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Emerson Project Hangs in the Balance

A Fortune 500 company's proposal to build along the Savage-Shakopee border in exchange for a tax abatement package got a lukewarm reception from the Burnsville-Eagan-Savage School District.

A business development that promises 500 jobs in Shakopee was greeted with polite skepticism by the Burnsville-Eagan-Savage Board of Education, which was drawn into a tax abatement scheme by virtue of a territorial technicality.

When the Board took the matter up on March 7, they had a proposal of mammoth proportions to consider, a fact acknowledged by Shakopee officials who have pinned their hopes on its success.

"It is a really big project and I think it's extremely important to our entire region," said Shakopee Mayor Brad Tabke. "I'm extremely excited about it and I hope you guys will be too."

All told, tax abatement package for Emerson Process Management involves $6 million in economic development assistance, so far. That sum pales in comparison to the amount the Fortune 500 company has pledged to build the 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," and it is a half-completed holdover from a brief recession from the year 2000. Emerson, a multinational company that pulled in $8 billion last year, has outlined tentative plans to acquire the dormant building and turn it into its third Twin Cities facility, an effort that would likely cost $71 million over a five-year period.

The new location would ultimately generate 400 to 500 jobs to the area. Shakopee officials 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 spur the creation of another 1200 "spin off" jobs, McNeill said.

The company has told local officials that it needs public assistance to make this proposal a reality. 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 City of Shakopee has put a significant amount of cash on the line. According to a recent report in the Shakopee Valley News, the city's subsidy package includes a $590,496 nine-year tax abatement, waiver of infrastructure fees for up to $456,275 and a forgivable loan of $350,000. 

The school district's share would be much less: $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.

At least one school board member seemed to be unmoved by the idea.

"What are the benefits to our school district?" asked School Board Member Jim Schmid.

Representatives of Shakopee began to enumerate the distant fruits of such a deal, such as regional "economic growth," an increase in income taxe revenue (which the district does not collect) and the eventual increase in property tax values (which the district will not benefit from until the abatement is over). In the middle of the pitch, Schmid stopped them.

"I'm talking about now. I can see immediate benefits for Shakopee and Scott County," Schmid said. "How does that benefit the district now?"

"We're all in the same boat. We're all in this to get benefit and have good positive things coming out of it in the end," said Tabke during the lengthy discussion that ensued. "We need as much help and community input as we can to get this done. I cannot guarantee that this project will happen without it."

The school board is unaccustomed to such requests. School Board Member Dan Luth said that he could not remember another abatement proposal coming before the board in the previous 11 years. Tabke conceded that usually school boards are not asked to participate in such incentive agreements.

Schmid, the most vocal critic of the plan, warned his fellow board members that approval of the proposal may set a trend.

"Here's my concern: The precedent that it sets," Schmid said. "We have another huge vacant undeveloped parcel in Eagan where a new outlet mall is going in. What's going to stop the next developer from coming in and saying 'Hey we want one?'" 

Tuesday night, when asked if the deal could go forward without the school board's participating, Tabke simply said that all parties would try to arrive at the best package possible. The city is still waiting on the final version of a business subsidy agreement with Emerson, a formal contract between all the entities involved.

The next public hearing on the matter will take place in Shakopee on Tuesday, April 2 at 7:00 p.m. The BES Board will not take action on the matter until April 4.

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