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Half-cent sales tax for Louisa Street project (09/12/2012)


After years of efforts to secure funds for the Louisa Street extension project, the City of Winona could see funding of $4.7 million, about half the total cost, for the project by the end of the month. The rest of the $9.5 million transportation project could be paid for using a half-cent local sales tax, or borrowing through the sale of bonds—borrowing that could drive up local property taxes for decades.

The Minnesota Department of Employment and Economic Development (DEED) announced Monday the Louisa Street extension project is one of 37 in the state moving on to the second round of review for possible funding.

In June, the city submitted a grant application regarding the proposed $9.5 million project. The application requested $4.7 million in state dollars to cover roughly 50 percent of the project, with the other half to be paid for using bonds or, according to several proposals, using a half-cent local sales tax. 

City Director of Economic Development Lucy McMartin said while the project isn’t approved yet this is a step in the right direction.

“I think it’s better to be in this upper group of projects,” McMartin said. “We feel strongly that this extension will have a positive economic impact in helping Technology Park and the East End of Winona with traffic access.”

DEED has $47 million to allocate to capital projects throughout the state and McMartin said the department will announce the list of funded projects at the end of the month.

“This process is still extremely competitive,” McMartin said.

Phase one of the project would construct access from Highway 61 to Louisa Street, providing an eastern access to retail and industrial land. The project also includes the construction of a bike path under Highway 61 that would begin near the Fleet Farm parking lot, proceed under the existing Highway 61 bridge and connect to Bundy Boulevard.

Possible local funding

The city’s capital improvement budget indicates the Louisa Street extension project will be paid for using $10 million from a half-cent city sales tax—a special tax that would require voter approval. It also pegs 2017 for an additional Louisa Street project, costing $14 million, to be constructed: a railroad overpass that would also be paid for using a local sales tax.

The last time the city imposed a local sales tax, it collected millions, purportedly to dredge Lake Winona and used the fill to create what the ballot language described as an “industrial park” on the East End. Instead, city leaders met privately with officials from big box retailers, and much of the land was for retail expansion, rather than the industrial developments ushering in the high paying jobs that were promised.

Soon after, a Louisa Street extension began appearing on city wish lists for funding from the state. Some believe the transportation needs on the East End were caused by the introduction of high-traffic, big box retailers on the land meant for industrial development.

If voters aren’t willing to approve a local sales tax to fund the rest of the proposed extension project, the city does have the ability to borrow money through the sale of bonds for the bill. A bond for $5 million, paid for over 20 years, would mean an annual bond payment of at least $250,000. That amount, if covered exclusively with the local property tax levy, would raise local property taxes by nearly four percent over that 20-year repayment schedule.

McMartin said that the city would likely pay for the rest of the Louisa Street extension through a bond, although that issue has not been fully vetted by the council. 


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