The Cost and Tax Impact
Serving Dilworth’s growing population while recognizing the need to maximize taxpayer dollars.
This November, the city is asking residents to consider a half-percent sales tax to fund most of the $7.2 million community center project. If approved by Dilworth voters, the local sales tax is expected to generate more than $6.1 million, plus interest and bond issuance costs, over a 25-year period.
The remaining funds for the project would come from a combination of tax abatements, private investment, facility revenues, and other sources.
Why a local sales tax?
The City Council proposed a local sales tax instead of a property tax increase to spread the cost of the community center among residents and nonresidents who will benefit from the new facility.
According to a study by the University of Minnesota Extension Center, 35% of the sales tax would be paid by nonresidents who make purchases in the city. That means visitors would contribute more than $2.25 million toward the cost of the new community center.
If the community center was funded through a property tax increase, the cost would fall solely on homeowners and other property owners in Dilworth.
Other facts about the local sales tax
During Minnesota’s 2023 legislative session, lawmakers reviewed Dilworth’s plan for a new community center and authorized the city to present a 0.5% sales tax option to local voters.
The city can’t extend or use the sales tax on other projects without authorization from the State Legislature and another vote of approval by residents.
The sales tax is not permanent. The tax will be in place for the next 25 years or until the bonds are repaid, whichever comes first.
The University of Minnesota analyzed the economic effects of a local sales tax in several Minnesota cities and found no evidence that overall sales growth for businesses was impacted.
Funding for the fire station has already been secured. The city is investing $10 million to build a new fire station using a combination of federal, state and local funding.