Women in hairnets pushed shopping carts though the cramped aisles of Abdallah Candies’ warehouse this week.
They pieced together orders for Hallmark stores and hospital gift shops — some chocolate-covered cherries, boxes of assorted chocolates — and carted them to packaging stations to be boxed and carried to storage. It’s an inefficient system, owner Steve Hegedus said, and one the company plans to change soon with the help of local tax dollars.
Abdallah Candies, a family business that opened in 1909 in Minneapolis, has outgrown the Burnsville location it’s occupied for years. After a two-year search, the popular chocolatier has found a second home in Apple Valley.
City officials voted Thursday to subsidize the $12 million expansion with up to $908,000 in local government tax revenue, and supported the business’s state funding request.
“It’s a great manufacturer that has had a long-term investment south of the river,” Apple Valley Mayor Mary Hamann-Roland said. “This brings one of the country’s best candy makers to Apple Valley.”
While the mayor proclaimed the decision a “win-win-win,” not everyone is on board with diverting tax dollars to the project. The Dakota County Board this week voted against it. The vote doesn’t prevent Apple Valley from moving forward with the incentive, but exemplifies a long-standing disagreement between the county and cities over the subsidies.
Dakota County has historically opposed tax increment financing for economic development projects, County Manager Brandt Richardson said.
“It’s not really our job to pick winners and losers,” Richardson said, instead the county’s policy has been “provide a good environment, keep the taxes low and let it grow.”
City leaders have said the idea that businesses will come, regardless of subsidies, is flawed. Lakeville Mayor Matt Little is one of the officials who emphasized the need for the incentives.
“We live in a world where there’s plenty of places with low taxes and plenty of places businesses can go,” he said at county meeting. They are competing against cities in Scott County, which have aggressively used subsidies, and communities in the Dakotas, Iowa and Wisconsin, he said.
“We need this tool to compete,” Little said.
Over the next eight years, Apple Valley’s tax increment financing district is estimated to generate about $1 million in new tax revenue. Most of that revenue, which would normally go to the city, county and schools, will be used to cover Abdallah’s development costs.
Apple Valley also supported the company’s application for up to $1 million state money from the Job Creation Fund.
If the city did not approve the tax subsidy, Hegedus said the company would not move there.
“Everything has to fall into place,” he said of the state and local money, “We are desperate for that funding.”
The city views the project as a long-term investment, Hamann-Roland said. Past subsidies have paid dividends, resulting in new jobs and tax base growth, she said.
Abdallah Candies will still use the facility on County Road 42 in Burnsville, in addition to its new Apple Valley storefront and manufacturing space at Johnny Cake Ridge Road and 147th Street W.
The company initially planned to move all its operations to one new, larger space. They looked at more than two dozen options, including some in Wisconsin, Hegedus said. But finding an affordable site that was large enough and in a busy retail area was impossible, he said, so they opted for two locations.
Abdallah will shift some of its 125 employees to the new location and will add 10 to 20 new jobs at the Apple Valley property in the first year, Hegedus said.
The Apple Valley site will initially be 74,000 square feet, with plans to expand to 159,000 square feet.
The company hopes to start operating in Apple Valley by next August and open a store there in time for the holidays in 2016.