BEMIDJI — Bemidji city leaders are expected to approach the Minnesota Legislature next year with the hope of implementing special use taxes to meet several community needs.
On Tuesday, the City Council came to a consensus on what those needs are and what kind of request should be made.
The idea of a special use tax, such as a sales tax or hospitality tax, has been a discussion circulating City Hall for more than a year. Usage of any implemented taxes wouldn't be limited to one need, though, as city officials discussed the number of places those dollars could go.
One option is directing special use tax funds to the Sanford Center. For 2019, the council budgeted $450,000 to cover operating losses at the city-owned event center. Additionally, the city authorized an investment in capital needs at the Sanford Center of nearly $860,000 for 2019.
An amount to subsidize the facility and provide annual capital investment work is expected to continue in the years ahead. According to City Finance Director Ron Eischens, for 2020 the Sanford Center has a capital investment need of nearly $483,571, while the city is budgeting $180,000 for capital investment work and $50,000 for maintenance, leaving a shortfall of $303,571.
To alleviate some of the burden, the city is exploring a special use tax, which would draw more dollars from outside the city limits and potentially allow for reductions in property taxes. According to Eischens, several other cities with event centers, such as Duluth, Mankato and St. Cloud, use a hospitality tax and/or a sales tax to assist in covering costs.
Another area where the city is looking to reduce financial burden is with its water infrastructure. In order to address chemicals called perfluorocarbons, or PFCs, found near Bemidji's water wells, the city is considering the construction of a new treatment plant estimated at $16.3 million.
Both council members and staff are working to include the project in the 2020 bonding bill, but even with legislative support, the city could still be facing a cost of more than $8 million. Additionally, the city is applying for a new permit from the Minnesota Pollution Control Agency for its wastewater treatment plant.
According to officials, there's a possibility the MPCA could require ammonia and nitrogen to be treated at the wastewater plant, resulting in another project estimated at more than $10 million.
During Tuesday's meeting, the council was informed about how a hospitality tax has no sunset date while a sales tax does. Additionally, Eischens said a hospitality tax only needs legislative approval, while a sales tax requires both authorization from the Legislature and a local vote.
As the conversation developed, Ward 2 council member Mike Beard said the city should try to handle the Sanford Center separately from the water infrastructure needs.
"If we bring the Sanford Center up, it will put a negative spin to the other two," Beard said. "I don't want to jeopardize the water needs for the Sanford Center's sake. I still think there's a group out there that see the Sanford Center on the ballot and they think, 'No.'"
In her comments, Mayor Rita Albrecht said the council and staff have to work at shifting the tone on the event center to where the community sees it as an asset.
"This isn't something we should feel bad about," Albrecht said. "This is something that our community should be proud of. There's no other like it in northern Minnesota. It helps support gas stations, retail, hotels, bars, restaurants and jobs. That's the narrative we should have."
The council agreed to ask the Legislature for approval of a sales tax for water infrastructure needs and a hospitality tax, with an emphasis on food and beverage, to support the Sanford Center. Another meeting on the subject to review finalized amounts was set for Dec. 9, with the expectation to have the requests sent to legislators by Dec. 15.