Mayor Larson Talks .5% Sales Tax For Streets, Mandate For Medical Dist.

$500K From Sales Tax, $500K From Utilities Fund Mandated By State For Medical Dist. Streets For 10 Years; City Receives $100M From State In Return

DULUTH, Minn. – Duluth City Councilor Joel Sipress sounded off at Monday’s city council meeting by saying Mayor Emily Larson and her administration could have been more transparent involving the new half-percent sales tax and a portion of that funding now being required by the state to go to the Medical District over a 10-year period.

“I have to say that I am very disappointed in Mayor Larson’s failure to clearly community with the public and with the council on this matter,” Sipress said. “This stipulation that was added to our street tax, as modest as it turns out to be, was something that was never presented publicly to the city council and never discussed publicly by the mayor at any point during this discussion.  I heard about it kind of through the grape vine, frankly, as a city councilor.”

But Mayor Larson told FOX 21’s Dan Hanger on Tuesday that she’s been an open book, and the dedicated funds for the developing Medical District will be spent for the streets in that neighborhood and at an amount comparable to what other neighborhoods will see.

“I am so happy for this community because we really, we deserve good streets, we deserve reliable infrastructure. And now we have a way to pay for it.”

The deal is done. Duluth’s half-percent sales tax is approved by the Minnesota legislature.

It’ll take effect this fall bringing in a projected $7.5 million annually for the next 25 years to be used specifically for street repairs throughout the city, just as voters approved in a referendum, according to Larson.

“It is the best legislative session this community has had in I don’t even know how many years. It is like the Minnesota miracle for Duluth,” Larson said.

But since that original referendum, the state legislature made a provision to the sales tax approval that mandates the city spend $10 million on streets and utilities over the next 10 years –specifically in the newly named Medical District. And in return, the city gets $100 million from the state to develop infrastructure within the Medical District neighborhood where Essentia and St. Luke’s are privately spending $1.1 billion in new development.

Some of the $100 million could go to parking solutions, connectivity from 4th Street to the Lakewalk, and supporting new housing developments with the possible demolition of St. Mary’s Hospital for such a project.

“We did many, many hearings on this bill. We did at least two press conferences with the governor after the sessions of the sales tax and how it fits into the Medical District. Councilors were there for that for those press conferences as well,” Larson explained.

But Councilor Joe Sipress says he, other councilors and the public never got a straight-forward heads up of the provisional requirement to use some sales tax revenue on a the Medical District.

“The biggest concern I heard from voters was if this is really going to be used the way you say, I’m all for this but I need your word, I need your word, I need your vow, I need your promise that that’s how it’s going to be used. So it was a sensitive issue,” Sipress said.

Mayor Larson says she’s been transparent and that the provision really isn’t that significant.  She says for the next 10 years, only $500 thousand will come out of the new sales tax annually — specifically for streets in the Medical District.

Another $500 thousand will come out of the utilities fund, equaling a $1 million a year over those 10 years.

“You could say, ya know, Superior Street, what is that an eight-block stretch? We’re doing utilities, we’re going all the way down, we’re doing steam. That is what, a $40-50 million project? Ya know, it goes fast,” Larson explained.

Larson says the $500 thousand from the sales tax is something that would have been spent on neighborhood streets in the Medical District anyway, which goes from Superior Street up to 6th Street and from 3rd Avenue East to 12th Avenue East.

“So what we are talking about over that duration is $500 thousand within a 12 block radius. That’s certainly in keeping with the spirit and intent and will of the voters,” Larson said.

Meanwhile, with the half-percent sales tax taking effect in the fall, Mayor Larson says to get ready for considerable projects in every single council district in the city in 2020 using revenue from that tax.

“We are being intentional about making sure every single neighborhood will see the benefit of this investment. That’s really important to me. That’s been the foundation of who I am — to be really clear and upfront, to be honest and forthright if we change course, but also to back up my word. What I said was this is a city wide solution for 25 years and residents can rely on that,” Larson said.

Councilor Sipress says he hopes the mayor and her administration, as well as councilors, will take this as a learning experience to clearly demonstrate to the public when changes are made to promises.

Meanwhile, any spending of the sales tax revenue or the $100 million from the state must be approved by the city council first, which Mayor Larson says was written into the bill intentionally for clarity and transparency.

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