ROCHESTER — Details related to potential plans for Rochester’s
newly approved half-cent sales tax extension
are beginning to emerge.
In November, 53.6% of voters authorized the local sales tax extension
to provide $205 million for four projects, which are:
On Monday, the Rochester City Council will receive updates on planning status for each set of funds.
Actual funds from the sales tax extension won’t be received until the $139.5 million approved in 2012 is fulfilled later this year.
“We are currently still collecting the 2012 local-option sales tax,” City Administrator Alison Zelms said. “That doesn’t flip over until the total amount is collected.”
The city currently collects approximately $15 million a year through the local-option sales tax, which provides 5 cents of city revenue for every $10 spent on taxable items in Rochester.
While the city must wait for the new revenue stream, council members will be presented with a financing option that could accelerate efforts to build the planned regional sports and recreation complex.
Financing the project and using sales tax revenue to pay the debt over time would allow the project to move forward, while other tax revenue is split between the remaining three projects.
The proposal being presented Monday suggests using $3.3 million a year each for streets and the economic vitality fund, with $2.6 million for flood control. It leaves roughly $5.8 million a year to pay debt on the sports and recreation complex project, if tax generation remains at current levels.
The other option is to pay for the new complex as funds are generated, unless the council wants to further postpone construction of the new facility.
If the accelerated option is selected, plans call for hiring a design team in the first half of this year, with the goal of having the facility completed by the end of 2026.
Before construction can start the design will need to be completed, and site options will need to be narrowed in hopes of finalizing a purchase agreement this summer.
Work would also continue on determining how the new facility would be operated, with a potential operator chosen by the time the design work starts, allowing the operator to provide insight during the yearlong design process.
The proposed plan sent to the council ahead of Monday’s study session calls for construction to start during the summer of 2025.
When it comes to street reconstruction funded by the sales tax extension, the accelerated proposal would allow Rochester Public Works to add approximately one project to its roster each year, catching up on the amount of streets that need to be updated or repaired.
The proposed sales tax plan would also provide funds for continued work on the city’s flood control system after the approximately $12.2 million in existing reserves are depleted. Maintenance of the existing system costs the city $800,000 a year, and the goal is to keep at least $4 million in reserves for emergency use.
In addition to maintaining the existing system, the sales tax funds are expected to provide investment in water-quality improvement projects.
Work continues in defining uses of the economic vitality fund, which is slated to address housing and workforce needs in the city.
The council pointed to the potential use of $1 million for historic restoration loans in the
newly designated downtown historic district on Monday,
but staff has said the majority of the $50 million being generated will be used to address housing challenges. Estimates cite a need for more than 5,000 new single-family homes for sale in the city by 2030.
The plan being proposed Monday would provide $26.5 million to create new homes in the city over time, with $12.5 million being used to rehabilitate existing homes. The remaining $11 million would support workforce and business development projects.
While proposals are emerging, any funds spent will require council approval at a later date as projects move forward, with any related maintenance expenses being included in the review and request for approval.
An annual report on tax usage is also expected to be provided to the council, documenting how much was spent each year and how much remains.
In addition to receiving an update on plans related to the sales tax extension, the council will also receive an update on the city’s action plan for 2024.
The plan outlines goals, tactics and key performance indicators that reflect staff efforts toward advancing the city’s strategic priorities, which the council defined as affordable living, economic vibrancy and growth management, and quality services.
Both updates will be provided during the council’s study session at 3:30 p.m. Monday in council chambers of the city-county Government Center.
Meetings scheduled to be held during the week of Jan. 29 include:
Rochester
• City Council study session at 3:30 p.m. Monday in council chambers of the city-county Government Center, 151 Fourth St. SE. The meeting will livestream at
www.rochestermn.gov/meetings/council-meeting
s and be available on Spectrum cable channel 180 or 188.
• Public Utility Board, 4 p.m. Tuesday in the Rochester Public Utilities community room, 4000 East River Road NE.
• Ethical Practices Board, 10:30 a.m. Wednesday in room 104 of City Hall, 201 Fourth St. SE.
Olmsted County
• County Commissioner retreat, 8:30 a.m. Tuesday in room 161 at 2117 Campus Drive SE
Destination Medical Center
• DMC Corp. Board, 9:30 a.m. Thursday in the Mayo Civic Center, 30 Civic Center Drive SE
