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After last week's veto, East Grand Forks advances shorter sales tax proposal

After Mayor Steve Gander vetoed a 30-year, 1.25% sales tax, East Grand Forks officials on Tuesday agreed on a tax that would last for 10 fewer years

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East Grand Forks City Hall. Herald file photo.
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EAST GRAND FORKS — After their first choice was vetoed , East Grand Forks officials agreed to shorten a proposed sales tax that would pay for renovations and upgrades to two city ice arenas and a baseball diamond.

City Council members voted 4-3 to send a 20-year, 1.25% sales tax to the Minnesota Legislature for approval. If lawmakers OK the tax, it’ll then head to a citywide vote in November for final approval. The proposal would tax sales on many goods and services at the same rate as one that council members approved by a 5-2 vote earlier this month, but it would expire approximately 10 years sooner. Voting in favor were council members Tim Riopelle, Tim Johnson, Brian Larson, and Council President Mark Olstad. Voting against were Marc DeMers, Clarence Vetter and Dale Helms.

“I don’t think that people realize that that’s going to go on their water and light bill, their cell bill, their heating,” Helms, a persistent skeptic of the project, said. “Every bill they pay, this is going to go on there.”

The vote comes a week after Mayor Steve Gander vetoed a council vote to advance a 1.25% tax that would have lasted 30 years instead of 20. Council members on Tuesday attempted to override Gander’s veto, but failed by a 5-2 vote. An override is only successful if at least six of the council’s seven members vote for it. Voting in favor of an override were Riopelle, Johnson, DeMers, Larson and Olstad. Voting against were Vetter and Helms.

The tax, regardless of its size, is meant to help pay for work on the city-owned VFW Memorial Arena, the East Grand Forks Civic Center, and Itts Williams Park, which sits next to the center. City consultants put together a $37.4 million proposal that calls for a grandstand adjoining the park and the Civic Center, a shared viewing area and sort-of breezeway connecting the VFW and nearby Blue Line Club Arena, more and better locker rooms and other amenities at both, plus a host of nuts-and-bolts upgrades to the buildings’ mechanical systems and accommodations for people with disabilities.

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A few Eastside business owners objected to the 30-year, 1.25% tax when council members considered it earlier this month. The Grand Forks and East Grand Forks Chamber of Commerce surveyed 51 business types – owners, employees, nonprofit workers and so on – and found that 32 of them either supported or strongly supported a new sales tax. Of the 37 who had an opinion about the rate of such a tax, 24 said they’d support a 1% one. The survey apparently did not inquire about the length of a new sales tax.

$5.5 million smaller

Sales taxes in Minnesota last for a predetermined number of years or until they’ve generated a certain amount of money for a specific project, whichever comes first. If East Grand Forks’ proposed tax is approved by legislators this spring and voters this fall, the money it generates would repay the bonds the city would sell to renovate the ice arenas and ballfield.

The newly approved tax is expected to produce $21.5 million for such a project, assuming that citywide sales grow by 1% each year for the next 20. Under that same assumption, the now-vetoed tax would have put forth $27 million – a figure that’s still well short of the total estimated cost of the broader plan.

City leaders expect to fill that gap with a combination of private donations and trimming parts of the plan as necessary. They’ve also kicked around ideas like getting the project included in a statewide bonding bill, selling city-owned land north of town that once was used for its sewage systems, and selling the city’s portion of a downtown strip mall that overlooks the river and houses a handful of restaurants and other businesses.

“I think it’s something that we need to consider very aggressively,” Olstad said, worried that escalating costs could continue to reduce the scale of the proposed renovations.

A shorter-lived tax means less revenue for the city project and thus, presumably, a much more ambitious fundraising target or deeper cuts to the spending plan. Reid Huttunen, East Grand Forks’ parks and recreation superintendent, told the Herald on Tuesday that the improvements to the Itts Williams baseball diamond and the connection between the VFW and Blue Line Arena might be the first to be reduced or eliminated outright.

“I think we really need to sharpen our pencils on this project before it comes to the citizens,” Vetter said, “or it’s all going to get voted down.”

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Annexation for an asphalt plant

In related news, council members agreed to annex about 22 acres of farmland adjacent to the city’s border with Huntsville Township at the intersection of Hwy. 2 and County Road 17. RJ Zavoral & Sons hopes to build an asphalt plant there, but a handful of nearby residents and business owners object to the plan on health and environmental grounds. Voting to annex the land were Johnson, Olstad, Larson, Vetter, and Helms. Voting against was Riopelle. Abstaining from the vote was DeMers, who works for the company.

The council’s vote on Tuesday is the first of two necessary for the annexation to move forward, and the company would still need to get further approval from the state and city governments to operate such a plant.

City council members in November agreed to zone the land in the township for industrial use at the same meeting during which they voted to adopt a long-range land-use plan that calls for it to be used for industry.

The company tried to build a similar facility further outside of town and was rejected by Polk County planners and officials .

Joe Bowen is an award-winning reporter at the Duluth News Tribune. He covers schools and education across the Northland.

You can reach him at:
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