For a midsize suburb at the far edge of the metro, it’s an eye-popping haul.
In just 15 months, Shakopee stands to reel in well over 1,000 jobs from five new employers, representing hundreds of millions in investment and covering well over 100 football fields worth of land.
But at what price?
The millions in tax subsidies that Shakopee is dishing out to land those jobs, counting deals in hand and deals in progress, has eyes rolling among some civic leaders in Scott County. Nor are the deals ones that every other suburban competitor is willing to consider. But the city insists that the long-term gains will justify the short-term sacrifice.
The latest to surface is a possible deal to bring the headquarters of Datacard Group to Shakopee from Minnetonka, where the maker of secure ID and card personalization products had outgrown its space.
With Shakopee’s once-commanding lead in Twin Cities housing development slowly melting away, the cascade of subsidies is starting to suggest a community anxious about its future prospects.
“We have a lot of people traveling out of town now to have those kinds of jobs,” said the city’s newly hired economic development chief, Samantha DiMaggio, who commuted from her home in Shakopee to St. Paul before starting her job in April. A lot of her neighbors work in Minneapolis and nearby suburbs like Eden Prairie, she added, and “we want to bring them back here.”
The pile of deals has some business owners, already unhappy with their own tax bills, grumbling, said Joe Wagner, a county commissioner who runs small businesses along the highway south of Shakopee.
“What I hear from people is ‘the big guys get the breaks and the little guy is on his own,’ ” he said. “And there’s an element of truth to that.”
There’s also the problem, added Chanhassen City Manager Todd Gerhardt, of where you stop.
“You kind of wind up going down slippery slope. You start abating taxes for one and having to explain why you’re not for others,” he said.
Chanhassen lost out to Shakopee in a competition for a major new installation for a division of Emerson Electric partly because the company wanted to spread out its operations, Gerhardt said. Emerson already has about 1,500 employees in Chanhassen.
But the company did ask about the possibility of financial assistance for one Chanhassen property it had looked at, Gerhardt said. The city offered Emerson some breaks on permitting fees, Gerhardt said, “but nothing that could come close to the deal that Shakopee put together.”
Shakopee Mayor Brad Tabke concedes that the city will take a financial hit for quite some time — but he says it will be worthwhile.
“We were a sleepy rural town that went through a heavy growth stage and then hit a very decisive lull,” he said.
“Something that does us immediate good in six months might not be the right path to take, versus something that’s beneficial five or 10 or 20 years down the road. All these deals are extremely beneficial in the long term.”
And the deals the public knows about are just the start, he added; the city expects to announce more in the coming weeks and months.
So far, however, there’s little sign of a recovery for Shakopee in annual building permit totals and population estimates. For the first half of this year, the city has recorded 39 single-family housing construction permits, 10 fewer than the same period in 2012.
The Metropolitan Council is warning that development is shifting heavily away from cornfield-subdivision suburbs and toward the inner metro as demographics change.
And that’s notably true for Shakopee, one of very few major suburbs not to experience a major acceleration in its population growth rate last year. Even inner-ring Richfield added more population — quite a change from the past decade, when Shakopee’s growth numbers were 18 times as big.
In its quest for jobs, Shakopee has lowered the bar for what businesses receiving financial assistance must pay their employees. Last year, companies seeking economic incentives had their minimum wage requirements cut from $19.94 to $14.50 an hour. The reduction was described as a reaction to the recession, but was put into effect at least two years into the economic recovery.
Wage levels don’t appear to be an issue with Datacard. DiMaggio told a city committee last week that the jobs pay an average of $85,000 a year. The renovations Datacard would make would mostly turn manufacturing space into professional office space.
A major plus for Shakopee, in the eyes of Commissioner Wagner and his colleagues: Despite the drop in wage requirements, it insists on well-paying jobs more than other places.
“On the surface it doesn’t look good, I know that,” he said, “but that industrial park in Shakopee is an ATM for all of Scott County, it spins off so much money, and as long as we’re getting good-paying jobs, jobs that fuel restaurants and homebuilding and not just starter homes but big ones, I can’t help but feel it offsets it. Ten, eleven bucks an hour? No way.”
Still, DiMaggio agrees that part of the challenge for Shakopee will be to measure the benefits. The city worked with Greater MSP, a regional development partnership, to get an impact study on the upcoming move of Emerson. She also said the city hopes to develop more-specific criteria for which types of businesses it’s willing to subsidize.
“We’re not just going to give [financial assistance] to everyone,” she said.