DISCLAIMER

 

FINANCE COMMITTEE


08-031-O

ORDINANCE NO. __________


AN ORDINANCE IMPOSING AN ADDITIONAL THREE QUARTERS OF ONE PERCENT FOOD AND BEVERAGE TAX, AMENDING SECTIONS 42A-2, 42A-44 AND 42A-50 OF THE DULUTH CITY CODE.

CITY PROPOSAL:

The city of Duluth does ordain:

     Section 1. That Section 42A-2 of the Duluth City Code, 1959, as amended, is hereby amended to read as follows:

Sec. 42A-2.Sales tax--imposed; amount of tax; exemptions.

     (a)  To provide funds for the purpose of general municipal operations, maintenance and capital improvements of the city, there shall be and is hereby imposed an excise tax of one percent on gross receipts of any person from sales at retail, including the sales of motor vehicles, as defined in this Chapter, made in the city. In no case shall the tax imposed hereby upon the seller exceed the amount of the tax which he is authorized and required by law to collect from the purchaser. Except in the case of motor vehicles and as otherwise provided in this Section, all goods and services that are exempt from taxation under the provisions of Minnesota Statutes Chapter 297A are exempt from taxation under this Chapter;

     (b)  In addition to the tax set forth in Subsection (a) of this Section, and notwithstanding any provision of law to the contrary, an additional tax of 1 1/2 two and one-quarter percent is hereby imposed on gross receipts from the furnishing, preparing or serving for a consideration of food, meals or drinks, not including those prepared and served at hospitals, sanatoriums, nursing homes or senior citizens’ homes, meals or drinks purchased for and served exclusively to individuals who are 60 years of age or over and their spouses or to the handicapped and their spouses by governmental agencies, nonprofit organizations, agencies or churches or pursuant to any program funded in whole or in part through 42 USCA Sections 3001 through 3045, wherever delivered, prepared or served, meals and lunches served at public and private schools, universities or colleges, or the occasional meal thereof by a charitable or church organization. The tax imposed in this Subsection is subject to the exemptions set forth in Subsection (c) of this Section and to the limitations of Laws of Minnesota 1980, Chapter 511, as amended;

     (c)  The tax imposed by Subsection (b) above shall not be imposed:

           (1)  Upon business establishments doing less than $100,000 in sales taxable under Subsection (b) in any current tax period from October 1 to September 30 of the next year;

           (2)  Upon business establishments which did less than $100,000 in sales taxable under Subsection (b) in any current tax period from October 1 to September 30 immediately preceding the period from October 1 to September 30 in which the tax would be collected;

     (d)  New establishments. The exemption in Subsection (c)(2) above shall not apply to newly opened establishments or establishments which have not been in operation for one year on September 30. In the case of the above-mentioned establishments, the administrator shall make an estimate of the anticipated yearly sales volume of the establishment based on the size, type of operation, sales volume of similar establishments in the area and any other available relevant data. If the estimated yearly sales volume exceeds $100,000, the establishment shall collect and remit the tax authorized in Subsection (b). If the establishment has not reached $100,000 in sales taxable under Subsection (b) by the next September 30, taxes remitted by the establishment pursuant to Subsection (b) shall be refunded to the establishment in the manner provided in Section 42A-35 of this Chapter;

     (e)  Notwithstanding the provisions of paragraph (a) of this Section, for sales at retail of manufactured homes used for residential purposes the excise tax is imposed upon 65 percent of the sales price of the home.

     Section 2. That Section 42A-44 of the Duluth City Code, 1959, as amended, is hereby amended to read as follows:

Sec. 42A-44.     Allocation and distribution of revenues produced by tax.

     (a)  All proceeds realized from the taxes imposed by this Chapter, except those amounts described in subsections (b) and (c), shall be paid into the general fund and distributed as provided in this Subsection. After the payment of all expenses of collection and enforcement of the taxes authorized under this Chapter, and after making refunds provided for in this Chapter, the remainder of the taxes levied and collected under this Chapter shall be allocated and distributed in accordance with the annual budget submitted by the mayor and approved by the city council;

     (b)  Taxes realized as the result of “sale and purchase” as defined in paragraph (e) of the definition thereof shall be paid into a special account in the general fund, the proceeds of which will be devoted to one or more of the following recreational, cultural or civic projects:

           Spirit Mountain recreation area;

           Arena-auditorium complex;

           Duluth Convention and Visitors Bureau;

           St. Louis County Heritage and Arts Center;

           An account for civic or tourist projects.

     The distribution of these proceeds shall be determined by the budget process described in Subsection (a);

     (c)  Revenues received from one percent of the tax authorized by Section 42A-2(b) in this Chapter shall be used to pay for activities conducted by the city or by other organizations which promote tourism in the city of Duluth, and to subsidize the Duluth arena-auditorium and the Spirit Mountain recreation area. Distribution of said revenues shall be approved by the city council at least once annually, and shall be made in accordance with the provisions of this subsection. Revenue received from 1/2 one and one-quarter percent of the tax authorized by said Section 42A-2(b) shall be used to pay the debt service on bonds as follows:

           (1)  One-half of one percent of such tax for:

                 (A)  Bonds originally issued in the principal amount of $8,000,000 for capital improvements to the Duluth Entertainment Convention Center; and

                 (B)  Bonds originally issued in the principal amount of $4,970,000 to finance capital improvements to the Great Lakes Aquarium; and

           (2)  Three-quarters of one percent of such tax for bonds to be issued in the principal amount of $40,285,000 plus issuance and discount costs for capital improvements at the Duluth Entertainment Convention Center, including a new arena. issued to finance the expansion of the Duluth Entertainment Convention Center. No such bonds shall be issued until the city council has adopted a resolution approving the location and design of the expansion of such entertainment and convention center.

     Section 3. That Section 42A-50 of the Duluth City Code, 1959, as amended, is hereby amended to read as follows:

Sec. 42A-50.     Allocation of revenues.

     (a)  The revenues received from one percent of the tax imposed by this Article shall be used to pay for activities conducted by the city or by other organizations which promote tourism in the city of Duluth and to subsidize the Duluth Entertainment Convention Center and the Spirit Mountain recreation area, and the revenues received from another one percent of such tax shall be used for tourist related public improvements. Distribution of said revenues shall be approved by the city council at least once annually, and shall be in accordance with this Section;

     (b)  The revenues received from 1/2 percent of the tax imposed by this Article shall be used to pay the debt service on:

           (1)  Bonds originally issued in the principal amount of $8,000,000 for capital improvements to the Duluth Entertainment Convention Center; and

           (2)  Bonds originally issued in the principal amount of $4,970,000 to finance capital improvements to the Great Lakes Aquarium. bonds issued to finance the expansion of the Duluth Entertainment Convention Center. No such bonds shall be issued until the city council has adopted a resolution approving the location and design of the expansion of such entertainment and convention center.

     Section 4. That this ordinance shall take effect and be in force from and after its passage and publication or on July 1, 2008, whichever is later.


FINANCE

STATEMENT OF PURPOSE:  This ordinance implements the additional three-quarters of one percent food and beverage tax that was authorized by the 2008 Minnesota legislature for the DECC Arena project and provides for technical corrections from the 2003 legislation regarding the food and beverage tax and lodging tax.