Incentive Package for Emerson Gets OK from City of Shakopee, Burnsville School Board

The Emerson deal has cleared one final hurdle: The Burnsville School District.

Thursday night, the Burnsville-Eagan-Savage Board of Education approved a property tax abatement for Emerson Process Management, parent company of Rosemount, Inc. The measure passed 4 to 2.

Rosemount is considering a new facility at 6021 Broadband Boulevard, a dormant building in eastern Shakopee. Technically, the area is within Burnsville district's boundaries. If all goes according to plan, the company will redevelop the building into a new engineering and manufacturing plant that would generate 400 to 500 jobs. Shakopee City Administrator Mark McNeill has stated that three-fifths of the positions would go to engineers, who make an average wage of $60,000 a year. The remaining 200 would be manufacturing jobs, with wages of just over $30,000 a year. The plant would also generate another 1200 "spin off" jobs, McNeill said.

Emerson estimates that the project will cost $71 million over a five-year period. The company has asked state and local authorities for financial assistance "in order to make the Project economically feasible," as the newly approved contract states.

The amount of money involved is considerable: a total of about $6 million in various forms of aid contributed from the City of Shakopee, Scott County, the Burnsville-Eagan-Savage School District and the state. The total includes about $1.5 million in property tax abatments—tax moneys to be paid back to the company over a period of nine years, from 2015 to 2024.

The City of Shakopee has quite a bit of skin in the game—about $1.4 million. The school district's share of the incentive package is the smallest, just $366,925, but the project still encountered some resistance from members of the board. 

"We're being asked to collect a tax from all of our district residents to pass on to a private business. That does not seem right to me," said Board Member Jim Schmid, one of the dissenting minority. 

Schmid's concerns echoed those of Shakopee Council Member Matt Lehman, who was the only member of the council to vote against the project at its meeting on Tuesday.

"From the last data I gathered, your company had $25 billion a year in sales, a 40 percent profit margin, and $10 billion in profit per year. How can someone who has $10 billion need to take a couple hundred thousand from people possibly trying to stay in their house?" Lehman asked Brian Harstad, vice president of finance for the company.

Harstad prefaced his comments by correcting some of Lehman's numbers.

 "The sales figure is accurate. The profit margin is overstated," Harstad said. "This project really comes down to choosing alternatives. We need to make the best investment choice for our shareholders. Starting out, financially it doesn't offer the return some others do."

The package was necessary to make the project "viable," Harstad said. The city council approved the project 4 to 1.

Though the package has been approved by all government entities involved, it is not yet known if Rosemount will accept the deal. Shakopee officials expect to have an answer in the next few weeks.

Here's the contract and here's a summary of what the package includes: 

City of Shakopee: $1,396,871

• A forgivable loan of $350,000
• A property tax abatement of $590,596
• Sewer availability charge (“SAC”) credits up to $304,375
• Waiver of SAC access fee up to $39,900
• Waiver of trunk sanitary sewer charge, up to $112,000

Burnsville-Eagan-Savage School District

• A property tax abatement $366,925 

Scott County

• A property tax abatement of $570,608
• Considerable assistance in paying for the fiber optic network/broadband access. The county has offered to give the company a fixed rate of $3,500.00 per month for up to twenty (20) years. The county has also agreed to pay up to $150,000 of the costs of extending the its fiber assets to not just the Shakopee property, but and Emerson's other three facilities in Chanhassen, Eden Prairie and Bloomington.

The State of Minnesota

• An infrastructure grant of $550,000
• A Minnesota Investment Fund grant of $1,434,579
• Potential sales tax exemptions of $745,493