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services in the downtown, but there will be no additional tax revenue to pay for those services during the life of the TIF contract. It can be successfully argued that the revenue would not be there because the development would not be there without the TIF subsidy anyway, but there is a small local financial disparity that needs to be noted. The disparities of the County and School District, which also do not capture the additional revenue, is more significant. Tax abatement, which is similar to TIF in that it is a mechanism to capture property taxes for local projects,is another option that would be directly tied to the growth of the downtown. • Sales Tax. There has been a lot of discussion on the sales tax issue and,with significant local costs pending for the Highway 371 improvements,there are a number of important City problems that can be solved with a sales tax. The convenient thing about a sales tax is that, in a tourism-based economy, people from outside the community will pay a higher portion of the tax. This may not seem fair until one considers that the local roads and streets being utilized by visitors, as well as the utilities, emergency services and general government necessary to keep the City functioning, are paid for and maintained by local property owners. The sales tax is an acknowledgement that there is an area-wide benefit to the downtown improvements. Growth in the downtown retail sector due to implementation of this plan will create additional sales tax revenue. That revenue would otherwise not be available. At a minimum, this additional revenue should be directed to pay for the improvements to the downtown. Additionally, the City should consider dedicating a portion of a new sales tax to the area that will provide a significant amount of the revenue from the first day:the downtown. • Agency Leverage. While not a significant source of revenue to the project, funding from other government entities can make a significant difference in getting a project completed. The improvements to the park,particularly the proposed fish exhibit,should be done in conjunction with the DNR There is money available for such demonstration and educational projects from the Legislative Commission on Minnesota's Resources, and the DNR has internal funds as well. It is a partnership that can benefit both the City and the DNR Mn/DOT needs local approval for highway improvements through the City. There is precedent in other communities for gentle leveraging of that position when it comes to addressing negative impacts to the community created by a highway improvement project. There is no question that highway improvements create disproportionate long-term burdens on the local Pequot Lakes Downtown Plan—Updated February 2oo8 22