Brooklyn Park, Shakopee are among the big winners
The Minnesota Department of Employment and Economic Development this year got an infusion of money from state lawmakers for a variety of economic development programs. And since the money became available on July 1, the money has been flowing to companies and local governments for a variety of business expansions.
The highlights of the omnibus jobs and economic development bill signed by Gov. Mark Dayton in May include $30 million for the two-year budget period for the Minnesota Investment Fund, or MIF, and $24 million for the newly minted Minnesota Job Creation Fund.
A steady stream of business expansion headlines has followed suit:
• Most recently, DEED pledged
$1 million of MIF money to Olympus Surgical Technologies America for a 181,000-square-foot office and research facility in Brooklyn Park. The state money is combining with tax-increment-financing from the city for roughly $2 million to the Tokyo-based health care company.
• Incentives to attract Baxter International to a 215,000-square-foot facility in Brooklyn Park were being devised even before the jobs bill was signed into law. In the biggest deal involving MIF funds so far, the legislation directed $5 million to go to a “biopharmaceutical manufacturing facility” that was later revealed to be Deerfield, Ill.-based Baxter. The money is to be spent during the first and second years of the biennium. The company is expanding a facility that it bought earlier this year from Danish biotechnology company Genmab.
• The MIF funds were tapped to help influence Redwood City, Calif.-based Shutterfly’s decision to build a 217,000-square foot manufacturing facility in Shakopee. The MIF fund contributed $1 million and the Minnesota Jobs Skills Partnership, which is also a DEED program, is kicking in up to $400,000. State and local incentives combined to get the online photo company to pick Shakopee as the site for its Midwestern regional operations.
The funding for the MIF program, which provides grants and loans to companies that commit to expanding or creating jobs in the state, is divided in half, with $15 million apiece for the two years of the state’s 2014-2015 biennium.
Since the legislation passed, DEED has spent $3 million from the MIF and has $12 million remaining for the year. A spokesperson for DEED said the agency is on track to spend all of the allotted money by the end of the state’s fiscal year on June 30.
The newly created Job Creation Fund, which gives up to $1 million in performance-related awards, is also divided in half, with $12 million for each year of the biennium. The Job Creation Fund, however, doesn’t go into effect until 2014. The Job Creation Fund is a replacement for the Job Opportunity Building Zones program that was started in 2004 under former Gov. Tim Pawlenty and was set to expire in 2015.
State officials are optimistic about the economic benefits from the business incentives. But some economists and politicians criticize them. Former state Rep. Phil Krinkie, a Republican and noted budget hawk, argues that companies use the incentives to play states off of each other.
“Once one public entity starts to bribe businesses or developers with taxpayer resources, where does it end? All you are doing is a bidding war and that’s what most businesses that [are] expanding or looking for development opportunities, that’s exactly what they do,” Krinkie said.
Rep. Tim Mahoney, DFL-St. Paul, who was the jobs bill’s chief author in the House, said he’s pleased with the ways DEED has spent the money.
“I’m very comfortable with what I’m seeing at the present time,” Mahoney said. “I would expect to have a better, more public update as we get to [the legislative] session or during session to find out the principles and what’s driven the decisions.”
The jobs bill also contained $6 million for the Redevelopment Grant Program to help local governments rehabilitate blighted sites. The grants go to cities, counties and other local units of government for up to half of a qualifying project’s redevelopment costs, with matching costs being required at the local level.
On Oct. 17, DEED announced it had spent $2.7 million on seven projects around the state. The largest redevelopment grant was $1 million to the city of St. Paul for the future ballpark for the St. Paul Saints baseball team. The ballpark will be located on a
10.5-acre site that was once home to the Diamond Products/Gillette Co. and that has been vacant since 2003.
Mahoney said he finds the state’s economic development programs that require matching funds to be particularly appealing. He said those programs get buy-in from local finance and government officials on projects, which was helpful in particular in attracting Shutterfly to Minnesota.
“I don’t think Shutterfly would have happened without Shakopee and the legislators down there and everyone else down there getting behind that particular plant,” Mahoney said.