New 0.5% city sales tax proposed

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The Cottage Grove City Council approved the first step toward implementing a possible 0.5% local option sales tax (LOST) at the Jan. 18 council meeting. While the new tax would not go into effect until being offered for public vote in a November 2024 referendum, the LOST program requires a series of state approvals to start the process in motion. The council unanimously approved the proposal, submitted by Cottage Grove Parks & Recreation Director Zac Dockter, to commence initial planning possibilities over the next few years.

The LOST program allows Minnesota cities to apply an additional sales tax within city limits over existing state sales tax to help fund up to five specific local capital projects, generally involving public parks and buildings. Certain essential items cannot be taxed under the program, including food, clothes, medications, and baby goods.

The total cost of the projects is estimated at $36 million, using a three-tiered construction plan. It is estimated that $1.2 million would be generated for the city each year with the new tax, allowing the city to issue a 25-year bond of nearly $16 million to begin work on the first tier on the capital projects. The proposal takes contingency and inflation into account, as well as planning for currently-unknown sales tax growth. Tier 1 projects would begin in the summer of 2025 if approved.

Three major improvement projects are currently being considered if the local tax is ultimately passed in 2024. Under the proposal, Hamlet Park, Mississippi Dunes Park, and River Oaks Golf Course would all receive funding for development and upgrades. The tiered stages of the plan allow for the city to move on to the next tier only as funding becomes available over time.

Hamlet Park, Cottage Grove’s largest and oldest park, would see a new playground and added amenities like a skate park and a splash pad. Also proposed are a new park building, trail improvements, completion of the baseball complex, and a turf field. About $17 million is the estimated total cost for the upgrade.

The Mississippi Dunes Park project would receive $13 million to develop approximately 20 acres on the site of the now-defunct golf course. The course has been out of business since 2017 due to legal and financial troubles, and on Aug. 5, 2021 a fire consumed the clubhouse and pro shop. Redevelopment plans have been in the works at city hall ever since. The main goals would be to restore the natural habitat, create educational programs, add recreational river access, and construct trails and an interpretive center.

About $6 million is proposed for improvements to the municipal River Oaks Golf Course and Event Center. While funds have recently already been allocated for structural and irrigation improvements, LOST funds could be used for more upgrades aimed at increasing the course’s wider regional appeal. Upgrades to the building and patio are planned, as well as the addition of a winter mountain biking course, simulated golfing, and a Himalayan putting green.


The proposed Mississippi Dunes Park development. Graphic courtesy of the City of Cottage Grove

A Hamlet Park upgrade plan layout. Graphic courtesy of the City of Cottage Grove