The city of Owatonna, Minn., hopes a $4.9 million tax incentive package will be enough to convince Apogee Enterprises Inc. to launch a multimillion-dollar expansion at its glass factory in Owatonna instead of sending the investment to Georgia.
Apogee announced this week that it plans to pump $30 million in factory improvements at either its Viracon facility in Owatonna or its glass plant in Statesboro, Ga. But where the investment happens will largely depend on how much financial support the communities can offer.
And that has sent the city of Owatonna into a whirlwind, as officials rush to finalize millions in tax breaks for Apogee. Such bidding wars between communities are common as companies increasingly lean on public incentives for large corporate expansions.
"They were looking for proposals from different entities," said Owatonna Mayor Thomas Kuntz. "Anytime a company wants to expand ... it becomes an international competition."
Winning the investment would ensure that Owatonna retains more than 1,000 jobs at its Viracon complex, which has supplied exterior glass for the Xcel Energy Center, TCF Bank Stadium and the new World Trade Center, and serves as the headquarters for Apogee's Viracon subsidiary. However, an expansion wouldn't mean more jobs at the factory, and the plant would continue to operate even if it didn't get the additional investment. The company wouldn't say whether it would cut jobs at the plant if Owatonna didn't get the expansion.
Apogee plans to make a decision on where to do the expansion by March.
Mary Ann Jackson, spokeswoman for Bloomington-based Apogee, said it was critical to seek competitive offers from both Minnesota and Georgia because the company's commercial construction business has been weak. Corporate revenue was $662 million in fiscal 2012, down from $925 million in fiscal 2009.
Jackson would not disclose details about the expansion project beyond saying that the company intends to make its factory more efficient and competitive. She said she hasn't seen Georgia's incentives package, and Statesboro city officials didn't return phone calls seeking comment about its plans.
If Owatonna's preliminary tax incentives win, the town stands to gain 100,000 square feet of additional factory space. But expanding there could prove to be tricky, because the location has four buildings and a road in between, making an addition potentially more expensive and complicated, said Owatonna Community Development Director Troy Klecker.
By contrast, Apogee's glass plant in Georgia has space and fewer physical complications. The Owatonna site, however, houses a larger workforce.
To help Viracon's decision, local officials are considering $3.1 million in tax abatements that would span 15 years for the city and five years for the county, Klecker said.
City officials are also proposing that the state offer Viracon its Minnesota JOBZ tax exemption plan. If accepted, JOBZ would provide up to $1.8 million in savings over two years from sales, property and corporate franchise tax benefits. The state's JOBZ program is set to expire in two years.
The Owatonna City Council will hear public comments and vote on the proposals Feb. 5. The Steele County Board votes Feb. 12.
Asked if the tax offerings will be enough to beat Georgia, Kuntz said, "There is never a slam-dunk until the signatures are on the bottom line. They need to get through their approval process before they make their final decision."
Brad Meier, president and chief executive of the Owatonna Area Chamber of Commerce said, "I guess we are pretty hopeful. At this point, we are doing everything we can so that this happens here in Owatonna ... For us, the objective is to have them here, have them grow their business here and keep jobs here. Viracon is great community partner and business citizen for us. So it's a big deal for us."
Viracon employs 2,000 U.S. workers, half of whom are in Owatonna. Before the recession, Viracon employed 3,000 workers.
Dee DePass • 612-673-7725