DATE:           January 26, 2023
                      For Immediate Release

CONTACT:  Rachel Leonard
                     (763) 295-2711 | Rachel.Leonard@ci.monticello.mn.us

City Leaders Seek New Option to Fund Priority Projects

On Monday, January 23 the City Council initiated the process to seek a local option sales tax (L.O.S.T.) in Monticello. This type of funding source has been gaining popularity across Minnesota as cities seek ways to facilitate big projects in their communities. 

Rather than limiting cities to only the taxpayers within their city limits, a sales tax allows revenue to be generated from people shopping in the community. As a regional commercial center, Monticello stands to benefit from a tax that includes contributions from the people drawn to the community from across Central Minnesota. 

The funds must be used for projects valuable to the greater region, and Monticello has identified two large-scale projects with regional significance: Bertram Chain of Lakes Regional Athletic Park and The Pointes at Cedar Recreation Area. 

Bertram Chain of Lakes Regional Athletic Park is already a regional destination for recreation. The initial phases of construction created space for regional regular season play as well as tournament play, bringing in teams from across the state. The completion of the first phase of premiere fields allowed the Minnesota Youth Soccer Association to host the 2021 State Soccer Tournament at the park.

The Pointes at Cedar is a more recent project. It’s intended to mix residential, commercial, and recreational spaces within a 100-acre development area. The project is anchored by a large central lake surrounded by pathways, art, and entertainment that will add a unique flair to the center of the community. 

The City Council is committed to phased development of both projects, but the proposed tax would be a transformational funding opportunity. It will create a specific source to finance future phases of the projects to ensure they can continue to develop for public use. 

The City Council resolution outlines a ½ cent sales tax that would be in place for a maximum of 20 years. This would generate $30 million that would be split evenly to fund $15 million for each project. State law requires the tax to automatically sunset once funds authorized for the projects are collected, or the proposed 20 years (pending approved legislation), whichever occurs first.

The approved resolution does not enact the tax, it allows the City of Monticello to submit a request for special legislation from the Minnesota Legislature. If the legislature approves it, the Council must vote on a second resolution to present funding the two projects with the proposed sales tax. Monticello voters would vote for funding each project individually, allowing for both, one, or none of the projects to be funded with the tax.

Local option sales taxes apply to the same items and services as the general state sales tax. Items exempt from the local sales tax include many essential items such as groceries, prescription and over-the-counter medications, baby products and clothing (here is a complete list of non-taxable items, from MN Dept. of Revenue).

During the meeting, staff also noted that regardless of the funding source, the plan is to pursue phased, needs-based development of both projects. City Administrator Rachel Leonard highlighted that a potential sales tax does not mean immediately completing a full build-out of the recreation facilities. 

“The idea is we keep looking at the needs of the community and how we can phase this in a responsible way. The sales tax gives us the option to either save that money over time and then pay it out when we decide to do another phase of the projects, or we can use that funding to pay the bond costs if we were to levy debt to complete those projects,” explained Leonard.

Prior to voting on the resolution, members of City Council voiced their opinions about the proposed funding source. 

“I think it’s reasonable to expect that a project like Bertram, that’s being utilized by more than just the residents of Monticello,” said Mayor Lloyd Hilgart. “This should be the type of thing that the sales tax is used for. Same with The Pointes, I feel that’s going to be a regional draw for the recreation and shopping that it will have,” he added.

Councilmember Hinz agreed, stating she felt like it was good for the city to have the experience.

“I think this is an excellent opportunity, regardless of the outcome, for the city to walk through the steps of this process. And also for our community to better understand their ability to influence the outcome by learning what they’re voting for. I think it’s a great first step,” said Hinz.

City staff will submit project plans for The Pointes and Bertram, as well as a breakdown of the proposed financial components to the MN state legislature by the deadline of January 31, 2023.

The proposed 2023 budget and property tax levy will be presented at a public hearing on December 12, 2022. It will begin with a short presentation followed by an opportunity for residents and property owners to comment and ask questions about the 2023 tax levy and budget. The public hearing is part of the regular City Council meeting at 6:30 p.m. in the Mississippi Room at the Monticello Community Center.

The proposed city levy of $12,050,000 represents a 6.1% increase (or $697,000) over the 2022 city levy. The HRA levy for 2023 is proposed at $402,000, or $14,000 (3.6%) more than 2022. The total combined levy amount is $12,452,000 or a 6.1% increase.

The impact of the proposed levy on individual properties was listed in the Truth-in-Taxation (TNT) notices sent by Wright County in November. Your notice shows changes to the levies, your property value, homestead exclusion, and any other changes to the tax base. New for the 2023 taxes payable year, local governments are required to report summary budget information with the TNT notices. Wright County compiled information from the County, City, and School District to include in a one-page insert. There’s a lot of information in a limited space, so property owners are encouraged to reach out to the appropriate jurisdiction with any questions on the summary information. Please note, the 2023 proposed budget information will not be final because we continue to refine it until the final budget is approved on December 12, 2022.

This year residential market values increased by an average of 20% over the prior year. As a result, residential taxpayers should expect to see an increase in their city property taxes that exceeds the percentage increase in the levy. City Council held several budget workshops over the summer of 2022 to discuss the city’s projected costs in light of the current economic environment and weighed budgetary needs with the associated tax burden on property owners in the community.

What are my Property Taxes used for?

 The property tax levy is used in four ways. About 1/3 of the funds are used to make the City’s debt payments, fund capital projects, and support the Monticello Community Center. The remainder of the levy is put into the General Fund.

The General Fund pays for city services like public safety, including the Fire Department and contract with Wright County Sheriff’s Office; snow and ice removal; and funding city departments like finance, planning and zoning, parks and recreation, and parts of public works. Overall, the tax levy helps us fund larger projects over time as well as complete our day-to-day operations on behalf of the public.

City Council Approves Preliminary 2022 City Tax Levy

 On Monday, Sept. 27, the Monticello City Council approved a preliminary 2022 city tax levy of $11,353,000. This is a 2.6 percent increase from the city tax levy of $11,063,700 in 2021. While the City Council can control the size of the levy, each property’s valuation contributes to changes on the tax bill.

Finance Director Sarah Rathlisberger noted in the meeting that council can think of the levy like a pizza, “You [council] can decide if we’re ordering it as a medium or a large. The property values tell you how much of the pizza, or what slice you get.”

Unlike many other municipalities, Monticello’s tax base is significantly affected by an electric-generating facility. The pie chart acts as a visual to show the four key components of the tax shift and levy: residential, industrial, apartments, and the nuclear generating plant.

Due to a roughly 7 percent decrease in this property’s taxable value and an average increase of 5.7 percent for residential homes, residential properties can expect to see a city tax percentage increase of greater than the 2.6 percent increase in the tax levy.

Please note, the 2.6 percent increase is for the city’s portion only; the county and school district also levy property taxes on parcels in Monticello. This table shows the city and HRA property tax levy from 2018 to the preliminary levy for 2022 with the tax levy increase in 2022 being less than half of what it was last year.

Watch a City Meeting

Citizens are welcome to attend City Council, Planning Commission, and Economic Development Authority meetings, but we understand that attending in person is not always an option. As an alternative, we offer the following options to stay engaged with your local government:

• Meetings are broadcast live on cable channel 12 (FiberNet and TDS subscribers) or channel 180 (Charter subscribers).
• Meetings are streamed live online. View the live stream on the Monticello Live Stream website.
• Meeting recordings are available online to watch when it's convenient for you. View the meeting recordings on the Monticello Live Stream website.
• Meetings are rebroadcast throughout the week on cable channel 12 (FiberNet & TDS subscribers) or channel 180 (Charter subscribers).