A Reality Check On Minnesota’s Bid For Amazon’s 2nd HQ

MINNEAPOLIS (WCCO) — Minnesota is entering a 50-state sweepstakes to win one of the most lucrative prizes in a generation.

State officials are preparing a bid of incentives to lure Amazon’s second headquarters to Minnesota.

The official bid is confidential, but it may include tax subsidies — a common and controversial economic development tool.

Some examples:

  • Mall of America got $250 million in public subsidies in 2013 to expand its shopping mall in Bloomington.
  • Recently, $500 million in tax dollars went to the city of Rochester, where the world renowned Mayo Clinic medical center is adding a $6 billion expansion.
  • And there’s U.S. Bank Stadium, a state-of-the-art football stadium. It got $500 million for a new facility to keep the Vikings in Minnesota.

But most of the public subsidies Minnesota gives to private employers do not come close to those high-end examples.

In fact, most tax subsidies are modest, and targeted, but many continue year-to-year.

amazon fulfillment center 2 A Reality Check On Minnesotas Bid For Amazons 2nd HQ

Amazon’s new Fulfillment Center in Shakopee (credit: CBS)

The Minnesota Department of Employment and Economic Development (DEED) reports last year it awarded $23.2 million to businesses last year “for expansion and/or relocation.”

According to DEED:

  • 16 Minnesota Investment Fund awards valued at $14.6 million. This includes two legislatively-directed projects — the $4 million Cirrus award and the $2 million Millennium Pharmaceutical award. As an aside, we had six other awards that were terminated post-award due to company not meeting goals or withdrawing their application.
  • 21 Job Creation Fund awards valued at $8.6 million. Seven awards were terminated post-award due to company not meeting goals or withdrawing their application.

According to a spokesman for DEED: “When compared to other states across the country, we rank near the bottom when it comes to these kinds of business finance incentives.”

But ongoing Minnesota tax incentives for all businesses totaled $161 million in 2014, according to the Council for Community and Economic Research.

Compare that to Wisconsin, which is offering $3 billion to the company Foxconn to bring 13,000 jobs to Milwaukee.

But that’s not the whole story.

Minnesota Governor Mark Dayton says the state bid will be “restrained,” no matter how awesome it would be to win the Amazon sweepstakes.

In part because Amazon competes directly with two Minnesota companies — Target and Best Buy.

“I did call both the Best Buy CEO and the Target CEO on my own initiative,” Dayton said. “I just wanted them to know they are very important companies. They are very major employers.”

Together, Target (26,271) and Best Buy (8,000) employ more than 34,000 workers.

Amazon is promising 55,000 employees to the winning state, which would immediately make it Minnesota’s largest employer.

Mayo Clinic currently ranks as number one, with 41,620 workers.

The news website Axios put Minneapolis among the top-five contenders for Amazon’s new headquarters.

But a New York Times list thought Denver would be the best fit.

The deadline for states to apply is Oct. 15.

Here are some of the sources we used for this Reality Check:

State Business Incentive Database: Minnesota
Minnesota Incentives, 2015 — Council for Community and Economic Research
Minn. Dept. of Employment and Economic Development Incentives
NCSL’s State Tax Incentive Evaluations Database
Pew Trust: State Tax Incentive Evaluation Ratings
New York Times Interactive Incentives Map
Example: Minnesota Angel Tax Credit Report
Urban Institute: Guide to State Economic Tax Incentive Tools
How States Are Using Tax Incentives To Lure Business
Minnesota’s Top Employers – By The Numbers

 

More from Pat Kessler
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