Wary School Board approves Shakopee tax abatement

A wary Burnsville-Eagan-Savage School Board voted 4-2 April 4 to grant a tax abatement as part of an economic-assistance package for an industrial development in Shakopee.

District 191’s $366,925 abatement over nine years is a small piece of a $6 million package of incentives to woo Rosemount Inc. to an unfinished, 490,000-square-foot building on the district’s western edge in Shakopee’s industrial park.

The building, built by ADC Telecommunications, was left unfinished in 2001 when the company went bankrupt. Chanhassen-based Rosemount — which makes valves and devices that regulate temperature, pressure and flow — is seeking incentives from the state, the city of Shakopee and Scott County to expand into the facility. The package includes tax abatements from the city and county.

The company, which is part of Emerson Process Management, is promising to create at least 400 jobs at the Shakopee facility, 60 percent of which will pay at least $30 an hour on average.

Shakopee City Administrator Mark McNeill told the board April 4 the company is seeking the assistance to close a “gap” between the cost of expanding in Shakopee and expanding at another site.

School Board members grilled company and city officials during a March 7 public hearing on the abatement request. Suspicions lingered April 4.

The abatement amount is the tax the district would collect on the post-improvement value of the building, which is projected to grow from $8.85 million to $21 million.

The district will still collect the tax it now collects on the unfinished property. It will collect all the taxes on the improved property after nine years.

But to pay the abatement, the district will actually add a line item to its annual levy, of up to $40,769 per year. It will cut a check to the city of Shakopee, Board Member Ron Hill said.

The abatement is “net-neutral to the school district. It is not net-neutral to the taxpayers of the school district,” said Hill, who nevertheless called the deal beneficial to the district and voted for it.

Board members Jim Schmid, the board’s most vocal abatement critic, and Robert VandenBoom voted against it.

“We’re being asked to collect a tax from all of our district residents, whether they live in Burnsville, Eagan or Savage, to pass onto a private business. That does not seem right to me,” Schmid said.

Lisa Rider, the district’s director of business services, crunched the numbers and determined that an annual abatement of $38,713 would cost the owner of a $200,000 home an extra $1.32 in property tax. The owner of a $300,000 home would pay $2.12.

The chief beneficiaries are Shakopee, Scott County, the state, the Shakopee School District, Savage, “and then maybe our district,” Schmid said.

“We’re not even in the top three,” he said, noting that tax abatements by Minnesota school districts are rare.

Supporters say the addition of even seven or eight students whose parents take jobs at the facility and enroll their children in District 191 will produce enough per-pupil funding to offset the annual abatement cost.

“I feel nine years will fly by,” Board Member DeeDee Currier said. “It is one of the shortest times the corporation would request. We could see this property deteriorate” without the project.

Maybe another proposal would come along, Currier said.

“But a Minnesota corporation committed to this region wanting to add 400 jobs, half of which are executive level, that’s compelling,” she added. “I think the risk is small with the potential benefits being great for our communities, our school district, and for the children.”

Rosemount hopes to create 500 jobs at the facility, although the state advised the company to use the more conservative figure of 400 in its contract with the Department of Employment and Economic Development, McNeill said.

In a letter to the board, he said regional job creation will total 500 to 1,200 jobs. The latter figure includes “spin-off jobs,” he said.

Of the current 2,000 Rosemount employees who work at the company’s Chanhassen and Eden Prairie facilities, 150 live in Burnsville, Eagan or Savage, according to McNeill.