HERMANTOWN — With the recent passage of a sales tax increase, this growing city will invest more than $19 million in recreation amenities, including an expanded hockey arena for its burgeoning youth programs.
The 46-year-old city of 10,200 is far younger than its border neighbors Duluth and Proctor, both incorporated in the 1800s. And demand for trails and athletic facilities grows as the city does, said longtime Mayor Wayne Boucher.
“What we are seeing is an evolution,” he said. “The newer people who come in do want more from city government.”
Hermantown is one of 14 Minnesota cities that asked residents for a sales tax increase in November. Most passed, including those in Edina and nearby Cloquet. All three projects on Hermantown’s ballot intended for sales tax investments sailed through with wide margins.
Cities are allowed to ask for sales tax increases to pay for projects that will benefit not only those who live in the city, but entire regions. High approval rates for such requests are common, because the burden falls on anyone who shops in the community and not residents alone.
“That’s why I think cities are looking at these sales taxes on a more regular basis,” said Gary Carlson, with the League of Minnesota Cities.
In Hermantown, with its new half-percent increase, which kicks in April 1 and lasts two decades, the sales tax now matches Duluth’s rate of 8.875%, among 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 Willard Munger State Trail in Duluth via a connector trail in Proctor; a second sheet of indoor ice that amounts to an expanded hockey arena; and upgrades to a park that include a new baseball field, sport court, skate park and playground.
The city that’s brought home four state hockey championships has seen enormous growth in its youth programs. Tanya Nichols drives her 10-year-old son to 9 p.m. hockey practices in Carlton, a 20-minute drive, because Hermantown’s single rink can’t accommodate the city’s 30-plus teams.
“We are playing home games in Carlton and Duluth and I’ve got a rink a half mile from my house,” said Nichols, who helmed a citizen advocacy group for the sales tax increase.
And that means “spending money in other peoples’ communities,” she said.
City leaders hope the park and arena upgrades will lead to further spending in Hermantown, with miles of new trail in the hiking- and biking-popular region, and the ability to host hockey tournaments.
The percentage of the city’s sales tax revenue generated by non-residents 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 those living outside the city. Big box retailers like Walmart and Fleet Farm are a large part of that draw.
The projects have been planned for years, but lacked funding, said city administrator John Mulder.
Even now, inflation has increased project costs, limiting the city to what it can complete on the indoor rink. Enough can be done for the youth program, Boucher said, but bleachers and locker rooms for the arena will need fundraising. He expects the city will go back to the Legislature for more money. Its request to voters, along with the others on the ballot this year, were approved by legislators in 2021 before inflation struck.
“We are figuring out right now what we can do with the money we have,” Boucher said.
The work of lengthening the trail and connecting the city’s vital community spaces should begin soon. It will both physically and figuratively link the downtown-less city, rolling alongside the schools, a wellness center and city hall.
“We talk about the trail as being a spine,” Mulder said. “I love the stories of people getting together to walk and talk on the trail. It’s a very small way you build community.”