Woodbury public safety campus costs rise as city asks voters to approve new sales tax to fund it

The cost of a public safety campus expansion in Woodbury has climbed to an estimated $60 million, as the city prepares to ask voters to pass a sales tax to help pay for the project.

That number is up from April 2023, when officials were projecting it would cost about $50 million for plans that include the construction of a new fire station for the fast-growing east metro suburb.

Inflation and rising construction costs have driven the cost estimates up, said city spokesman Jason Egerstrom. The higher cost means the city will likely need to turn to property taxes for at least a portion of the project, even if voters this fall approve a local sales tax that’s being pitched as the main funding vehicle for the renovations and expansion.

Woodbury was one of 26 cities authorized by the Legislature last year to adopt a local sales tax, and has authority to raise $50 million. With voter approval, the city will add the 0.5% tax to receipts starting next spring. The tax amounts to a nickel for every $10 spent on taxable items. Woodbury’s current sales tax rate is 8.38%.

“We’re appreciative of our state Legislature giving us the opportunity to do this,” said Woodbury Mayor Anne Burt. The mayor and City Council members can’t advocate for or against the tax, but the city has been sending out information about it to help voters understand how it could work.

A University of Minnesota study found that 53% of the money raised from a local sales tax would come from visitors. A half-cent sales tax in 2021 would have raised about $4.9 million, the study found. The study also considered the effect of a sales tax on purchases, and found that it had a negligible effect in 11 Minnesota cities that enacted a local sales tax between 1999 and 2006.

The public safety expansion will go ahead whether or not the sales tax is approved, and Burt said the city would need to turn to property taxes to pay for it if the sales tax referendum doesn’t pass. The city estimates that due to visitor spending it would be cheaper for residents to adopt the sales tax than to pay for the project through property taxes alone.

A sales tax would cost the average Woodbury household about $82 to $96 a year, depending on their purchases. The project’s rising price would require an additional $13 in property tax from the average Woodbury homeowner, for a total of about $102, according to data shared by the city this month. Without the local sales tax, property taxes would increase about $154 a year to pay for the project.

The sales tax would also generate the needed $50 million more quickly at about 13 years, the city said. A property tax increase would need 20 years to raise the $50 million.

The public safety campus expansion would see the city buy the Washington County Service Center building at 2150 Radio Drive; the county plans to move that office to a new location adjacent to the Metro Gold Line. The building would be demolished or renovated as necessary to make room for a new fire station, according to a draft schematic of the plans. The new fire station would sit to the south of the existing police station at 2100 Radio Drive, and a new public entrance would be built on the north side of the renovated complex.

Woodbury Police Chief Jason Posel said the expansion is needed. The public safety building was built in 1975 and twice expanded, but Woodbury has grown quickly and is now the largest suburb in the east metro and the eighth-largest city in the state, with more than 80,000 people. The city’s busy retail district along I-94 is used by a lot of visitors, placing more pressure on police, fire and EMS services, he said.