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Guest Blog Post - ERACC Board shares position on sales tax referendum

The primary purpose of the Elk River Area Chamber of Commerce is to support and advocate for area business.

Earlier this year, the City Council identified three aging facilities that need immediate attention.  In April, the chamber asked the city council to provide tax payers with a complete picture of the vision for city assets and the future growth of Elk River by creating a comprehensive plan for the aging facilities.

The resulting plan was created with the council recommendation of paying for it through a local option sales tax. The plan is well documented on the new website:  If the sales tax referendum does not pass, then “Plan B”, which has unofficially been identified as the alternative solution, puts the burden solely on property taxes. 

In April, the chamber told the City Council that if the only two options presented for repairs and improvements on aging assets are a sales tax or a property tax increase, we believe a sales tax would have less of an impact on our local businesses.  Property taxes are often cited as one of the highest concerns of business property owners and their tenants because of the disproportionate way they are assessed in the State of Minnesota.  Business properties as assessed at approximately 2.5 times the rate for the same priced residential property.  Our research shows that the $17 million dollar cost identified as Plan B, will cost a business with a $500,000 dollar business property approximately $450 in additional property taxes each year. A $1 million property would cost approximately $937 more and for a $5 million property the annual property tax increase would be $4833 annually with no sunset required on the tax.

The ½ cent sales tax covers all three of the aging buildings identified as needing immediate attention and the alternative addresses only one of the 3 buildings in need.  The cost for Plan B is a smaller price tag today. However, building projects will likely continue and will likely be added to property taxes year after year.  This uncertainty and increase in costs does not produce the stability that businesses need in order to grow or an environment that builds confidence for new businesses considering making Elk River their home. 

The city council has already made the decision to repair/replace the Ice arena facilities.  They are only asking voters how they wish to pay for them.  For the sake of a strong business community, we again say that we support a ½ percent sales tax over a property tax increase.

Signed, The Elk River Area Chamber of Commerce Board of Directors

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