Shakopee abatement request gets a grilling

District 191 asked to forego some taxes for employer

Backers of a highly prized plan to occupy a large, unfinished building in Shakopee came in for some grilling March 7 when they asked the District 191 School Board for a tax break.

Chanhassen-based Rosemount Inc., which is part of Emerson Process Management, wants to occupy a 490,000-square-foot building south of Scott County Road 101 and east of Valley Park Drive on the eastern edge of Shakopee’s industrial park.

The facility, built by ADC Telecommunications, was left unfinished in 2001 when the company went bankrupt.

Rosemount — which makes valves and devices that regulate temperature, pressure and flow — says business growth has the company looking for more office and manufacturing space.

It says it will invest $21 million in completion of the Shakopee building and $35 million in equipment and other purchases while creating 500 well-paying jobs over five years.

The company is seeking $6 million in incentives from the state, city and Scott County, including the tax abatements.

The city, county and school district would forgive nine years’ worth of property tax on the post-improvement value of the upgraded property.

Under the plan, the Burnsville-Eagan-Savage School District would forgive an inflation-adjusted $366,925.

Though it’s a small portion of the incentive package, a public hearing before the School Board was required.

In a surprise to many — including, at one time Shakopee Mayor Brad Tabke — the site is in the Burnsville-Eagan-Savage district, not the Shakopee district, which Tabke first approached with the abatement request.

“I completely screwed up and I had no idea this was not in our Shakopee school district,” Tabke told the board.

The project promises regionwide benefits, with the addition over five years of 300 jobs averaging $75,000 a year and 200 averaging $38,000, backers say.

Both Shakopee and Scott County have already approved their abatements — $590,000 by the city and a similar amount by the county, Tabke said. The School Board has yet to vote on its abatement request.

Board Member Jim Schmid was the most vocal skeptic during the March 7 discussion.

The Rosemount plant will have “indirect” benefits to the school district, not the direct benefits backers promise, Schmid argued.

He pointed to the large amount of undeveloped land in Eagan’s Cedarvale redevelopment area and wondered whether it would be next.

“What’s going to stop the next one from coming and saying, ‘Hey, you did it here — we want an abatement’?  ” Schmid said.

As for benefits to the school district, its own proposed resolution approving the abatement says those benefits will “be at least equal to the costs to the school district” because the development “is not reasonably likely” to occur without it and the long-term taxes after the abatement expires will exceed the amount granted to the developer.

“There’s economic growth in the area. There’s an increase in economic development, an increase in employment,” said Julie Eddington of Kennedy and Graven, Shakopee’s financial counsel. “And there’s an increase in the tax base after nine years.”

The district now collects about $55,000 a year on the 110-acre property, according to Board Member Ron Hill. It will continue to collect that, and the amount will probably double after the abatement expires, he said.

Board Member Dan Luth said he doesn’t recall another abatement request during his nearly dozen years on the board.

Schmid said he’s aware of four Minnesota school districts that have denied abatement requests.

The annual abatement amount would be replaced by extra per-pupil aid if only seven children of the new Rosemount employees enroll in District 191, said Lisa Rider, the district’s executive director of business services.

“Hopefully, some of them will land in the Burnsville school district,” Hill said.

Board Member DeeDee Currier said she couldn’t vote for an abatement without guarantees Rosemount will hit its job targets.

Eddington said incremental targets eventually reaching 500 jobs are built into the abatement agreements, and proportionate repayments of the forgiven taxes are triggered if the targets aren’t met.

“I think what you’re seeing is how difficult it is to get funding in public education,” Board Member Bob VandenBoom told the Shakopee contingent, which included Brian Harstad, a Rosemount vice president of finance.

The proposed improvements are projected to create an additional $12.15 million in market value on the site.

Rosemount has its global headquarters in Chanhassen and factory and office space in Eden Prairie. It employs 7,000 at 18 sites worldwide and generates global sales of $8 billion annually, the company says.