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Minn. Floats $15.4M In Subsidies For Biotech Firm

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(credit: CBS)

(credit: CBS)

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ST. PAUL, Minn. (AP) — State leaders stand ready to commit up to $15.4 million in taxpayer subsidies to a Fortune 500 pharmaceutical company they hope will put an outpost in Minnesota, according to a document made public Wednesday.

After declining to provide details the day before, Gov. Mark Dayton’s office released a February letter from the governor and top legislators to a site hunter for Baxter Healthcare Corp. The Deerfield, Ill.-based company is eyeing a property in Brooklyn Park, a Minneapolis suburb, for an expansion that could result in 200 good-paying jobs.

The initiative was dubbed “Project Fern” in the official communications, because the Dayton administration signed an agreement that barred it divulging Baxter’s identity or interest in the state. That agreement was waived late Tuesday as questions began to swirl about the offering and the covert courtship. The process is raising concerns that the pressure to attract jobs is overwhelming transparency at the Capitol.

The letter from the state’s political powers went to a Minneapolis consulting firm that is advising Baxter as it considers branching into Minnesota.

“We, leadership of the state of Minnesota, greatly value your investment and by receipt of this letter, state our commitment to pursuing the following special legislation for Project Fern during the 2013 legislative session,” the letter reads. It goes on to list five programs the officials were prepared to tap to deliver tax exemptions, forgivable loans, per-job tax credits, working training grants and special assistance on road, sewer and water construction.

House Speaker Paul Thissen, a Minneapolis Democrat, has said he signed the letter without knowing the identity of the company or the full scope of its plans. Senate Majority Leader Tom Bakk, a Democrat from Cook, said sensitivities involved in recruiting a large company makes the discretion understandable.

Baxter is a $14 billion-a-year company that makes devices and drugs to treat hemophilia, immune disorders, infectious diseases, kidney disease and other acute conditions. It recently bought a building vacated by another biotech company and is considering a two-phase expansion, which could add $300 million in space and equipment to the property and result in permanent jobs that would average $75,000 in base salary plus benefits.

Baxter could also qualify for city subsidies, making the public’s commitment to the project even more.

Lawmakers had begun voting on the subsidies without knowing which company could land them. Some now say they are uncomfortable with the secrecy involving a request for taxpayer dollars.

Democratic Rep. Ryan Winkler, a Golden Valley Democrat, said he might have opposed a larger economic development package the House passed Monday if he knew what was transpiring privately. That bill contained $5 million in forgivable loans plus another $2 million incentive based on the number of jobs the company adds to its Minnesota payroll.

“It’s a problem that we didn’t know and weren’t told what the subsidy deal was because most of these are not very good, and without some public scrutiny, we just start throwing money around in an even more egregious fashion than we typically do with these kind of subsidies,” Winkler said.

Winkler said the state appears to be bowing too readily to a company for the sake of attracting jobs. “It’s a certain kind of desperation to agree to their confidentially terms when they’re asking for the taxpayers to give them free money,” he said.

Blake Chaffee, a spokesman for the Minnesota Department of Employment and Economic Development, said the non-disclosure agreement was meant “to protect the business and their competitive interest in terms of proprietary information.” He didn’t have immediate information on how often such agreements are used, but he stressed that the incentives themselves are subject to public disclosure and examination.

Rep. Kurt Zellers, a former Republican House speaker, said the way this deal played out could come back to haunt state leaders if Baxter wins its subsidies. He predicted more companies and their search firms will insist on non-disclosure agreements that prevent a full public vetting of their requests.

“It’s a new precedent for those that do these searches for these companies,” Zellers said. “If you go to Minnesota that’s what you do.”

(© Copyright 2013 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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