, then lie would prepare that information. Mayor/President Elliott stated he hears folks are interested in doing this, but they want more information. Councilmember/Commissioner Lawrence -Anderson noted she would like to move forward based on the available time frame since she does not know what the legislature will come up with down the line. Comicilmernber/Commissioner Butler stated she concurs. Councilmeniber/Commissioner Ryan stated he thinks they should pursue this and he is interested in staff recommendations about various percentage increases and the impacts on various income levels. His biggest concerti was motor vehicle sales, but learning that those are excluded addresses his largest concerti. Council member/Commi ssioner Ryan believes they should start to gather more information. Councili-neii,iber/('omii,iissioner Graves stated she is in favor of Moving forward at least to find out more infon-nation and to start the process so they can decide once they have more information. 'rhe majority consensus of the City Council/EDA was for staff to gather more information and address the issue further at a later date. ADJOURNMENT Mayor/President Elliott moved and Councilmember/Commissioner Ryan seconded adjournment of the City Cotmcil/.[conornic Development Authority Work Session at 5:55 p.m. Motion passed unanimously. 09/27/21 -9- STATE OF MINNESOTA) COUNTY OFHENNEPIN) ss. Certification of Minutes CITY OFBROOKLYN CENTER) The undersigned, being the duly qualified and appointed City Clerk of the City of Brooklyn Center, Minnesota, certifies: 1. That attached hereto is a full, true, and complete transcript of the minutes of the Special Work Session of the City of Brooklyn Center held on September 27, 2021. 2. That said ineeting was held pursuant to due call and notice thereof and was duly field at Brooklyn Center City Hall. 3. That the City Council adopted said minutes at its October e--", A& '44 City Clerk 2021, Regular Session. 09/27/21 -10-