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HomeMy WebLinkAbout[10a] Joint Powers Agreement - Sales Tax - 2014MEETING DATE: AGENDA ITEM: SUBMITTED BY: Council Agenda Item 10[a] June 24, 2014 Joint Powers Agreement Administration BOARD /COMMISSION /COMMITTEE RECOMMENDATION: PREVIOUS COUNCIL ACTION: The City of St. Joseph is part of the regional 1/2 cent sales tax which is set to expire in 2017. The distribution of the sales tax is includes two equations, one using revenue and the second using population. The City of St. Joseph receives about S 1.40 for every dollar collected. BACKGROUND INFORMATION: The area cities received legislative authority to extend the additional half cent sales tax for an additional 20 years beginning in 2018. The Administrators and Mayors have meet to discuss the regional projects and funding for each, forwarding the information to each Council. Previously the Council discussed that the regional projects would include the following three projects: Airport (S 200,000), Aquatics Center (S 200,000) and Trails (S 500,000). For the purposes of determining trails, any funding would have to connect to the Wobegon Trail and over a 20 year period, using the three projects, S 10 M is anticipated to be received. Each City looked at connections to the Wobegon and how the project could be completed within the 20 years. The purpose of the trails is two fold: 1) to provide a continuous recreation trail and more importantly 2) to connect the area cities. The map that follows is the illustration of the connections to the Wobegon showing that at the end of the 20 years, all the Cities would be connected. Since the funding will not begin until 2018, any project that is started before that date is not eligible for funding. Therefore you will notice that St. Joseph does not have any trails that are funded as the St. Joseph connections will be completed by 2018, with Stearns County the lead agency on the connection to Waite Park and St. Joseph via APO funding connecting on the west. The agreement also provides for unspent funds to go into a park and trails fund that could be used for enhancements. For example, the City of St. Joseph could request use of excess funds for lighting or benches along the Wobegon. Excess funds would be limited to the Wobegon Trail. During the discussion of the regional projects it became apparent that not everyone agrees with the regional project designations, but it was a compromise between all involved in the discussions (Mayors and Administrators). During the next couple of weeks all the Cities will be considering the Joint Powers Agreement as it needs to be finalized so ballot questions can be drafted and approved. During one of the meetings it was asked what happens if a City does not sign the Agreement, the answer was that they would not be a participant in the regional half cent sales tax. BUDGET /FISCAL IMPACT: ATTACHMENTS: Request for Council Action Joint Powers Agreement Trail Exhibit REQUESTED COUNCIL ACTION: Consider authorization for execution of the Joint Powers Agreement. This page intentionally left blank Central Minnesota Sales Tax Collection and Distribution Joint Powers Agreement The parties to this Agreement are governmental units of the State of Minnesota. This Agreement is made pursuant to the authority conferred upon the parties by Minnesota Statute §471.59. Article I General Purpose Section 1.1 Purpose. The cities have determined that the St. Cloud Regional Airport ( "Airport "), the proposed St. Cloud Area Aquatics Facility ( "Aquatics Facility "), and regional trail connections ( "Trails ") (all three projects collectively referred to as the "Core Projects ") are all integral parts of the region's public infrastructure and significant assets to the region's cities. Pursuant to the approval of voters at the general election held on November 4, 2014, the parties to this Agreement are authorized to impose a sales and use tax of one -half percent to pay all or part of the capital and administrative costs of certain improvements to the Core Projects. Authorized expenses include, but are not limited to, acquiring property, paying construction expenses related to the Core Projects, and securing and paying debt service issued to finance construction or improvement of the Core Projects up to the dollar limits approved by voters, plus any debt service costs. The expenditure decisions for the Airport will be at the sole discretion of the City of St. Cloud or a Regional Airport Authority. The expenditure decisions for the Aquatics Facility will be at the sole discretion of the City of St. Cloud. The expenditure decisions for the Trails will be as outlined in Article V below. The primary purpose is to create a source of revenue to provide for future capital improvements to the Core Projects, including related administrative costs. Additionally, the law authorized distribution of surplus tax revenues to cities whose citizens approve the imposition of the various taxes. Those surplus revenues can be used in accordance with the special law to fund needed public facilities. Surplus revenues are revenues collected from authorized taxes that are greater than the capital or administrative costs of the Core Projects. The purpose of this Joint Powers Agreement is to provide for the collection and distribution of the sales tax authorized by Minnesota Laws, 2013, Chapter 143, Article 8, Section 47 (the "Special Law "). The authorized taxes are a one -half percent sales and use tax. The revenues raised must be used for the purposes authorized by such legislation. Any sales tax dollars collected from the parties to this Agreement prior to January 1, 2019 will be distributed in accordance with terms of the current agreement between the parties related to sales and use tax collections from 2006 through 2018. The Special Law is in the best interests of the governmental units executing this Agreement as well as the citizens of those units. 1 Article II Definitions Section 21. "PARTICIPANT ". Any city which is a signatory to this AGREEMENT. Article III General Administration Section 3.1. The City of St. Cloud shall provide general administrative services to the PARTICIPANTS. These services shall include: Accounting and reporting Record keeping Legal services Section 3.2. Any PARTICIPANT'S employees serving as advisors or providing administrative services shall not be considered employees of any other PARTICIPANT for any purpose. Each PARTICIPANT shall be responsible for the payment of wages or other remuneration to its employees providing services pursuant to this AGREEMENT. Article IV Imposition of Sales and Use Taxes Section 4.1. The collection and administration of sales and use taxes shall follow provisions of Minnesota Statutes, Section 297A.48. Once all taxes, less state administrative fee, have been remitted to the City of St. Cloud, the following procedures shall be followed: 4.1.1 Accounting and Financing. The City of St. Cloud shall establish a Sales and Use Tax Fund. The Sales and Use Tax Fund shall be the depository for all tax revenue collected by the State of Minnesota and remitted to the City of St. Cloud, pursuant to the Special Law. 4.1.2 Procedures. After receipt of sales and use tax revenue into the City of St. Cloud's Sales and Use Tax Fund each year, the City of St. Cloud will transfer $900,000 to City of St. Cloud accounting funds related to the Core Project improvements. Of the $900,000 allocated to the Core Projects fund, the City of St. Cloud will transfer $200,000 to City of St. Cloud accounting funds related to the Airport improvements and $200,000 to the City of St. Cloud accounting funds related to the Aquatics Facility improvements, with expenditure decisions on those funds to be made as stated in Section 1.1 above. The remaining $500,000 will be transferred to the City of St. Cloud accounting fund related to the Trails improvements to be distributed in accordance with Article V below. Accounting and reporting of all funds and accounts will follow generally accepted government accounting practices. 4.1.3 Financial Statements. The City of St. Cloud will provide the Participants with monthly statements of all activity related to the Sales and Use Tax Fund. K Article V Trails Fund 5.1. Allocation of Trails Fund: The participants have expressed the mutual desire to create an integrated network of regional recreational trails whereby participant cities connect into the trail network. It is the intention of the participants to create a general Trail Fund for the benefit of the integrated trail. The allocation to each Participant from the Trails Fund portion of the Core Projects shall be set as follows based upon their estimated regional recreational trail connection costs as approved by all Participants through this Agreement: Integrated Trail Plan Section Total Cost Annual Disbursement City 6th Street S. /Heritage Drive /CR #1 2,165,000.00 108,250.00 Sartell 3rd Avenue to Sauk Rapids High 500,000.00 25,000.00 Sauk Rapids Waite Avenue /44th Avenue 250,000.00 12,500.00 St. Cloud Apollo High School Area 350,000.00 17,500.00 St. Cloud TH15 to Mississippi River 2,000,000.00 100,000.00 St. Cloud Downtown to Hester Park to Sauk Rapids Bridge 3,000,000.00 150,000.00 St. Cloud CR134 /CR138 /Pincecone Road 600,000.00 30,000.00 St. Cloud City Center to Opprtunity Drive 955,000.00 47,750.00 St. Augusta Sauk River to 3rd Street 180,000.00 9,000.00 Waite Park 10,000,000.00 500,000.00 Total Each Participant must use their annual allocation as shown above toward making the designated connection to the integrated recreational trail network. Qualifying expenses include right -of -way acquisition, engineering, design, lighting, and the construction of the trail itself. Additionally, the Participants understand that from time to time individual Participants may receive federal or state grant dollars to fund recreational trails. This may create an excess of Trail Funds in any given year. The Participants agree that any excess trail funds will be utilized and allocated back into the general Trail Fund for any trails identified on exhibit A. Reallocation of excess trail funds will be determined by consensus of the city administrators and final approval by the Participants. The Participants recognize that the connection to the integrated recreational trail that was estimated above could be different than the actual connection that is made in the future, or that the costs related thereto may be higher or lower and the Participants agree that the annual allocation agreed upon will remain based on estimates and actual costs will not change the allocation. Any higher costs must be covered by the Participant with their own funding sources; any remaining funds available due to lower costs may be used as identified above. Article VI Use and Distribution of Surplus Tax Revenue Section 6.1. Use of Surplus Tax Revenue: If annual revenue collected from the sales and use taxes, authorized in the Special Law are greater than $900,000, the surplus shall be returned to the Participants in the manner described in Section 6.2 of this Agreement. The use of surplus tax revenue will comply with the Special Law. K3 Section 6.2. Distribution of Surplus Tax Revenue: The annual distribution of surplus revenue will be as follows: Where: STR x (PPTT + PPTP) = PD 2 STR is the surplus tax revenue in each year for which the sales and use tax is collected. PPTT is the Participant's total sales and use tax revenues collected by the Minnesota Department of Revenue each year as a percentage of the total sales and use tax revenue for all Participants in that same year. PPTP is the Participant's total population in each year as a percentage of the total population of all Participants in that same year. The population shall be based on the Minnesota State Demographer's latest population estimate. PD is the Participant's annual distribution. Sample Calculation for the Cities of St. Cloud and participating Cities City Population % Tax % Core Projects Available For Distribution Allocation % Distribution St. Cloud 63,789 61.60 $64,250,149 66.33 63.97 $4,477,900 St. Augusta 2,726 2.63 $134,200 0.14 1.39 $97,300 Sartell 12,629 12.20 $2,348,104 2.42 7.31 $511,700 Sauk Rapids 12,216 11.80 $6,014,335 6.21 9.00 $630,000 Waite Park 6,757 6.53 $23,184,299 23.94 15.23 $1,066,100 St. Joseph 5,438 5.25 $926,648 0.96 3.10 $217,000 Total 103,555 100.00 $5,511,901 100.00 $500,000 $7,000,000 100.00 $7,000,000 Section 6.3 Time for Distribution. The City of St. Cloud will distribute excess revenues to Participants on a monthly basis once the $900,000 Core Projects allocation has been paid. Distributed funds shall become the sole property of the Participants. Section 6.4 Unallocated Sales Tax. The parties to this Agreement acknowledge that the Department of Revenue is sometimes unwilling or unable to allocate sales and use tax collections among the cities and so an accounting estimate based upon the formula needs to be made by the City of St. Cloud in order to try to fairly distribute such collections. The parties have agreed that population will be used as the allocation factor for such unallocated collections. Any other collection and allocation interpretations not clearly spelled out in this Agreement will be made by the City of St. Cloud as the entity providing the administrative services under this Agreement. The City of St. Cloud will communicate any such allocation interpretations to each participant. M Article VII Indemnification Section 7.1. Each Participant shall be liable for its own acts to the extent provided by law and hereby agrees to indemnify, hold harmless and defend the other, its officers and employees against any and all liability, loss, costs, damages, expenses, claims or actions, including attorney's fees which the other, its officers and employees may hereafter sustain, incur or be required to pay, arising out of or by reason of any act or omission of the Participant, its agents, servants or employees, in the execution, performance, or failure to adequately perform its obligations pursuant to this Agreement. Section 7.2. It is understood and agreed that nothing in this Agreement shall affect or otherwise constitute a waiver of the limits on the liability of any Participant provided by Minnesota Statutes Chapter 466 (Tort Liability, Political Subdivisions) or other applicable law. Article VIII Duration Section 8.1. This Agreement shall continue in full force and effect until December 31, 2038. Section 8.2. Upon termination of this Agreement, all property purchased or owned pursuant to this Agreement together with monies on hand, shall be distributed to the current Participants. Such distribution of assets shall be made in proportion to the total (annual average) contributions respective by Participant over the entire duration of this Agreement according to the formula in Section 6.2. This Agreement will continue in full force and effect after termination for such period, no longer than six (6) months, as is necessary to wind up the affairs of the Participants, but for no other purpose. Article IX Severability Section 9.1. If any portion of this Agreement is found to be void, unenforceable or unconstitutional, or any combination of these, by a court of competent jurisdiction, the remaining portion of this Agreement shall remain in effect. Article X Effective Date Section 10.1. Effective Date. This Agreement shall be in full force and effect for each Participant upon signing this Agreement. All Participants need not sign the same copy. Each Participant shall file the signed Agreement with the City Clerk of the City of St. Cloud. 61 Article XI Prior Agreements Section 11.1. Cities that chose to execute this Agreement may be parties to prior Sales Tax Collection and Distribution Joint Powers Agreements. The prior agreements had other primary purposes. This agreement will run consecutively to the prior agreement. The City of St. Cloud's participation in the prior agreement will continue for purpose of providing administrative services including collection and administration of tax revenues pursuant to that agreement. IN WITNESS WHEREOF, the undersigned governmental unit, by action of their governing bodies, have caused this Agreement to be executed in accordance with the authority of Minnesota Statute §471.59. Date: Date: Date: CITY OF ST. 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