Shakopee’s City Council late Wednesday approved economic incentives to lure fast-growing Shutterfly Inc. to the southwest metro city, a move that followed Gov. Mark Dayton’s “mystery” visit to the California firm last week.

The next step in the Internet company’s quest to build a new $60 million plant in Shakopee involves gaining approval for additional tax breaks from Scott County commissioners, who are scheduled to meet Aug. 20. If approved, Shutterfly could break ground at the Dean Lakes business park in the third quarter, according to Shakopee Mayor Brad Tabke.

All told, the maker of digital photo and paper products is seeking up to $3 million in economic incentives from the city, county and state. Shutterfly, founded in 1999, has annual revenue of about $500 million and has become a well-known supplier of customized photo albums and other personalized ­stationery products ordered online. It made headlines earlier this week with the release of an iPad app that allows customers to create and order products by using that mobile device.

Dayton did his part in the economic courtship last week when he flew to Shutterfly’s headquarters in Redwood City, 25 miles south of San Francisco, to discuss a possible expansion in Minnesota. The governor has taken two such “mystery” trips in recent weeks, and the location of the July 31 trip to California did not come to light until Thursday. The destination of an earlier “mystery” trip on July 24 is still unknown.

“It’s a very promising company and a very good company,” Dayton said, noting that Shutterfly also considered Wisconsin for its expansion plans, but Minnesota apparently beat out the Badger State.

Dayton, along with Tabke and Minnesota Department of Employment and Economic Development (DEED) officials, met with Shutterfly CEO Jeffrey Housenbold for about 90 minutes on July 31. The discussion didn’t center on nitty-gritty details of the incentives in the mix, but focused more on the role Shutterfly would play in “community building, and how we could be partners in the community,” Tabke said. “It was phenomenal.”

“I think [the trip] nudged it forward but I’m not claiming credit for it,” Dayton said. “The credit goes to the local officials and development people at Shakopee and at DEED. They’ve worked on this for several months.”

Shutterfly plans to create 329 jobs over the next two to five years with an average hourly wage of $18.78. In addition, just over 200 people would work on a seasonal basis, according to city documents. It’s unclear how long the seasonal work would last.

On Wednesday, Shakopee’s City Council took a key step in the process by approving a 100 percent tax abatement deal over a nine-year period for the company, a package that has an estimated abatement value of $569,078 to $758,771. The deal also includes sewer access charge credits valued at about $174,000.

Shutterfly will now ask Scott County to approve a nine-year tax abatement valued at $551,159 to $734,878. And the Department of Employment and Economic Development has given preliminary approval for Shutterfly to receive a $1 million Minnesota Investment Fund forgivable loan, and $400,000 in matching grants from the Minnesota Job Skills Partnership program.

Minneapolis-based developer Ryan Cos. will invest about $26 million in the plant, while Shutterfly will fork over $34 million. It is the latest in a series of companies locating or relocating to Shakopee.

On Wednesday, Minnetonka-based Datacard Group confirmed that it was moving about 680 employees to the city, and Emerson Electric’s Rosemount division announced in June that it would take over a long-abandoned complex that was the former home of ADC Telecommunications, investing about $70 million in the facility.


Staff writer Rachel E. Stassen-Berger contributed to this report.