Baxter International is seeking subsidies for $300 million renovation in Brooklyn Park.
A planned expansion by an out-of-state Fortune 500 company would bring 190 high-paying jobs to Brooklyn Park, a prospect that has the city and the state working to seal the deal.
Baxter International, an Illinois medical products company, has paid nearly $10 million to buy a vacant plant along Hwy. 610 where it plans a two-phase renovation that is expected to total $302 million, including a $60 million first phase.
The firm wants city and state tax subsidies, including an exemption from sales taxes on materials used, and could back out without them, said Brooklyn Park City Manager Jamie Verbrugge.
At the State Capitol, the House Tax Committee heard testimony Tuesday on a $7.4 million sales tax exemption, which is expected to be tucked into the House’s omnibus tax bill.
“These types of economic development initiatives are very important for us to stabilize our tax base,” Verbrugge told the panel. The city is trying to recover from the recession.
“What they [Baxter] are really doing is presenting an opportunity for Minnesota in an emerging industry,” he said. To not take advantage of it, “we’d be missing out on a huge opportunity not only for the state, but for our community.”
Company officials have met with Gov. Mark Dayton and the state Department of Employment and Economic Development. Earlier Tuesday, Dayton had declined to identify the company, citing competition from other states for the proposed expansion.
The Deerfield, Ill.-based company has 50,800 employees worldwide and had $14.2 billion in bioscience and medical product sales in 2012. Spokesmen for Baxter could not be reached for comment Tuesday.
“This bill is about bringing jobs to the community of Brooklyn Park,” said Rep. Melissa Hortman, DFL-Brooklyn Park, a bill sponsor. “It’s about the state of Minnesota making a modest investment in a $300 million development.”
Republicans criticized Democrats as inconsistent for offering tax breaks to this company while trying to raise taxes overall. However, Rep. Pat Garofalo, R-Farmington, said: “I am very much in favor of reducing the cost of doing businesses in Minnesota to create jobs.”
House Taxes Chairwoman Ann Lenczewski also supported the proposal, saying it has built-in protections for taxpayers. “You only receive the tax benefit if you start building things,” said Lenczewski, DFL-Bloomington.
Privacy clause in bill
The provision of the bill dealing with the project does not name the company. Lenczewski and House Speaker Paul Thissen, DFL-Minneapolis, said they hadn’t known the identity before moving ahead and pointed to a privacy clause agreed to by the administration. Lenczewski said she first heard of it about a month ago.
“It is very difficult for governmental units to negotiate deals, publicly, when oftentimes private firms don’t want those negotiations to happen publicly,” said Sen. Tom Bakk, Senate majority leader.
Baxter bought the 215,000-square-foot plant from Genmab, a Danish company that made pharmaceuticals there until late 2009.
Brooklyn Park will provide about $490,000 in tax increment money for the Baxter plant and about $1.5 million in tax abatement over 10 years if Baxter meets renovation and job goals, city officials said. Verbrugge said Brooklyn Park will offer city property tax rebates of $4,000 to $8,000 for each new job Baxter creates, depending on how high the salaries are. He said the company says the average salary will be about $75,000 a year for the medical technology jobs that require specialized training. He said the city rebates would continue for a decade and cannot be more than the city’s share of Baxter’s property taxes.
The Associated Press contributed to this report.