Shakopee considers tax incentives to lure Amazon distribution center

Shakopee is poised to join cities across the nation that have offered millions of dollars in tax incentives in order to snag Amazon.com Inc. distribution centers — along with the jobs and the speedy delivery they promise.

The 820,000-square-foot warehouse on Shakopee's docket is expected to bring 1,000 full-time jobs and faster delivery around the Twin Cities region. The Shakopee City Council will consider a nine-year, estimated $6.4 million tax increment financing package for Amazon on Tuesday.

If approved, it would position the nation's largest online retailer as the most prominent addition to the business community in Shakopee, where city officials have aggressively courted companies with tax incentives. In the last two years, the city has offered $1.7 million to draw Shutterfly to the southern suburb and lure Datacard and Emerson Electric from elsewhere in the Twin Cities metro area.

Some in Shakopee and elsewhere are excited about the growth and are confident that the tax incentive for Amazon is a worthwhile investment. ­Others are nervous about pouring money into another company when some businesses already are complaining about a shortage of workers — a problem worsened by a lack of transit. And at least one City Council member is concerned about Amazon's long-term intentions when the tax incentives expire.

"In nine years, are they going to come back and say 'Either we get more or we leave?' " said Council Member Mike Luce.

Shakopee's workforce grew nearly 25 percent between 2004 and 2014. But many are commuters — in Scott County as a whole, about three-quarters of the workforce is employed elsewhere.

In an effort to tamp down the daily exodus, Shakopee has opened its arms to a slew of new companies and added about 1,500 jobs.

"Local officials are under a lot of pressure to demonstrate that they're creating jobs," said Stacy Mitchell, co-director of the Institute for Local Self-Reliance. "When you have an empty piece of land and it turns into a warehouse, it certainly seems like economic development."

But some of Shakopee's new companies already are struggling to fill jobs. At an April 29 Economic Development Advisory Committee meeting, Chairman Kevin Wetherille said he's heard from local employers looking for workers, especially in ­Amazon's wage bracket.

"With that wage range from like $12 to $18 an hour, our local market is tapped out for those jobs," said Mayor Brad Tabke.

Amazon has analyzed the region's workforce and isn't anticipating a problem. But Stacy Crakes, business development manager at Scott County's First Stop Shop, said the data Amazon reviewed are outdated and don't reflect recent business growth.

The First Stop Shop is conducting a new workforce analysis on the county level, she said. Meanwhile, staff at the city, county and state levels are trying to figure out options for mass transit so that out-of-town Amazon employees will be able to get to work.

The company has stated that it intends to build a distribution center near every major U.S. metropolitan area, Mitchell said, regardless of financial incentives.

"That's what's so frustrating about this, is that we've got the use of limited taxpayer resources going to fund something that is going to happen anyway," she said.

At the April 29 committee meeting, Amazon's director of economic development, Mike Grella, touted the company's treatment of employees. Workers at the Shakopee facility will be paid $12 per hour minimum and $16 on average, plus benefits, stock grants, even tuition reimbursement, he said.

"We are aware that there are other facilities and large employers here, and so we need to compete for that top talent," Grella said.

But Seattle-based Amazon has faced multiple lawsuits for conditions at its distribution centers. Workers have described intense time pressures, overheated warehouses and being told to lie about workplace injuries.

"I fully expect that they'll get a great representation of what it is and what it looks like to work and be part of Amazon's infrastructure," Tabke said.

In exchange for the estimated $6.4 million TIF package — of which Amazon is expected to capture about $3.3 million in net revenue — Amazon's investment in Shakopee will total about $220 million.

Billy Wermerskirchen, the owner of Bill's Toggery for Men in downtown Shakopee, said he's been happy to see business growth in recent years. Though he already faces some competition from Amazon, he said, he isn't too worried about a new distribution center just a few miles from his clothing store.

"A tailor is something you can't find on the Internet," he said.