Secrecy Surrounds Minn. Tax Break For Biotech Firm
ST. PAUL, Minn. (AP) — Following a hush-hush courtship, top Minnesota lawmakers acknowledged Tuesday that they are compiling a multi-million dollar package of public subsidies and tax breaks to encourage an Illinois-based pharmaceutical firm to add 200 high-paying jobs and undertake a substantial construction project in their state.
The extent of the public offerings is becoming known months into a high-level recruitment. The name of the company, Baxter Healthcare Corp., had been constrained by a confidentiality agreement entered into by Gov. Mark Dayton’s administration. Even lawmakers who have begun voting on the package didn’t know which firm would benefit.
Brooklyn Park city manager Jaime Verbrugge disclosed the company’s name Tuesday at a legislative hearing, and Dayton’s administration later confirmed it was hoping to get the Fortune 500 company to make the Minneapolis suburb a significant outpost.
“What they are really doing is presenting an opportunity for the state of Minnesota — an emergent industry in health sciences,” Verbrugge said of Baxter, a $14 billion-a-year company that makes devices and drugs to treat hemophilia, immune disorders, infectious diseases, kidney disease and other acute conditions.
The Legislature is advancing a sales tax exemption, a $5 million forgivable loan and possibly more from a package that state officials have been trying to quietly assemble.
The first clues surfaced Monday. The tax break was a clause buried in a 330-page tax plan released by House Democrats. The provision offered a sales tax exemption on construction materials for a biopharmaceutical manufacturing facility. The standalone bill providing the break was held back until Tuesday, which is notable because plans are normally vetted before inclusion in the giant tax packages.
The $5 million loan, which would come in two parts and is forgivable if certain conditions are met, passed the House with little attention on Monday night as a piece of a broad economic development package. The Minnesota Investment Fund loan is larger than the typical awards.
Asked about the efforts Tuesday, Dayton refused to disclose the name of the company, citing competition from other states for the firm’s expansion. If he did, Dayton said, “they won’t be a prospect to come to Minnesota anymore.”
His Department of Employment and Economic Development said the state had to honor a non-disclosure agreement.
After Verbrugge testified in the House Taxes Committee, the state development agency issued a statement expressing optimism that the Baxter deal would go through. It was the first official acknowledgement of the dealings months in the works.
“We have been working with the company on a competitive economic development incentive package to attract a new industry, new jobs and private investment in the state,” the agency statement said. “We are hopeful and excited about Baxter’s interest in locating in Minnesota.”
The process played out with unusual secrecy.
House Speaker Paul Thissen and Taxes Committee Chairwoman Ann Lenczewski said they didn’t know the identity before moving ahead and pointed to a privacy clause agreed to by the administration. Lenczewski said she first heard of it about a month ago.
Thissen, DFL-Minneapolis, said he and Senate Majority Leader Tom Bakk, DFL-Cook, signed a letter committing to work on the development. Thissen said the venture was known to him only as “Project Fern.”
“It’s a code name,” he said. “Now that it’s in the tax bill we’ll get more information about it and understand it.”
Bakk said he was not bothered by a deal occurring in the dark.
“Often times, private firms don’t want those negotiations to happen publicly,” he said. “Ultimately, there’s a public record of everything that happens but often times it’s the business that requests that the conversations be held confidentially. The project may or may not happen.”
A spokeswoman for Deerfield, Ill.,-based Baxter didn’t immediately return a phone message from The Associated Press and a lobbyist for the firm also didn’t reply.
Documents from the Brooklyn Park Economic Development Authority said the Baxter presence — the company wasn’t named in those papers — would be at a property that has been home to other biotech companies since 2004. The authority was fashioning city tax breaks to foster a two-phase expansion, which could add $300 million in space and equipment to the property. The city materials say the resulting jobs would average $75,000 in base salary plus benefits.
The state’s sales tax break would depend on the company adding at least 190 jobs and making $50 million or more in capital upgrades. It would cost the state treasury nearly $1 million at first.
Neither bill formally names the company. But both are structured so the help would go only to a firm engaged in biopharmaceuticals or biologics. Those fields involve making prescription drugs or proteins, antibodies, nucleic acids and vaccines.
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