How much money should the public sector put down in an effort to lure businesses into town?
Thursday, the Burnsville-Eagan-Savage School District will consider that question. The district, which has long suffered from lagging revenues, has been asked to consider a tax abatement package for Emerson Process Management, a Fortune 500 company that is considering a new facility at 6021 Broadband Boulevard in Shakopee. Technically, the area is within ISD 191's boundaries.
The address in question is currently known as the "ADC 2 Building site," a holdover from the year 2000. That year, ADC began work on a 508,000 square foot building on tract of land, which is not far from Valley Fair. Construction was about 75 percent complete when the tech bubble burst, and ADC abruptly shuttered the structure. The building shell has been sitting vacant ever since.
Enter Emerson, a multinational company that pulled in $8 billion last year. Emerson has expressed interest in the acquiring the dormant structure and turning it into its third Twin Cities facility (at present, Emerson has 250 locations worldwide, including one in Eden Prairie and another in Chanhassen). If all goes according to plan, the new engineering and manufacturing plant would generate 500 jobs. Shakopee City Administrator Mark McNeill told the BES Board of Education that three-fifths of the positions would go to engineers, who make an average wage of $60,000 a year. The remaining 200 would be manufacturing jobs, with wages of just over $30,000 a year. The plant would also generate another 1200 "spin off" jobs, McNeill said.
However, "progress" comes at a price. Emerson estimates that the project will cost $71 million over a five-year period. That total includes $21 million just to complete the building, and another $35 million to get the plant up and running.
The company has told local officials that it needs public assistance to make this proposal a reality. Though the total amount is still in question, Emerson has asked for $6 million in economic development assistance so far.
The bulk of that total would come from abatements, though some grants and loans are also on the table. Under an abatement agreement, the company's share of property taxes are refunded to it as an incentive, rather than going into public sector coffers. The school district's share would be $366,925 over the course of nine years, from 2015 to 2023.
While Emerson would get this money back, the district would not be obliged to count the abated property taxes as a loss. Instead, the district could levy to make up for Emerson's lost share, meaning that average taxpayers in Burnsville, Eagan and Savage would make up the difference.
Certain aspects of the abatement proposal rubbed Board Member Jim Schmid the wrong way, or so it would seem.
"I find it ironic that we're going to create all these high-paying jobs, which would imply highly educated employees, and yet you want to take $300,000 from the public education system, which makes it more difficult to educate those employees," Schmid told Emerson representatives when they made their pitch to the Board of Education last month.
Others on the board were less concerned about this apparent contradiction.
"I'm totally in support of this," said Board Member Ron Hill, who added that the benefits would make themselves apparent down the road, once the parcel was fully developed. "I doubt that we're collecting very much on (the site) right now. I see it as a win-win in terms of the long-term tax situation."
Though negotiations with the state are still pending, officials at Scott County and the City of Shakopee have already given the deal their stamp of approval. The Board of Education will hold a public hearing on the matter today, March 7, during its bimonthly meeting at 6:30 p.m.
When contacted for comment, representatives at Emerson said they would not speculate about how the presence—or absence—of abatements might affect their plans. They also stated that no timetable for this project–or any of the other options being considered–has been announced.