Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
2025-11-24 City Council Workshop Packet
AGENDA MAPLEWOOD CITY COUNCIL MANAGER WORKSHOP 6:30 P.M. Monday, November 24, 2025 City Hall, Council Chambers Pursuant to Minn. Stat. 13D.02, one or more councilmembers may be participating remotely A. CALL TO ORDER B. ROLL CALL C. APPROVAL OF AGENDA D. UNFINISHED BUSINESS E. NEW BUSINESS 1. Local Option Sales Tax – University of Minnesota Analysis F. ADJOURNMENT RULES OF CIVILITY FOR THE CITY COUNCIL, BOARDS, COMMISSIONS AND OUR COMMUNITY Following are rules of civility the City of Maplewood expects of everyone appearing at Council Meetings - elected officials, staff and citizens. It is hoped that by following these simple rules, everyone’s opinions can be heard and understood in a reasonable manner. We appreciate the fact that when appearing at Council meetings, it is understood that everyone will follow these principles: Speak only for yourself, not for other council members or citizens - unless specifically tasked by your colleagues to speak for the group or for citizens in the form of a petition. Show respect during comments and/or discussions, listen actively and do not interrupt or talk amongst each other. Be respectful of the process, keeping order and decorum. Do not be critical of council members, staff or others in public. Be respectful of each other’s time keeping remarks brief, to the point and non-repetitive. THIS PAGE IS INTENTIONALLY LEFT BLANK E1 CITY COUNCIL WORKSHOP STAFF REPORT Meeting Date November 24, 2025 REPORT TO: Michael Sable, City Manager REPORT FROM: Michael Sable, City Manager PRESENTER:Michael Sable, City Manager AGENDA ITEM: Local Option Sales Tax – University of Minnesota Analysis Action Requested:MotionDiscussionPublic Hearing Form of Action:ResolutionOrdinanceContract/AgreementProclamation Summary: The University of Minnesota - Extension Center for Community Vitality studied the spending breakdown between residents and non-residents in the City of Maplewood. The study was designed to understand the potential local sales tax impact using the most recent sales and use tax data available (2023). Recommended Action: Discussion Only Fiscal Impact: Is There a Fiscal Impact? No Yes, the true or estimated cost is $0 Financing source(s): Adopted Budget Budget Modification New Revenue Source Use of Reserves Other: n/a Strategic Plan Relevance: Safety Sustainability Development Invest in people and placemaking Background: Local option sales taxes are a tool that cities can use to fund major capital projects without burdening property taxes, capture revenue from regional visitors, and support long-term community investment strategies. Sales Tax proceeds can only be used for “regionally significant” capital projects. State law limits these projects to a single building or structure, including associated infrastructure needed to safely access or use the building or structure; improvements within a single park or named recreation area; or a contiguous trail. Packet Page Number 1 of 53 E1 Attachments: 1. Local Option Sales Tax Analysis for Maplewood 2. LMC – Local Option Sales Tax Process 3. PowerPoint Presentation Packet Page Number 2 of 53 E1, Attachment 1 EXTENSION CENTER FOR COMMUNITY VITALITY Local Option Sales Tax Analysis for Maplewood, MN ESTIMATED CONTRIBUTIONS OF RESIDENTS AND NON-RESIDENTS TO A LOCAL OPTION SALES TAX Authored by Eric King REPORT SPONSOR: MAPLEWOOD, MINNESOTA Packet Page Number 3 of 53 E1, Attachment 1 Local Option Sales Tax Analysis for Maplewood ESTIMATED CONTRIBUTIONS OF RESIDENTS AND NON-RESIDENTS TO A LOCAL OPTION SALES TAX October 2025 Authored by Eric King, Extension Educator, University of Minnesota Extension Department of Community Development Report Reviewers: Kathryn Leys, University of Minnesota Extension, Department of Community Development Sponsor: City of Maplewood © 2022 Regents of the University of Minnesota. All rights reserved. University of Minnesota Extension is an equal opportunity educator and employer. In accordance with the Americans with Disabilities Act, this material is available in alternative formats upon request. Direct requests to 612-625-8233. Printed on recycled and recyclable paper with at least 10 percent postconsumer waste material. Local Option Sales Tax Analysis for Maplewood, MN 1 Packet Page Number 4 of 53 E1, Attachment 1 Table of Contents SUMMARY of FINDINGS .............................................................................................. 3 BACKGROUND AND METHODOLOGY .......................................................................... 6 TRADE AREA ANALYSIS BY MERCHANDISE CATEGORY ................................................ 7 Vehicles and Parts ................................................................................................... 7 Building Materials ................................................................................................... 8 Food and Groceries ................................................................................................. 9 Furniture Stores, Electronics, and Appliances ........................................................ 10 General Merchandise Stores ................................................................................. 11 Health and Personal Items .................................................................................... 12 Gas/Convenience Stores ....................................................................................... 13 Apparel/Clothing................................................................................................... 14 Leisure Goods, All Other Miscellaneous Retail ...................................................... 15 Amusement and Recreation .................................................................................. 16 Accommodations .................................................................................................. 17 Eating/Drinking Establishments ............................................................................ 18 Repair and Maintenance ....................................................................................... 19 Personal Services/Laundry .................................................................................... 20 Retail (Non-Store) and Other Services ................................................................... 21 Construction, Manufacturing, Utilities, Wholesale Operations, Transportation, and Sales Suppressed for Business Confidentiality ....................................................... 22 APPENDIX A: RESEARCH ON THE EFFECTS OF A LOCAL OPTION SALES TAX ............... 23 APPENDIX B: DEFINITIONS OF TERMS ....................................................................... 25 Local Option Sales Tax Analysis for Maplewood, MN 2 Packet Page Number 5 of 53 E1, Attachment 1 SUMMARYOF FINDINGS University of Minnesota Extension conducted a study to estimate the proportion ofsales proceeds attributedtoboth Maplewoodresidentsandnon-residents. Using 2023sales and usetax data available from the Minnesota Department of Revenue (MN Revenue),Extension estimated that non-residents account for 60.1percentof taxable sales subject to a local option sales tax (LOST). In 2023, total taxable sales in Maplewoodwere $765.03million. MN Revenue analysts estimate that 99.3% oftaxable sales wouldbe subjectto a LOST. With 60.1percent of sales derived from non-resident spending, Extension estimated that Maplewoodresidents spent $303.2million of the total $760.0million in taxable sales subject to a LOST. If the tax were in place in 2023, a0.5percentlocal option sales tax would have garnered $3,800,000millionin tax proceedsaccording to MN Department of Revenue analysts. Maplewoodresidents would have contributed $1,516,200in taxes,and non-residents would have contributed $2,283,800in 2023.Based on these estimates, each Maplewoodresident would have paid, on average,an additional $36.11in sales taxin 2023. Thisreportis based on atrade area analysis comparingactual taxable sales to potential sales. This is calculatedby multiplying the Maplewoodpopulation in 2023(MN Demographic Center) by the Minnesota average per capita salesfor each category,and then adjusting for the countypersonal income factor. This initial analysisprovided an estimate of retail and service purchases made by Maplewoodresidents. For each merchandise group, the estimates for two types of purchaserscountyresidents and otherswere calculatedand adjusted consideringthe area economy. These adjustments were based on informed estimates and were aimed, in part, at reducing potentialoverestimates of the sales tax share attributable to non-residents. Assumptions and calculations areincludedfor major retail and service categories so local decision makers can adjust totals if they have more nuanced insight. Several factors and features ofMaplewoodeconomy helped frame the analysis forthe different merchandise categories: Residents of nearby Figure 1: Maplewoodworker in-flow and out-flow communities caneasilyaccess Maplewoodbusinesses. For this analysis, cross-hauling hasthe general effect of increasing non- resident spendingas Maplewood is a central shopping hub in the region. Maplewoodhas slightly less workers entering the cityfor employment than residents who leave for work(Figure 1). In this dynamic,commutersoftenshop Inflow and outflow of wage earners. for goods andservices near Source: 2022U.S. Census Bureau On-The-Map where they workand those commuting into the city purchase in the city. Local Option Sales Tax Analysis for Maplewood, MN 3 Packet Page Number 6 of 53 E1, Attachment 1 Figure 2 shows the estimated percentage of salesacross all merchandise categories attributedto both residents and non-residents in 2023. These estimates are based on the adjusted analysis to more accurately reflect the counteconomic and consumption circumstances. Based on Figure 2: Estimated 2023Taxable Sales Subject to LOST these findings, Extension estimatescityresidents Taxable Sales Percent of Sales represent39.9percent of all taxable retail and service Cityresidents$303,240,00039.9% salessubject to the tax Non-residents$456,760,00060.1% ($303.2million), and the remaining 60.1percent ($456.8million) are attributed to non-residents. The total taxable Figure 3: Total taxable sales in Maplewoodfrom 2014-2023 sales in the city hovered around $600 $900.00 million between 2014- 2019(Figure 3).Total $800.00 sales droppedoff $700.00 slightly during the $600.00 2020 global pandemic, and have $500.00 since increasedover $400.00 the past threeyears. $300.00 This provides some sense of the stability $200.00 and trajectoryof a $100.00 LOST going forward. $- Extension forecasted 2014201520162017201820192020202120222023 taxable sales subject to the local tax for Source: Minnesota Department of Revenue 2023, 2024, and 2025 using a simple exponential smoothing forecast model that employs a moving weighted average and a 95% confidence interval to provide an upper and lower bound to the estimate (Figures 5and 6). This model estimates total tax proceeds in 2024to be between an upperlimit of $4,173,274 and a lower limit of $3,458,834. Considering the historic disruption of the pandemic and its uneven effect on business categories, this forecast is an unlikely scenario based only on past trends. National evidence shows that home-focused businesses like food, building materials, furniture, and general merchandise did well through the pandemic, whereas dining, accommodations, and amusement saw record sales decreases. The increase in sales over the previous three years further complicates any forecast, though based on historical data, movement towards the Upper Confidence Bound seems more likely than forecast. Local Option Sales Tax Analysis for Maplewood, MN 4 Packet Page Number 7 of 53 E1, Attachment 1 Figure 5: Forecast for Tax Proceeds based on Past Trends2013to 2022 $5,000,000 $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $- 2014201520162017201820192020202120222023202420252026 ValuesForecast Lower Confidence BoundUpper Confidence Bound Figure 6: Forecast withUpper and Lower Bound 2023-25 ForecastLower BoundUpper Bound 2024$3,816,054 $3,458,834 $4,173,274 2025$3,864,007 $3,383,178 $4,344,836 2026$3,911,960 $3,333,153 $4,490,767 Use taxes also affectthetax proceeds from a local option sales tax. Use taxes derive from countybusinesses purchasing products from out-of-state sources and in other Minnesota locations.Use taxes are often less consistent and more difficult to estimate accurately than sales taxes. In 2023, the countyreceived $1,320,914in use (not sales)tax proceeds.It would have garnered $97,845for a LOSTat the 0.5percentrate. Policymakers must also consider the impacts that a LOST may have on consumer purchasing behavior, particularly whether it will result in aloss of consumer purchases to other jurisdictions. Extension examined records of 11 citiesthat enacted a local option sales tax between 1999 and 2006 (information available on the Minnesota Department of Revenue website). Records do not indicate a major purchasing change due to the additional sales tax, and most of the jurisdictions have shown continued sales growth (see Appendix A). These communities, however,may not be comparable to Maplewood. All communities included in thisanalysis are locatedoutside the Twin Cities metro area and may retainmoreshoppers than communities in the metro area where one caneasily switch spending from one jurisdiction to another. Local Option Sales Tax Analysis for Maplewood, MN 5 Packet Page Number 8 of 53 E1, Attachment 1 BACKGROUND AND METHODOLOGY Community economics educators at University of Minnesota Extension provide applied research and education to help community and business partners make better informed decisions. In recent years, Minnesota has adopted laws enabling local governments to enact a local option sales tax. Extension has assisted these administrations in estimating their potential tax proceeds and the portion of taxes paid by local residents. This report estimates the proportion of tax proceeds generated by Maplewood residents compared to non-residents. The most recently available state sales tax data (2023) from the Minnesota Department of Revenue (MN Revenue) was used. Trade Area Analysis and Calculations Extension conducted a trade area analysis of retail and service sales in select merchandise categories, estimating the amount of Potential sales estimate the dollar taxable sales subject to sales taxes made by both local residents amounts for purchases made by local and non-residents. Use tax is a much smaller portion of the total residents if local residents spend as much collection compared to sales tax proceeds. It is also estimated as the average Minnesota resident. using a different formula. Potential sales are calculated by the Extension calculated potential sales for the county in each following formula: merchandise category and compared this calculation to actual (T ÷ PMn) x PO x (YWC ÷YMn) = potential taxable sales from the Minnesota Department of Revenue sales sales tax statistics for the same category. Actual sales greater than potential sales indicate the county attracts sales from outside T = Total Minnesota taxable sales for a its boundaries or has sales greater than one would expect from merchandise category its residents. Extension used the difference between potential and actual sales to set reasonable estimates of spending by PMn = 2023 population of Minnesota residents and non-residents across all categories. These (5,800,386) estimates also helped inform adjustments for each category. Potential sales calculations are based on average statewide PO = 2023 population of Maplewood spending by merchandise category and the population of the (41,989) county, then adjusted by the level of income in Maplewood. Specifically, potential sales result from county population, state YWC = Per capita income of Maplewood per capita taxable sales, and the index of income (see sidebar residents ($69,310) and Appendix B). YMn = Per capita income of Minnesota The following section details the initial and adjusted trade area residents ($72,557) calculations for all merchandise categories. The sections labeled nalysis with Adjustments lists the final estimate of sales generated by non-residents. A rationale for adjustments and conclusions is also included. Online sales have been left out of the estimates for this analysis as data for these types of transactions by jurisdiction are not available before a local option sales tax is enacted. After a local option sales tax is enacted, sales tax is collected for online sales for delivered purchases. Extension estimates about 10-15% of sales are done online by households. Local Option Sales Tax Analysis for Maplewood, MN 6 Packet Page Number 9 of 53 E1, Attachment 1 TRADE AREA ANALYSIS BY MERCHANDISE CATEGORY The following pages provide detailed analysis by merchandise category. Vehicles and Parts 11.4 percent of total taxable retail and service sales The 27 businesses in this retail category include repair parts, snowmobiles, boats, trailers, and recreational vehicles. Sales of cars and other on-road vehicles are not included in this category since they are subject to a different tax. ($Millions) $83.53 Actual taxable sales $27.99 -Potential sales $55.54 = $ variance 198.4% = as % of potential Unadjusted Trade Area Analysis $27.99 Potential taxable sales to residents $55.54 Surplus $83.53 Total 66.5% Surplus percentage Analysis with Adjustments 84% Capture rate of Maplewood residents $23.39 Residents' $ share $60.14 Non-Residents' $ share $83.53 Total 72.0% Non-resident share per group Analysis for Vehicles and Parts in Maplewood. This category includes 27 businesses specializing in repair parts, snowmobiles, boats, trailers, and recreational vehicles, excluding on-road vehicles which are taxed separately. Actual taxable sales totaled $83.53 million, significantly exceeding potential sales of $27.99 million, resulting in a $55.54 million surplus, or 198.4% of potential sales. Extension estimates the capture rate of Maplewood residents at 84%, with residents contributing $23.39 million and non-residents accounting for $60.14 million, representing 72% of total sales. This substantial surplus indicates that Maplewood serves as a strong regional destination for recreational vehicles and related parts. The high proportion of non-resident spending suggests that local businesses are successful in attracting customers from outside the community, likely due to competitive pricing, product variety, and regional accessibility. Local Option Sales Tax Analysis for Maplewood, MN 7 Packet Page Number 10 of 53 E1, Attachment 1 Building Materials 17.1 percent of total taxable retail and service sales These 10 businesses sell lumber, hardware, paint, wallpaper, tile, hardwood floors, roofing, fencing, ceiling fans, lawn equipment, and garden items. ($Millions) $125.90 Actual taxable sales $60.01 Potential sales $65.89 = $ variance 109.8% = as % of potential Unadjusted Trade Area Analysis $60.01 Potential sales to residents $65.89 Surplus $125.90 Total 52.3% Non-resident share per group Analysis with Adjustments 78% Capture rate of Maplewood residents $46.58 Residents' $ share $79.32 Non-residents' $ share $125.90 Total 63.0% Non-resident share per group Analysis for Building Materials Maplewood. This sector includes 10 businesses offering products such as lumber, hardware, paint, wallpaper, tile, hardwood floors, roofing, fencing, ceiling fans, lawn equipment, and garden items. Actual taxable sales reached $125.90 million, well above the potential sales of $60.01 million, producing a $65.89 million surplus, or 109.8% of potential sales. Extension estimates a capture rate of 78% among Maplewood residents, who contributed $46.58 million to total sales. Non-residents accounted for $79.32 million, or 63% of total sales. This strong improvement products. The high proportion of non-resident spending reflects the ability of local businesses to draw shoppers from outside the city, likely due to broad product key retail destination in the region. Local Option Sales Tax Analysis for Maplewood, MN 8 Packet Page Number 11 of 53 E1, Attachment 1 Food and Groceries 6.1 percent of total taxable retail and service sales The 44 businesses in this merchandise group include grocery stores, delis, bakeries, and butcher shops that sell food to be prepared at home. Liquor stores are also included in this group. ($Millions) $44.73 Actual taxable sales $32.10 - Potential sales $12.62 = $ variance 39.3% = as % of potential Unadjusted Trade Area Analysis $32.10 Potential sales to residents $12.62 Surplus $44.73 Total 28.2% Non-resident share per group Analysis with Adjustments 70% Capture rate of Maplewood residents $22.36 Residents' $ share $22.36 Non-residents' $ share $44.73 Total 50.0% Non-resident share per group Analysis for Food and Groceries in Maplewood. This sector includes 44 businesses, such as grocery stores, delis, bakeries, butcher shops, and liquor stores, providing products intended for preparation at home. Actual taxable sales totaled $44.73 million, exceeding the potential sales of $32.10 million by $12.62 million, representing a 39.3% surplus. Extension estimates the capture rate of Maplewood residents at 70%, with local residents contributing $22.36 million in sales. Non- residents also accounted for $22.36 million, or 50% of total sales. This substantial surplus indicates that Maplewood is not only retaining a significant share of local grocery spending but also attracting considerable spending from non- as a regional destination for food and grocery shopping. The equal contribution of resident and non- Local Option Sales Tax Analysis for Maplewood, MN 9 Packet Page Number 12 of 53 E1, Attachment 1 Furniture Stores, Electronics, and Appliances 6.3 percent of total taxable retail and service sales* These 27 businesses primarily include household-type appliances, sewing machines, cameras, computers, other electronic goods, furniture, beds, carpeting, window coverings, kitchenware, and wood-burning stoves. ($Millions) $45.94 Actual taxable sales $34.40 -Potential sales $11.54 = $ variance 33.5% = as % of potential Unadjusted Trade Area Analysis $34.40 Potential sales to residents $11.54 Surplus $45.94 Total 25.1% Non-resident share per group Analysis with Adjustments 64% Capture rate of Maplewood residents $22.05 Residents' $ share $23.89 Non-residents' $ share $45.94 Total 52.0% Non-resident share per group Analysis for Furniture Stores, Electronics, and Appliances and service sales in Maplewood. This sector includes 27 businesses offering a range of household products, including appliances, furniture, beds, carpeting, window coverings, kitchenware, computers, cameras, and other electronic goods. Actual taxable sales totaled $45.94 million, exceeding the potential sales of $34.40 million by $11.54 million, a 33.5% surplus. Extension estimates the capture rate of Maplewood residents at 64%, with residents contributing $22.05 million and non-residents accounting for $23.89 million, or 52% of total sales. This surplus indicates that Maplewood is a regional draw for furniture and electronic goods, successfully attracting spending from outside the community. The roughly equal split between resident and non-resident spending accessibility make Maplewood a strong retail destination for durable household goods. Local Option Sales Tax Analysis for Maplewood, MN 10 Packet Page Number 13 of 53 E1, Attachment 1 General Merchandise Stores 17.8 percent of total taxable retail and service sales* The 14 businesses in this category sell general merchandise and are unique because they have the equipment and staff needed to sell a large variety of goods from a single location. This includes department stores, superstores, dollar stores, and variety stores. ($Millions) $130.77 Actual taxable sales $59.53 potential sales $71.24 = $ variance 119.7% = as % of potential Unadjusted Trade Area Analysis $59.53 Potential sales to residents $71.24 Surplus $130.77 Total 54.5% Non-resident share per group Analysis with Adjustments 72% Capture rate of Maplewood residents $43.15 Residents' $ share $87.62 Non-Residents' $ share $130.77 Total 67.0% Non-resident share per group Analysis for General Merchandise Stores Maplewood. This group comprises 14 businesses that sell a wide variety of goods from single locations, including department stores, superstores, dollar stores, and variety stores. Actual taxable sales totaled $130.77 million, far exceeding the potential sales of $59.53 million by $71.24 million, a 119.7% surplus. Extension estimates the capture rate of Maplewood residents at 72%, with residents contributing $43.15 million and non-residents accounting for $87.62 million, or 67% of total sales. This substantial surplus indicates that Maplewood is a regional hub for general merchandise, drawing a majority of its sales from customers outside the community. The high non-resident spending share selection, and convenient shopping experiences, making the city a strong destination for broader regional retail activity. Local Option Sales Tax Analysis for Maplewood, MN 11 Packet Page Number 14 of 53 E1, Attachment 1 Health and Personal Items 1.6 percent of total taxable retail and service sales Stores selling prescription drugs, food supplements, vision supplies, cosmetics, and hearing aids are among the 28 businesses included in this merchandise group. ($Millions) $11.80 Actual taxable sales $7.48 Potential sales $4.31 = $ variance 57.7% = as % of potential Unadjusted Trade Area Analysis $7.48 Potential sales to residents $4.31 Surplus $11.80 Total 36.6% Non-resident share per group Analysis with Adjustments 68% Capture rate of Maplewood residents $5.07 Residents' $ share $6.72 Non-residents' $ share $11.80 Total 57.0% Non-resident share per group Analysis for Health and Personal Items sales in Maplewood. This sector includes 28 businesses selling prescription drugs, food supplements, vision supplies, cosmetics, and hearing aids. Actual taxable sales totaled $11.80 million, surpassing the potential sales of $7.48 million by $4.31 million, a 57.7% surplus. Extension estimates the capture rate of Maplewood residents at 68%, with residents contributing $5.07 million and non-residents accounting for $6.72 million, representing 57% of total sales. This surplus indicates that Maplewood is a regional destination for health and personal care products, attracting substantial spending from outside the community. The high proportion of non-. Local Option Sales Tax Analysis for Maplewood, MN 12 Packet Page Number 15 of 53 E1, Attachment 1 Gas/Convenience Stores 1.2 percent of total taxable retail and service sales This merchandise group covers 13 businesses selling convenience items at a store that also sells fuel. ($Millions) $9.14 Actual taxable sales $14.43 -Potential sales ($5.29) = $ variance -36.7% = as % of potential Unadjusted Trade Area Analysis $14.43 Potential sales to residents ($5.29) Surplus $9.14 Total -57.9% Non-resident share per group Analysis with Adjustments 57% Capture rate of Maplewood residents $8.22 Residents' $ share $0.91 Non-residents' $ share $9.14 Total 10.0% Non-resident share per group Analysis for Gas/Convenience Stores sales in Maplewood. This group includes 13 businesses that sell convenience items alongside fuel. Actual taxable sales totaled $9.14 million, which is $5.29 million below the potential sales of $14.43 million, reflecting a 36.7% sales leakage. Extension estimates the capture rate of Maplewood residents at 57%, with residents contributing $8.22 million and non-residents accounting for only $0.91 million, or 10% of total sales. This negative variance indicates that a suggesting opportunities for local retailers to better capture resident demand. Local Option Sales Tax Analysis for Maplewood, MN 13 Packet Page Number 16 of 53 E1, Attachment 1 Apparel/Clothing 1.5 percent of total taxable retail and service sales This merchandise group includes 37 businesses selling new clothing and accessories, jewelry, shoes, bridal items, clocks, and luggage. ($Millions) $10.79 .9Actual taxable sales $7.77 Potential sales $3.02 = $ variance 38.9% = as % of potential Unadjusted Trade Area Analysis $7.77 Potential sales to residents $3.02 Surplus $10.79 Total 28.0% Non-resident share per group Analysis with Adjustments 62% Capture rate of Maplewood residents $4.86 Residents' $ share $5.94 Non-residents' $ share $10.79 Total 55.0% Non-resident share per group Analysis for Apparel/Clothing Maplewood. This sector includes 37 businesses offering new clothing and accessories, jewelry, shoes, bridal items, clocks, and luggage. Actual taxable sales reached $10.79 million, surpassing the potential sales of $7.77 million by $3.02 million, representing a 38.9% surplus. Extension estimates the capture rate of Maplewood residents at 62%, with residents contributing $4.86 million and non-residents accounting for $5.94 million, or 55% of total sales. The surplus indicates that Maplewood is successfully attracting apparel and clothing shoppers from outside the city, making this category a regional draw. The high share of non- resident spending suggests that local stores likely benefit from competitive pricing, product variety, and accessibility, positioning Maplewood as a notable retail destination for clothing and fashion-related goods. Local Option Sales Tax Analysis for Maplewood, MN 14 Packet Page Number 17 of 53 E1, Attachment 1 Leisure Goods, All Other Miscellaneous Retail 10.0 percent of total taxable retail and service sales 86 businesses are part of this group, including florists, used merchandise stores, pet supply stores, sporting goods, books, music, hobby items, fabrics, toys, and other retailers. ($Millions) $73.22 Actual taxable sales $29.01 Potential sales $44.21 = $ variance 152.4% = as % of potential Unadjusted Trade Area Analysis $29.01 Potential sales to residents $44.21 Surplus $73.22 Total 60.4% Non-resident share per group Analysis with Adjustments 71% Capture rate of Maplewood residents $20.50 Residents' $ share $52.72 Non-residents' $ share $73.22 Total 72.0% Non-resident share per group Analysis for Miscellaneous Retail taxable retail and service sales in Maplewood. This sector includes 86 businesses, covering a diverse mix of retailers such as florists, used merchandise stores, pet supply stores, sporting goods, books, music, hobby items, fabrics, toys, and other specialty retailers. Actual taxable sales totaled $73.22 million, substantially exceeding the potential sales of $29.01 million by $44.21 million, a 152.4% surplus. Extension estimates the capture rate of Maplewood residents at 71%, with residents contributing $20.50 million and non-residents accounting for $52.72 million, or 72% of total sales. This significant surplus highlights Maplewood as a strong regional destination for specialty and leisure retail goods. The high proportion of non- resident spending suggests that businesses in this category are effectively attracting shoppers from outside the city, likely due to unique product offerings, variety, and competitive pricing, items. Local Option Sales Tax Analysis for Maplewood, MN 15 Packet Page Number 18 of 53 E1, Attachment 1 Amusement and Recreation 1.1 percent of total taxable retail and service sales* The 14 businesses in this group include casinos, bowling lanes, water parks, amusement parks, arcades, bingo halls, golf courses, ski slopes, marinas, dance or fitness centers, recreational clubs, ice rinks, swimming pools, roller rinks, etc. ($Millions) $8.22 Actual taxable sales $16.12 Potential sales ($7.90) = $ variance -49.0% = as % of potential Unadjusted Trade Area Analysis $16.12 Potential sales to residents ($7.90) Surplus $8.22 Total -96.0% Non-resident share per group Analysis with Adjustments 34% Capture rate of Maplewood residents $5.51 Residents' $ share $2.71 Non-residents' $ share $8.22 Total 33.0% Non-resident share per group Analysis for Amusement and Recreation service sales in Maplewood. This sector includes 14 businesses offering a range of entertainment and recreational activities, such as casinos, bowling lanes, water parks, amusement parks, arcades, golf courses, fitness centers, ice rinks, swimming pools, and other leisure facilities. Actual taxable sales totaled $8.22 million, falling below the potential sales of $16.12 million by $7.90 million, a 49.0% deficit. Extension estimates the capture rate of Maplewood residents at 34%, with residents contributing $5.51 million and non-residents accounting for $2.71 million, or 33% of total sales. This deficit indicates sales leakage in the amusement and recreation sector, suggesting that Maplewood residents are traveling outside the community to access these types of recreational and entertainment services. Opportunities may exist to expand local offerings, enhance amenities, or develop new facilities to retain local spending and attract additional regional visitors, strengthening Local Option Sales Tax Analysis for Maplewood, MN 16 Packet Page Number 19 of 53 E1, Attachment 1 Accommodations 0.2 percent of total taxable retail and service sales These 4 businesses provide lodging or short-term accommodations for travelers, vacationers, and others. Included are hotels, motels, lodges, bed & breakfasts, campgrounds, fraternities, boarding houses, and dormitories. ($Millions) $1.82 Actual taxable sales $18.11 Potential sales ($16.29) = $ variance -89.9% = as % of potential Unadjusted Trade Area Analysis $18.11 Potential sales to residents ($16.29) Surplus $1.82 Total -894.0% Non-resident share per group Analysis with Adjustments 2% Capture rate of Maplewood residents $0.36 Residents' $ share $1.46 Non-residents' $ share Total $1.82 80.0% Non-resident share per group Analysis for Accommodations retail and service sales at 0.2%. This group includes four businesses providing lodging or short-term accommodations such as hotels, motels, bed & breakfasts, campgrounds, and boarding houses. Actual taxable sales totaled $1.82 million, which is far below the potential sales of $18.11 million, resulting in a sales leakage of $16.29 million, or 89.9% below potential. Extension estimates the capture rate of Maplewood residents at 2%, with residents contributing $0.36 million and non-residents contributing $1.46 million, accounting for 80% of total sales. While some non-resident spending does occur, the data indicates substantial opportunity for growth in attracting travelers and expanding lodging options, which could help capture lost revenue and better support regional tourism and visitor needs. Local Option Sales Tax Analysis for Maplewood, MN 17 Packet Page Number 20 of 53 E1, Attachment 1 Eating/Drinking Establishments 17.7 percent of total taxable retail and service sales These 115 businesses sell food at full-service or limited-service establishments. The group includes cafeterias, bagel shops, ice cream parlors, snack bars, food service contractors, caterers, lunch wagons, and street vendors. It also includes bars, taverns, and nightclubs. ($Millions) $129.99 Actual taxable sales $82.59 Potential sales $47.40 = $ variance 57.4% = as % of potential Unadjusted Trade Area Analysis $82.59 Potential sales to residents $47.40 Surplus $129.99 Total 36.5% Non-resident share per group Analysis with Adjustments 68% Capture rate of Maplewood residents $55.90 Residents' $ share $74.10 Non-residents' $ share $129.99 Total 57.0% Non-resident share per group Analysis for Eating/Drinking Establishments taxable retail and service sales, encompassing 115 businesses such as full-service and limited- service restaurants, cafeterias, snack bars, ice cream parlors, food service contractors, caterers, lunch wagons, bars, taverns, and nightclubs. Actual taxable sales totaled $129.99 million, significantly exceeding the potential sales of $82.59 million by $47.40 million, a 57.4% surplus. Extension estimates the capture rate of Maplewood residents at 68%, with residents contributing $55.90 million and non-residents contributing $74.10 million, representing 57% of total sales. This strong surplus indicates that Maplewood is a regional destination for dining and drinking, successfully attracting a substantial share of non- resident customers. The high proportion of non-resident spending suggests that local establishments are competitive in terms of menu variety, pricing, service, and accessibility, positioning the community as a hub for food and beverage activity in the region. Local Option Sales Tax Analysis for Maplewood, MN 18 Packet Page Number 21 of 53 E1, Attachment 1 Repair and Maintenance 2.3 percent of total taxable retail and service sales The 41 businesses in this group restore machinery, equipment, and other products. The group does not include plumbing or electrical repair services but does encompass auto repair, cameras, televisions, computers, copiers, appliances, lawn mowers, specialized equipment, small engines, furniture, shoes, guns, etc. ($Millions) $17.15 Actual taxable sales $15.90 Potential sales $1.25 = $ variance 7.9% = as % of potential Unadjusted Trade Area Analysis $15.90 Potential sales to residents $1.25 Surplus $17.15 Total 7.3% Non-resident share per group Analysis with Adjustments 63% Capture rate of Maplewood residents $9.95 Residents' $ share $7.20 Non-residents' $ share $17.15 Total 42.0% Non-resident share per group Analysis for Repair and Maintenance and service sales, covering 41 businesses that restore machinery, equipment, and a variety of products. This includes auto repair, electronics, small engines, appliances, furniture, and other durable goods, but excludes plumbing and electrical repair services. Actual taxable sales totaled $17.15 million, slightly exceeding the potential sales of $15.90 million by $1.25 million, a 7.9% surplus. Extension estimates the capture rate of Maplewood residents at 63%, with residents contributing $9.95 million and non-residents contributing $7.20 million, or sector is relatively strong, drawing not only from the local customer base but also attracting a meaningful portion of spending from non-residents, likely due to the range of services offered, expertise, and convenience. The data indicates that these businesses contribute both to retainin economic activity in the service sector. Local Option Sales Tax Analysis for Maplewood, MN 19 Packet Page Number 22 of 53 E1, Attachment 1 Personal Services/Laundry 0.4 percent of total taxable retail and service sales The 59 businesses in this merchandise group include barber shops and beauty parlors, death care services, laundry and dry-cleaning services, and a wide range of other personal services, such as pet care (except veterinary), photofinishing, temporary parking, and dating services. ($Millions) $2.73 Actual taxable sales $8.15 Potential Sales ($5.41) =$ variance -66.4% = as % of potential Unadjusted Trade Area Analysis Potential sales to residents $8.15 ($5.41) Surplus $2.73 Total -197.9% Non-resident share per group Analysis with Adjustments Capture rate of Maplewood residents 30% $2.46 Residents' $ share $0.27 Non-residents' $ share $2.73 Total 10.0% Non-resident share per group Analysis for Personal Services/Laundry retail and service sales, encompassing 59 businesses such as barber shops, beauty parlors, laundry and dry-cleaning services, pet care (excluding veterinary services), photofinishing, temporary parking, dating services, and other personal services. Actual taxable sales were $2.73 million, falling well short of the potential sales of $8.15 million, resulting in a sales leakage of $5.41 million, or 66.4% below potential. Extension estimates the capture rate of Maplewood residents at 30%, with residents contributing $2.46 million and non-residents accounting for $0.27 million, or 10% of total sales. This significant leakage indicates that local residents are spending outside the community for personal services, likely seeking specialized offerings, broader options, or more competitive pricing elsewhere. The low share of non- limited regional draw, highlighting an opportunity for business expansion or development to retain local spending and strengthen the local service economy. Local Option Sales Tax Analysis for Maplewood, MN 20 Packet Page Number 23 of 53 E1, Attachment 1 Retail (Non-Store) and Other Services This section includes taxable sales attributed to North American Industrial Classification System categories 511-813 released by MN Revenue. ($Millions) Actual taxable sales $38.46 % of total taxable retail and service sales In Maplewood 5.2% Analysis with Adjustments ($Millions) $23.46 Residents' $ share $15.00 Non-residents' $ share $38.46 Total 39% Non-resident share per group Analysis for Retail and Other Services This group includes non-store retailers (such as direct selling operations), healthcare, waste management, rental/lease services, administrative support, and the performing arts. Some of these categories serve primarily a local market, whereas categories like 541 (professional and technical services) often serve a non-local market. This mix of business types is too diverse to run a trade area analysis for, but Extension estimated an aggregate 39 percent of these sales are to non-resident customers. The categories of sales are shown below: CATEGORY TAXABLE SALES % NON-LOCAL NON-LOCAL $ 40% 454 RETL -NONSTORE RETAILERS $28,765 $20,060 40% 512 INFO -MOVIES, MUSIC IND $50,151 $1,031 40% 513 INFO -PUBLISHING INDUSTRY $2,578 $3,223,044 35% 517 INFO -TELECOMMUNICATIONS $8,057,610 $45,218 519 INFO -WEB SEARCH PORTALS, OTHER 35% SERVICES $129,194 $17,589 40% 522 CREDIT INTERMEDIATION $50,254 $346,667 35% 531 REAL ESTATE $866,668 $2,018,210 40% 532 RENTAL, LEASING SERVICES $5,766,314 $2,234,935 40% 541 PROF,SCIENTIFIC,TECH SERV $5,587,337 $5,883,948 35% 561 ADMIN, SUPPORT SERVICES $14,709,871 $114,403 35% 611 EDUCATIONAL SERVICES $326,866 $465,192 40% 621 HEALTH -AMBULATORY CARE $1,329,119 $12,180 35% 623 HEALTH -NURSING,HOME CARE $30,451 $279,915 40% 711 PERF ART, SPECTATOR SPRTS $799,756 $291,060 40% 813 RELIGIOUS,CIVIC,PROF ORGS $727,650 $20,060 TOTALS $38,462,584 39% $14,964,958 Local Option Sales Tax Analysis for Maplewood, MN 21 Packet Page Number 24 of 53 E1, Attachment 1 Construction, Manufacturing, Utilities, Wholesale Operations, Transportation, and Sales Suppressed for Business Confidentiality A diverse mix of businesses fall into these non-retail categories, and a portion of sales are within a suppressed or non-disclosed subcategory. These industries and services generate $30.82 million in taxable sales, or 4.0 percent of total taxable sales in Maplewood. A significant portion of this amount would be subject to any new sales taxes, including a local option sales tax. This category includes utilities that primarily serve a local market and are subject to a local option sales tax. The diversity of firm types included in this category makes it difficult to understand the customer mix of these businesses; however, Extension broke out each known subcategory with an assumption of whether customers paying the taxable sales were non- local: Category Taxable Sales % non-local $ non-local CONSTRUCTION $372,520 60% $223,512 MANUFACTURING $1,969,752 80% $1,575,802 WHOLESALE $7,881,886 90% $7,093,697 UNDESIGNATED/SUPPRESSED $20,596,992 50% $10,298,496 Total $30,821,150 62% $19,191,507 Extension estimated that, overall, 62 percent of sales are to non-residents. This analysis assumes that some subcategories, such as manufacturing sell primarily (90 percent) to non- resident customers, whereas subcategories like construction split sales between resident and non-resident customers. Analysis with Adjustments ($Millions) share $11.71 Non-residents $ share $19.11 Total $30.82 Non-resident share 62% Local Option Sales Tax Analysis for Maplewood, MN 22 Packet Page Number 25 of 53 E1, Attachment 1 APPENDIX A: RESEARCH ON THE EFFECTS OF A LOCAL OPTION SALES TAX Policymakers are oftenconcerned that enacting a local sales tax will result in a loss of consumer purchases to neighboring communities that have not adopted the tax. The Minnesota Department of Revenuerecords the tax collected froma set of Minnesota jurisdictions that have hada local sales or use tax in effect for at least eight years.Most of these cities show continued sales growth. A comparison that includes 11Minnesota cities adoptinga 0.5 percent local option sales tax is offered below(refer to Figures 4, 5, 6, and 7). Policymakers mustdetermine the best allowable method to raise revenuefrom a variety of options current income and raises the financial burden of low-income or retired homeowners. Sales taxes raise revenues based on household expenditures, which, in Minnesota,excludes the basic necessities of food and clothing. However, sincesales tax raises revenues from non- residents who shop in Maplewood, residentcontributions to tax revenues are significantly lower than a tax generatedexclusively by local residents, such as a property tax. Policymakers must carefully consider these and other factors before making a decision about enacting a local sales tax. Figure 4: Taxable retail and service sales by communitiesthatbegan collecting a local option sales tax from 1999 to 2006 $1,000,000,000 $900,000,000 $800,000,000 $700,000,000 $600,000,000 $500,000,000 $400,000,000 $300,000,000 $200,000,000 $100,000,000 $0 199019952000200320042005200620072008200920102015 Albert LeaBaxterBemidjiNew UlmWorthington Figure 5: Data table for example communities, taxable retail and service sales (in millions) Town Name2015 Year 909500030405060708091015 PopulationLOST Albert Lea 18,3562006$264$344$397$407$521$502$551$555$588$519$541$696 Baxter 8,0652006$432$473$556$605$650$630$612$676$900 Bemidji 11,9172005$257$362$457$428$410$437$495$596$570$563$581$837 New Ulm 13,5941999$109$165$204$233$236$259$261$280$303$295$329$417 Worthington 11,2832005$77$77$91$99$102$103$103$108$107$108$114$121 Local Option Sales Tax Analysis for Maplewood, MN 23 Packet Page Number 26 of 53 E1, Attachment 1 Figure 6: Taxable retail and service sales by communities that began collecting a local option sales tax between 2011-2012 $700,000,000 $600,000,000 $500,000,000 $400,000,000 $300,000,000 $200,000,000 $100,000,000 $0 19901995200020052009201020112012201320142015 BrainerdCloquetFergus FallsHermantownHutchinsonMarshall Figure7: Data table for examplecommunities, taxable retail and service sales (in millions) Town Name2015 Year 9095000509101112131415 PopLOST Brainerd 13,1782011$302$479$623$458$362$324$311$330$332$338$341 Cloquet 11,2012011$93$124$175$244$260$273$290$303$296$308$284 Fergus Falls 13,4712011$192$263$386$523$467$486$551$591$568$558$534 1996 - Hermantown 7,448increase $43$164$137$430$393$423$489$576$607$637$659 2012 Hutchinson 13,0802011$122$191$269$471$609$374$425$409$389$415$424 Marshall 12,7352011$176$283$343$398$371$380$440$447$457$463$428 Local Option Sales Tax Analysis for Maplewood, MN 24 Packet Page Number 27 of 53 E1, Attachment 1 APPENDIX B: DEFINITIONS OF TERMS Gross sales Gross sales include taxable sales and exempt businesses with sales and use tax permits. This is the most inclusive indicator of business activity for reporting jurisdictions, but it can be misleading when used in comparisons. At times, non-taxable commodity items (e.g., gasoline) can have large price variations, creating huge swings in gross sales. Taxable sales Taxable sales are sales subject to sales tax. Taxable sales exclude exempt items, items sold for resale, items sold for exempt purposes, and items sold to exempt organizations. For the purpose of this study, taxable sales were the focus of the analysis. For more information on what is taxed in Minnesota, see the "Minnesota Sales and Use Tax Instruction Booklet" available at https://www.revenue.state.mn.us/minnesota-tax-handbooks Taxable retail and service sales In this study and other retail trade analyses conducted by University of Minnesota Extension, the (NAICS) numbers of 441 to 454 (retail) and 511 to 812 (most service industries) released by the Minnesota Department of Revenue for a geographic area. Current and constant dollar sales Current dollar (or nominal dollar) sales are those reported by the state. No adjustment has been made for price inflation. In general, this measure of sales is not satisfactory for comparisons over long periods of time since it does not account for changes in population, inflation, or the state's economy. Constant dollar (or real dollar) sales reflect changes in price inflation by adjusting current dollar sales according to the Consumer Price Index (CPI). Constant dollar sales indicate the real sales level with respect to a base year. This is a more realistic method of evaluating sales over time than current dollar comparisons, but it still does not take into consideration changes in population or the states economy. Number of businesses The number of sales and use tax permit holders who filed one or more tax returns for the year. Index of income This index provides a relative measure of income, calculated by dividing local per capita income by state per capita income. The base is 1.00. For example, a 1.20 index of income indicates that per capita income in the area is 20 percent above the state average. Potential sales Potential sales are an estimate of the amount of money spent on retail goods and services by residents of a county or county. It is the product of county population, state per capita sales, and the index of income (based on the county personal per capita income). Actual sales For this study, the Minnesota Department of Rev2019 sales data for Maplewood provides the actual sales numbers used. Local Option Sales Tax Analysis for Maplewood, MN 25 Packet Page Number 28 of 53 E1, Attachment 1 Variance between actual and potential sales The variance between actual and expected sales is the difference in amount above or below the standard established by the expected sales formula). When actual sales exceed expected sales, the county has a surplusof retail sales. When actual sales fall short of expected sales, the county has a retail sales leakageDiscrepancies between expected and actual sales occur for a variety of reasons. For this study, we use potential sales per merchandise group to create a first-cut estimate of r Cautions Gross sales Gross sales are a comprehensive measure of business activity, but it should be noted the numbers in this report are self-reported. Furthermore, gross sales are not audited by the state of Minnesota. It is believed that gross sales figures are generally reliable, but there is the possibility of distortions, especially in smaller cities where misreporting may have occurred. Misclassification Holders of sales and use tax permits select the North American Industry Classification System (NAICS) category that best fits their business. All sales reported by a business is attributed to that selected NAICS category. Regardless of who makes this classification, errors are occasionally made. Also, sometimes a business will start out as one type but evolve over time to a considerably different type. Misclassifications can distort sales among business categories, especially in smaller cities. For example,a furniture store that is classified as a general merchandise store will underreport sales in the furniture store category and over-report sales in the general merchandise category. Suppressed data The sales data for merchandise categories that have less than four reporting firms are not reported. This is a measure taken by most states to protect the confidentiality of sales tax permit holders. Sales for suppressed retail categories are placed into the miscellaneous retail category (NAICS 999) and included in total sales but not total sales of a typical retail trade analysis. For this report, however, all taxable salesincluding NAICS 999are part of calculating the amount of special taxes collected. Consolidated reporting Vendors with more than one location in Minnesota have the option of filing a separate return for each location or filing one consolidated return for all locations. The consolidated return shows sales made, tax due, and location by county, and county for each business. Data for consolidated filers are combined with data for single-location filers to produce the figures in this report. Occasionally, consolidated reports may not be properly deconstructed, and all sales for a company may be reported for one town or county. Whenever misreporting is discovered, the Minnesota Department of Revenueis contacted to clarify the situation. Local Option Sales Tax Analysis for Maplewood, MN 26 Packet Page Number 29 of 53 E1, Attachment 2 Packet Page Number 30 of 53 E1, Attachment 2 Packet Page Number 31 of 53 E1, Attachment 2 Packet Page Number 32 of 53 E1, Attachment 3 Packet Page Number 33 of 53 E1, Attachment 3 Packet Page Number 34 of 53 E1, Attachment 3 Packet Page Number 35 of 53 E1, Attachment 3 Packet Page Number 36 of 53 E1, Attachment 3 Packet Page Number 37 of 53 E1, Attachment 3 Packet Page Number 38 of 53 E1, Attachment 3 Packet Page Number 39 of 53 E1, Attachment 3 Packet Page Number 40 of 53 E1, Attachment 3 Packet Page Number 41 of 53 E1, Attachment 3 Packet Page Number 42 of 53 E1, Attachment 3 Packet Page Number 43 of 53 E1, Attachment 3 Packet Page Number 44 of 53 E1, Attachment 3 Packet Page Number 45 of 53 E1, Attachment 3 Packet Page Number 46 of 53 E1, Attachment 3 Packet Page Number 47 of 53 E1, Attachment 3 Packet Page Number 48 of 53 E1, Attachment 3 Packet Page Number 49 of 53 E1, Attachment 3 Packet Page Number 50 of 53 E1, Attachment 3 Packet Page Number 51 of 53 E1, Attachment 3 Packet Page Number 52 of 53 E1, Attachment 3 Packet Page Number 53 of 53