Hermantown gross sales tax enhance means investments in hockey, out of doors recreation

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HERMANTOWN — With the recently passed sales tax increase, this growing city will invest more than $19 million in recreational facilities, including an expanded hockey arena for its burgeoning youth programs.

The 46-year-old city of 10,200 is much younger than its border neighbors Duluth and Proctor, both of which were incorporated in the 19th century. And demand for trails and sports facilities is growing with the city, said longtime Mayor Wayne Boucher.

“What we’re seeing is an evolution,” he said. “The newer people who come in want more from the city government.”

Hermantown is one of 14 Minnesota cities that asked residents for a sales tax increase in November. Most passed, including those at Edina and near Cloquet. All three projects on Hermantown’s ballot, earmarked for sales tax investments, sailed through with big profits.

Cities are allowed to apply for sales tax increases to fund projects that benefit not only the city’s residents, but entire regions. High approval rates for such requests are common because the burden falls on everyone shopping in the community, not just residents.

“So I think cities are looking at these sales taxes more regularly,” said Gary Carlson of the League of Minnesota Cities.

In Hermantown, the sales tax, with its new half-percent increase beginning April 1 and lasting two decades, now matches Duluth’s rate of 8.875%, one of the highest in the state. Voters were asked to approve funding for three projects: several miles of a trail extension that leaders hope will eventually connect to the Willard Munger State Trail in Duluth via a connecting trail in Proctor; a second indoor ice rink leading to an expanded hockey arena; and upgrades to a park that includes a new baseball field, athletic field, skate park, and playground.

The city, which has brought home four state hockey championships, has seen tremendous growth in its youth programs. Tanya Nichols drives her 10-year-old son to 9 p.m. hockey practice in Carlton, a 20-minute drive, because Hermantown’s only ice rink can’t accommodate the city’s 30-plus teams.

“We play home games in Carlton and Duluth, and I have an ice rink a half-mile from my house,” said Nichols, who led a citizens’ initiative for a sales tax increase.

And that means “spending money in other people’s communities,” she said.

The city leadership hopes the upgrade to the park and arena will lead to more spending in Hermantown, with miles of new trails in the popular walking and biking area and the opportunity to host hockey tournaments.

The proportion of foreigners in the city’s sales tax revenue is unusual for its size.

A University of Minnesota Extension Center study commissioned by Hermantown officials found that nearly 80% of the city’s taxable sales came from people who lived outside of the city. Big-box retailers like Walmart and Fleet Farm make up a big part of this draw.

The projects have been planned for years but lack funding, City Administrator John Mulder said.

Even now, inflation has increased project costs, limiting the city to what it can complete on the rink. Enough can be done for the youth program, Boucher said, but stands and changing rooms for the arena need funding. He expects the city to return to the legislature for more money. His motion to voters, along with the others up for voting this year, was approved by lawmakers in 2021 before inflation set in.

“We’re just trying to figure out what to do with the money we have,” Boucher said.

Work to extend the path and connect the city’s important common spaces should begin soon. It will connect the city without a downtown both physically and figuratively, rolling along the schools, a wellness center and the town hall.

“We speak of the trace as a backbone,” Mulder said. “I love the stories of people coming together to walk and talk on the trail. It’s a very small way of building a community.”