Project Finance
The City’s investment plan that shares the costs with residents and nonresidents.
Public Works & Public Safety Facility Financing
During Minnesota’s 2023 legislative session, state lawmakers reviewed the City’s plan for new Public Works and Public Safety buildings and authorized the City to present a 1.25 percent sales tax option to local voters. Approved by voters Nov 7, 2023, the local sales tax will be used to pay for the $105 million cost of the projects, plus interest and the cost of issuing bonds. Here is how these project costs will be divided:
$15 million will be used to acquire land outside of downtown Golden Valley to serve as the location for a new Public Works building.
$45 million will be used to build the new Public Works building.
$45 million will be used to build a new Public Safety building near the current site of the Public Works buildings and will serve as a new Fire and Police headquarters.
When including interest and other financing expenses, the total cost of the Building Forward plan will be approximately $190 million spread over 30 years.
The local sales tax will generate 1¼ cents for every dollar spent, or 10 cents for every $8 spent. Automobiles, clothing, groceries, baby products, and feminine hygiene products are exempt from a local sales tax.
East Fire Station Financing
The East Fire Station is being funded through several sources that are separate from the 1.25 percent optional sales tax. Funding for the East Fire Station project will come from a combination of city fund s and government bonds. Bonds are a type of long-term loan utilized by government entities to finance major, long-term capital projects such as roads, schools, and other public infrastructure. Borrowing for large project enables government entities to distribute the costs across future years.
In 2023, the City received roughly $3.2 million in state grant funding to contribute to this project. The funds may be utilized to acquire and improve property, create early designs, and make space for regional training and other site upgrades.
Civic Center Campus Financing
The Civic Center Campus Master Plan is being funded through several sources, and these sources vary for different aspects of the plan. The Master Plan will explore the feasibility of building a new City Hall along with a possible full campus design. Once a final plan is determined, the City will share more about how each component is being financed.
How nonresidents will help pay for the plan
61.6%
38.4%
About 61.6 percent of the funds generated by the sales tax will come from nonresidents who make purchases in Golden Valley.
That means nonresident spending in the city will contribute approximately $64.7 million for the $105 million in projects, according to the University of Minnesota.
Why a local sales tax?
The City Council chose a local sales tax over a property tax increase to spread the cost of the projects among residents and nonresidents who benefit from Golden Valley’s public services.
With the high traffic of nonresidents who work in Golden Valley (approximately 33,200) combined with the population of Golden Valley (approximately 22,000) who use City services, the sales tax meets the Minnesota Legislature’s goals for regional impact.
If the projects were funded through a property tax increase, the cost burden would only fall on those who own properties in Golden Valley.
The local sales tax can’t be extended or used 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 30 years or until the bonds are repaid, whichever comes first.
Collections from the tax will be used to make bond payments to finance the City’s investments. This approach allows current residents to take advantage of the improvements several years sooner while the bonds are being repaid.
The University of Minnesota analyzed the economic effects of a local sales tax increase in several Minnesota cities and found no evidence that overall sales growth for businesses was impacted.