City Council Meeting Date: March 3, 2026
To: Mayor and Members of Council
From: Ben Martig, City Administrator
Title
Review and Discuss Local Option Sales Tax - Riverfront Park Projects Scoping and Related Topics.
Body
Action Requested:
Discussion only.
Summary Report:
At the January 20, 2026 the City Council passed Resolution 2026-015 (attachment #1) supporting the authority to impose a local sales tax to fund specific capital improvements providing regional benefit, to establish the duration of the tax and the revenue to be raised by the tax, and to authorize the City to issue bonds supported by the sales tax revenue.
The State of Minnesota allows for local governments specifically request to implement up to a .5% sales and use tax for items for capital building projects Detailed description of up to five capital projects to be funded with the tax. A capital project includes:
- A single building or structure, including associated infrastructure needed to safely access or use the building or structure;
- Improvements within a single park or named recreation area;
- A contiguous trail.
Three capital improvement projects identified by the Council include (1) Northfield Public Library improvements, (2) Northfield Community Resource Center (NCRC) improvements, and (3) capital costs of the acquisition and betterment of Northfield’s interconnected Riverfront Parks
Staff is currently refining plans for a discussion at the meeting related to Riverfront Park projects and will be sending out additional information via supplemental prior to the meeting.
City Plans & Policies Relevance:
Alternative Options:
N/A
Financial Impacts:
A 0.5% local sales tax would generate approximately $18.5 million over 20 years, 40% of which would be paid by individuals visiting Northfield, alleviating $4.5 million of capital costs from local taxpayers. That revenue would support funding of $11.4 million net for projects assuming debt would be used for the projects. The revenue would cover both annual principal and interest payments. The total annual revenue is estimated to be between $800,000 - $1,000,000 per year over the 20-year term.
If all steps in the required process is approved and a local sales and use tax is implemented, the Minnesota Department of Revenue manages the collection and distribution of revenue to the City Finance Department.
Tentative Timelines:
ü Submit the approved resolution and supporting documents to the senate and house tax committee chairs by January 31 requesting authorization to impose a local option sales tax.
ü February 17th - Start of MN Legislative Session
• May 18th - End of MN Legislative Session (constitutional deadline there are provisions for early completion or extended special session)
• June 2nd - Once legislative approval is given, Council revise and reaffirm a resolution. The resolution must be passed at least 90 days before a general election.
o Pass a referendum to impose the tax:
§ Hold a vote at a general election within two years of legislative approval (In this case, this would be November 2026).
• September 18, 2026 - General Election Early Voting & Mail-in Voting Start
• October 16, 2026 - Direct Ballot Early Voting Starts
• November 3rd -General Election Day
• November/December 2026 - If approved by voters, City Council pass ordinance imposing the tax.
• By January 31, 2026 - Staff file a certificate of approval and a copy of the ordinance with the Minnesota Secretary of State.
• After filing with Minnesota Secretary of State, staff notification in writing to the Minnesota Department of Revenue to start a new local tax.
• Q1 2027 - Special Tax Effective Date
• 2027 - Project Schedule to Be Determined