City Council Meeting Date: March 17, 2026
To: Mayor and Members of Council
From: Ben Martig, City Administrator
Scott Wopata, Community Development Director
Brenda Angelstad, Finance Director
Emery John, Program Associate
Title
Consideration of Ordinance 1092 Amending Northfield City Code, Chapter 74-Taxation (Related to Allowing Lodging Tax Administrative Collection Responsibilities to Be Transferred from the City Finance Department to the Minnesota Department of Revenue).
Body
Action Requested:
Staff recommends a motion to approve Ordinance 1092 (First Reading) Amending Northfield City Code, Chapter 74-Taxation.
Summary Report:
This proposed ordinance amendment creates the ability to transfer lodging tax collection from the City Finance Department to the Minnesota State Department of Revenue (DOR). This change will streamline tax collection and compliance, including the work of ensuring that all lodging operators who owe taxes are paying them. Currently, the City's Finance Department is responsible for collecting revenues. This change will save staff time and make this more administratively efficient for the short-term rental license holders.
Most local governments collect their lodging tax locally but jurisdictions may contract with the DOR to have them collect the lodging tax. The department is allowed to retain from the collected revenues an amount to cover the costs of collection. The DOR now administers local lodging taxes for many municipalities - including Minneapolis, St. Paul, Rochester, Biwabik, Bloomington, Cottage Grove, and Faribault. This enables the state to enforce lodging tax collection through third-party booking platforms such as Airbnb and VRBO. These platforms collect lodging taxes directly from individual hosts, similar to how they collect sales tax.
Background
Lodging taxes are imposed on short-term lodging by a number of local governments in Minnesota, mainly by cities and towns. All cities and towns, and ...
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