5-year plan proposed for spending start of renewed Rochester sales tax

ROCHESTER — Plans for the first five years of extended Rochester sales tax collections will be outlined Monday.

"Teammates will present a pooled funding concept for the first five years of collection across three of the four sales tax renewal projects – economic vitality, street reconstruction, and flood control and water quality," Rochester Community Development Director Irene Woodward wrote in a report to the Rochester City Council ahead of Monday's study session. "The pooled concept will reduce the need for borrowing, balance workloads and provide support for economic vitality projects in the short term, recognizing the goal to catalyze housing development."

The $205 million expected to be collected through the extended sales tax includes $50 million for an economic vitality fund, which is largely intended to address housing needs.

Another $50 million will be used for street reconstruction projects, and $40 million is dedicated to flood control and water quality efforts.

The sales tax extension, which was approved by voters in November, also provides $65 million for the creation of a regional sports and recreation complex. Unlike the other three projects, the new facility is expected to be built using borrowed funds that will be paid back through sales tax.

Current projections anticipate the city will generate $15 million a year through the half-cent sales tax that collects 5 cents for every $10 spent on taxable purchases made in Rochester.

Since the extended sales tax started after the previous tax ended earlier this year, the city anticipates receiving nearly $8 million this year for the four projects.

The plan being reviewed Monday calls for $2.5 million to be dedicated to the sports and recreation complex project this year, with $4.9 million available for debt payments and other expenses each year starting in 2025.

The remaining funds will be used for the remaining projects.

Under the proposed five-year plan for those funds would be used to:

To achieve the goals, the city anticipates spending $41 million through 2028, with half of that used within the economic vitality fund.

Street construction plans would require approximately a third of the anticipated $41 million collected within the first five years, with the remaining 17% dedicated to flood control and water quality efforts.

With staff priorities and proposals being outlined, Woodward said Monday's presentation is intended to see whether the city's elected officials agree with the proposed path.

"It will be helpful for the team to gain feedback from the City Council and mayor about this financial strategy to ensure it is in alignment with common goals and so that the team can finalize a budget amendment related to the (city's) capital improvement plan that incorporates sales tax as a new funding source in alignment with a supported strategy," she wrote in her report.

The council's study session is set to start at 3:30 p.m. Monday in council chambers of the city-county Government Center, 151 Fourth St. SE. Other topics set for discussion include a recap of the 2024 Minnesota legislative session and plans related to Mayo Clinic's $5 billion "Bold. Forward. Unbound. In Rochester." expansion effort.

Meetings scheduled to be held during the week of Sept. 30 include:

• City Council study session, 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-meetings and be available on Spectrum cable channel 180 or 188.

• Park Board, 4:30 p.m. Tuesday in room 104 in City Hall, 201 Fourth St. SE.

Olmsted County

• Physical Development Committee, 8 a.m. Tuesday in conference room 1 of the Government Center, 151 Fourth St. SE..

• Health, Housing and Human Services Committee, 9:30 a.m. Tuesday in conference room 2 for the Government Center.

• Board of County Commissioners, 11 a.m. Tuesday in the board chambers of the Government Center.

• Administrative Committee, 1 p.m. Tuesday in conference room 1 of the city-county Government Center.

• Housing and Redevelopment Authority special meeting, 2:30 p.m. Tuesday in board chambers of the Government Center.

• Planning Advisory Commission, 7 p.m. Thursday, in board chambers of the Government Center.