ROCHESTER — Goals for a new sales-tax generated economic vitality fund continue to unfold.
On Monday, the Rochester City Council will review proposals for $50 million of the $205 million set to be generated through the recently approved local sales tax extension.
The bulk of the economic development fund is expected to address housing needs, with $33 million being proposed to spur new housing development and $6 million targeting housing preservation and support.
The remaining $11 million will be used for programs addressing workforce needs and business development, according to information provided to the council ahead of Monday’s study session.
“This presentation is intended to provide funding recommendations on the use of the funds to support these areas of focus, both for the life of the funding source as well as for the next five years,” Rochester Manager of Housing and Neighborhood Services Taryn Edens wrote in her report to the council.
Of the $33 million dedicated to housing creation, Community Development staff is recommending $18 million be used to invest in city infrastructure, such as sewer access and streets, needed to attract new housing development.
Another $14 million would fund efforts to create new affordable housing, either by supporting construction of single-family homes through homeownership programs or by supporting the creation of new affordable rental projects.
The remaining $1 million is proposed for a housing trust to leverage potential state housing support.
When it comes to local housing preservation and support, city staff is recommending $4 million be used for continued support of the city’s existing home rehabilitation program, $1 million be invested in the First Homes Community Land Trust and another $1 million be used for construction projects that add housing density to existing buildings.
The workforce and business development funds could also have a housing impact, with $5.5 million being used to support development of new housing in the upper stories of commercial and mixed use buildings, which would create construction jobs and new revenue streams for property owners.
Another $3.5 million is proposed for an economic development fund to support the creation of new businesses, while also strengthening existing local businesses, while $2 million would be split between workforce initiatives and entrepreneurship programs.
With an estimated $15 million in sales taxes being collected annually, the economic vitality fund is expected to receive approximately $3.3 million a year, according to the proposal being reviewed Monday. Added funds could be borrowed during the first two years to kick-start efforts, with future sales tax revenue being used for debt payments.
Under the plan being presented, the first five years would see $21 million spent on the creation of housing and related infrastructure, $1.5 million to leverage existing housing and infrastructure and nearly $3.4 million to address workforce and business development.
Using current projections, the work would require borrowing nearly $9.4 million in the first two years, with $900,000 in annual debt payments starting in 2026. The payments won’t necessarily lower the amount of support provided through the economic vitality fund, since the sales tax extension is allowed to continue until related debt is paid.
Under the plan being proposed, the number of new housing units created, the amount of land made available for development and the number of businesses supported would be among data tracked to show whether the goals are being met during the first five years, which is considered Phase 1 for the fund.
Specific programs and efforts being proposed in Phase 1 will be presented to the council during its study session at 3:30 p.m. Monday, which is being held in the Rochester Public Utilities Community Room, 4000 East River Road NE.
Meetings scheduled to be held during the week of June 10 include:
Rochester
• City Council study session, 3:30 p.m. Monday in the Rochester Public Utilities Community Room, 4000 East River Road NE. The meeting will livestream at
www.rochestermn.gov/meetings/council-meetings
and be available on Spectrum cable channel 180 or 188.
• Pedestrian and Bicycle Advisory Commission, 6:30 p.m. Monday in room 104 of City Hall, 201 Fourth St. SE.
• Rochester Police Policy Oversight Commission, 3:30 p.m. Tuesday in room 164B of the Development Services and Infrastructure Center, 4001 West River Parkway.
• Sustainability and Resiliency Commission, 4:30 p.m. Wednesday in room 104 of City Hall, 201 Fourth St. SE.
• Planning and Zoning Commission, 6 p.m. Wednesday in council chambers of the Government Center.
• Citizens Advisory on Transit, 4:30 p.m. Thursday in room 104 of City Hall.
Rochester Public Schools
• School Board study session, 5:30 p.m. Tuesday in the board room of the Edison Building, 615 Seventh St. SW.
