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Serving Northern St. Louis County, Minnesota

Virginia residents will decide fate of sales tax for Miners

Marcus White
Posted 11/1/18

VIRGINIA— Voters in Virginia will be asked to give their blessing on Nov. 6 to the imposition of a one-percent sales tax in the city to fund the construction of a new Miners Memorial complex. …

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Virginia residents will decide fate of sales tax for Miners

Posted

VIRGINIA— Voters in Virginia will be asked to give their blessing on Nov. 6 to the imposition of a one-percent sales tax in the city to fund the construction of a new Miners Memorial complex. Backers of the proposal have marketed the concept to city residents as a way to have residents of neighboring communities, including communities in the North Country, pay much of the $43.8 million price tag.

That’s because Virginia is a regional retailing hub, which serves a large swath of northern St. Louis County. The one-percent sales tax would apply to most retail sales (automobiles being an exception) within the city limits and is estimated to pay the cost of revenue bonds over 20 years.

Supporters say that years of maintenance problems have plagued the complex, which was originally built as a basketball arena and community center in 1957. Efforts to fund fixes to the building have been ongoing since 2005, but have been largely unsuccessful, and the city is banking on the referendum as a final option for the project or it risks losing funding pledged by the state.

Virginia Mayor Larry Cuffe Jr. said the city has expanded the project from simple renovations to one of the city’s largest economic development plans in recent memory.

“It won’t be just another ice arena,” Cuffe said. “It will be a convention and community center as well.”

The plan, according to Cuffe, is based on studies conducted by the city and project managers, Kraus-Anderson, that found building new, rather than a restoration of the existing structure, would bring in additional revenues to the city. Those increased revenues, estimated at $2.25 million per year, would come from home sales and increased property values and the proposition that a large convention center would bring more business by luring hotels to build in the area, increasing traffic to local businesses and potential renters of the new convention space.

The latest plan only covers a new arena space, meeting rooms and convention space. Any additional work, such as the addition of swimming pools, would need to be funded through entities that would use them, such as local school districts.

Cuffe said he understands that the city has marketed the new tax to city residents as largely being paid for by outside shoppers, but he said it is the city’s right to hold such as referendum. He also said he would be willing to meet with anyone, whether a city resident or not, to discuss the project and what he sees as not only an addition to the city, but an addition to the region.

He added that materials being circulated throughout the area to garner support for the project have not originated with the city, but are being distributed by a group of businesses and citizens who are in support of the project under the banner “Friends of the Virginia Recreation Committee”.

While members of the city council, including the mayor, are allowed to support the project personally and lend vocal support, Minnesota law prohibits cities from using taxpayer money to promote city projects up for a referendum vote.

Cuffe said Virginia’s plan to impose a sales tax is quite common in the state, and other cities, such as Rochester and Bemidji, have imposed sales taxes to pay for similar projects with much success. Cuffe noted that Virginia currently has no local taxes, in contrast to Duluth, which has three. Even if Virginia voters okay the measure, the state Legislature will still have to authorize the tax.

If the referendum were to fail, Cuffe said the city would have two options on the table. The first would be to forfeit a $12 million grant from the state. The second would be to utilize the grant, which requires matching funds, and raise the money through a local property tax increase, which could be as much as 28 percent, to increase the city’s bonding capacity.

The mayor has asked people to reach out to him on his cell phone at 218-780-9941 if they have any comments or concerns about the project.