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Sales Tax FAQs
On November 5, 2024, Monticello residents approved a 0.5% local sales tax as a new funding source for the Bertram Chain of Lakes Regional Athletic Park. The proposed sales tax funding for The Pointes at Cedar Recreational Area was not approved. Both projects are priorities the City of Monticello has committed to completing.
Many cities use a local sales tax to distribute the costs of eligible projects across a wider region rather than relying only on property taxes from residents.
Typically, cities are restricted to raising revenue from property owners, but a sales tax acknowledges that some amenities draw users from surrounding communities. A sales tax is a way for non-residents to contribute to the cost of those regional amenities.
The City of Monticello estimates it will receive 30% of the sales tax revenue from residents and 70% of the sales tax revenue from shoppers who live in the surrounding region.
The sales tax was approved to fund improvements at the Bertram Chain of Lakes Regional Athletic Park. Sales tax revenue may only be used for the specific approved project.
Although the City proposed a sales tax to fund The Pointes at Cedar Recreation Area project, it was not approved. It is not eligible to use the sales tax funds.
Both are existing projects the City has already started.
The sales tax is 1/2 percent (0.5%), which is equal to ½ a penny for each dollar spent. For example, if you spent $4 on a cup of coffee, the sales tax would be 2 cents.
The sales tax is limited in length to 20 years or until the funding limit ($15 million) is reached - whichever comes first.
The sales tax vote was on General Election Day, November 5, 2024. There was a separate question for each project proposed to be funded with a sales tax. They were listed as City Ballot Questions. The two questions read as follows:
- Imposition of Sales Tax for Bertram Regional Athletic Park: Shall the City of Monticello be authorized to (a) impose a temporary sales and use tax of one-half of one percent (0.5%) to finance new construction and rehabilitation of the Bertram Chain of Lakes Regional Athletic Park for the earlier of 20 years or until $15,000,000 plus the cost of administering the tax and associated bonding costs including interest is collected , and to (b) issue general obligation bonds for such project in the principal amount noted in (a), plus the cost of issuing the bonds including interest?
If one or both questions are approved by a majority of voters, the City is only authorized to impose a single one-half of one percent (0.5%) sales and use tax for a maximum of 20 years or until enough sales tax revenue has been raised to pay for the costs of the voter-approved projects.
- Imposition of Sales Tax for Pointes at Cedar Recreation Area: Shall the City of Monticello be authorized to (a) impose a temporary sales and use tax of one-half of one percent (0.5%) to finance new construction and improvements to The Pointes at Cedar Recreation Area for the earlier of 20 years or until $15,000,000 plus the cost of administering the tax and associated bonding costs including interest is collected, and (b) issue general obligation bonds for such project in the principal amount noted in (a), plus the cost of issuing the bonds including interest?
If one or both questions are approved by a majority of voters, the City is only authorized to impose a single one-half of one percent (0.5%) sales and use tax for a maximum of 20 years or until enough sales tax revenue has been raised to pay for the costs of the voter-approved projects.
The language in the ballot questions gives specific authorization for how the City of Monticello can use the revenue received through the sales tax. The City would like to keep flexibility to either:
- Complete future project phases periodically as sales tax revenue is collected; or
- Issue debt to pay for future project phases and use the sales tax revenue to make the debt payments.
To ensure both options are available, the questions get quite long.
It will take effect on April 1, 2025. The tax is administered and collected by the Minnesota Department of Revenue (MNDOR) on behalf of the City. MNDOR has sent a notification to local businesses regarding the collection of the local sales tax.
The MN Dept. of Revenue estimates Monticello would receive about $1.4 million each year.
No, the revenue can only be used for the project Monticello residents approved: The Bertram Chain of Lakes Regional Athletic Park.
Please note the ballot questions authorize use of the sales tax revenue for administrative costs associated with the sales tax and financing costs related to debt management if any is issued.
The local sales tax applies to the same items as the state sales tax.
- Essential items like groceries, medications, baby products, and clothing are not taxable.
- Non-essential items and services like a new tv, a meal at a restaurant, a visit to the movie theater, etc. are taxable.
A full list of taxable and non-taxable items is available on the MN Dept. of Revenue website.
You may owe local use tax if you buy taxable items for use in the City of Monticello and do not pay the local sales tax. To calculate, multiply the purchase amount by the local tax rate. Remit payments to the Minnesota Department of Revenue. For more information: www.revenue.state.mn.us/sales-and-use-tax.
According to a study by the University of MN Extension Office, the tax would cost an average Monticello resident about $30 per year.
The study also estimated that only about 30% of the revenue would come from Monticello residents; about 70% of the revenue would be paid by non-residents who shop in Monticello.
The University of MN Extension Office studied 11 cities that enacted a local sales tax and found that the data did not indicate a major change to sales in those areas, and most cities continued to see sales growth.
While it’s possible some people will adjust their shopping habits, Monticello’s strong retail sector is likely to continue to attract people from around the region. Additionally, many other area cities have a similar local sales tax, so travelling elsewhere in the region would not result in any savings.
No, the tax does not automatically renew. The tax will be in place for 20 years or until the city collects $15 million, whichever comes first.
If policy makers wanted another sales tax, Monticello would have to go back to the legislature for a new approval and go back to the voters to ask for additional approval.
The City of Monticello has applied for various grants and looks to utilize partnerships where possible. However, recreation grants are highly competitive and incredibly hard to secure. The City Council and staff will continue to pursue other funding to limit reliance on local taxpayers as much as possible.
Specific questions regarding the collection and filing of the local sales tax should be directed to the Minnesota Department of Revenue.
Call: 651-296-6181 or 1-800-657-3777 (toll-free)
Fax: 651-556-3102
Email: salesuse.tax@state.mn.us
Write: Minnesota Department of Revenue, Mail Station 6330, 600 N. Robert St., St. Paul, MN 55146-6330
Website: www.revenue.state.mn.us
Project FAQs
Bertram Regional Athletic Park Concept Plan
The Bertram Chain of Lakes Regional Athletic Park is a regional play destination for a variety of sports, including soccer, lacrosse, football, baseball, and cross-country athletes and their families. The first phase of this 100-plus-acre active recreation park opened in 2017 featuring multi-purpose athletic fields for soccer and lacrosse.
The park is intended to include additional recreational play opportunities for growing interests, like pickleball, as well as amenities like restrooms and concessions.
It’s an urban public park designed to fit into the center of a large, 100-acre development called The Pointes at Cedar.
While the area around the perimeter is private development, the center will be a regional public park featuring a lake that also serves as a regional stormwater pond, spaces for events and performances, art, pathways, and places for discovery and play.
The park’s unique landscape will feature plants and materials representing Minnesota’s natural biomes, including the north woods, deciduous forests, and oak prairie.
The park is intended to draw exciting private development to the area as well as fill an existing gap in our park plan.
These projects are city priorities with regional benefits and meet the State’s eligibility requirements to qualify for sales tax funding.
They serve the greater region beyond Monticello’s city limits, enhance our community, improve quality of life, and support the local economy.
The sales tax will help fund improvements to existing fields at the park, as well as build new fields to serve the growing demand for athletic spaces in the community. Fields will be based on community demand and can include green fields for soccer, lacrosse, and football; baseball and softball fields; and pickleball courts.
Sales tax revenue is also eligible to be used for supporting amenities like field lighting, fences, bleachers, playgrounds, restrooms, shelters, field equipment storage, and concession buildings.
Read more about the Bertram Chain of Lakes Regional Athletic Park.
Initial improvements include a lake (also serving as a stormwater pond), a one-mile lighted pathway, gathering and event spaces, shelters and seating, native landscaping, restrooms, and parking. This will create a usable park in the center of the larger development area that can be enjoyed by the general public.
Although The Pointes at Cedar Recreation Area did not receive sales tax approval, it continues to be an important part of Monticello’s vision for a strong and resilient community that has regional attractions for recreation, connection, and economic development. The City is committed to seeking alternative funding sources, such as grants, and considering a phased development approach to minimize the financial impact on residents’ property taxes.
Both the Bertram Chain of Lakes Regional Athletic Park and the Pointes at Cedar Recreation Area have Master Plans adopted by the City Council that break out the projects into phases.
Monticello still intends to construct the projects in phases over time based on the needs of the community and the capacity of the city to adequately maintain them.
The City Council has identified both the Bertram Chain of Lakes Regional Athletic Park and The Pointes at Cedar Recreation Area as priorities given their regional and economic benefits.
Without sales tax funding for The Pointes at Cedar Recreation Area, the City Council will reassess the next steps and evaluate the project's timeline and spacing of development phases. The City will actively explore other funding options, like grants, and allow City Council to determine how to incorporate the project into future plans & budgets. While a secure funding source would have offered greater certainty, the goals for the project remain the same.
The City plans to fund the ongoing maintenance of these projects through a phased approach. While the sales tax revenue will cover the initial construction costs at Bertram, we will implement the projects in stages. As each phase is completed, the associated maintenance costs will be included in future operating budgets. This gradual approach allows us to manage and integrate maintenance expenses over time, ensuring that the financial impact is spread out and more manageable.