Another Business Wants a Handout
By Andrew Richter
You have to love today’s version of capitalism! Here’s another story about a company that wants a government handout and a government that is all too eager to help them get your money. From the Sun Post;
A Fortune 100 company is asking the state for tax breaks to expand a vacant medical manufacturing facility in Brooklyn Park. The city has already indicated it’s willing to offer financial support.
Of course, the city has offered to help. It’s their money not yours right?
Baxter International, a biotechnology company based in Deerfield, Ill., plans a two-phase, $310 million investment in a specialized manufacturing facility at 9450 Winnetka Ave. N., according to Brooklyn Park staff reports. Baxter recently purchased the 215,000 square-foot antibody manufacturing facility from Denmark-based Genmab for $10 million at the end of February.
The first phase of investment would include about $60 million in improvements to the facility, according to city staff reports. Phase two would double the size of the building at a cost of about $100 million, with another $150 million spent on machinery and equipment. The company estimates the final product would create about 200 highly skilled jobs with an average annual base salary of $75,000 plus benefits.
Prior to purchasing the building, Baxter asked the Brooklyn Park Economic Development Authority (EDA) to approve a non-binding term sheet indicating the city’s willingness to offer financial assistance. The company asked to remain anonymous at the time, with the understanding that its name must become public before it could enter any binding agreements with the city. The EDA approved the term sheet Feb. 19.
Baxter continued its secretive approach at the state level. Even Rep. Melissa Hortman, DFL-Brooklyn Park, the chief author of a bill that would offer the company tax breaks, reportedly didn’t know the company’s name or what it manufactured early April 16, the day she introduced the bill.
Oh really Ms. Hortman? Tax breaks to a business? I thought the rich had to pay their fair share??
Hortman was not immediately available for comment for this story.
Must have been at an Education Minnesota fundraiser.
Her proposed bill would exempt the company from state taxes on materials, supplies and equipment used in the improvement or expansion of the facility. To be eligible for the refund, the company would have to invest at least $50 million in the project and use the facility for “the manufacturing of biologics.”
How about all the other businesses out there who don’t have millions of dollars for lobbyists or friends at city hall? Are they exempt from state taxes on supplies and equipment?
Baxter spokesperson Deborah Spak said the company is currently transferring technologies to the facility for planned development projects but that future projects could be affected by the Legislature’s actions.
“Future decisions will be made over time on additional investments to expand on the technical capabilities of the site and to equip the site for biosimilar production,” she said in an email. Spak added that incentives “may impact these future decisions and additional investments.”
That sounds like a threat to me!
Brooklyn Park Community Development Director Jason Aarsvold said the city has been hoping to see another medical manufacturing company operate the site since it closed in 2009. “We’re really relying on the state to put together a package that makes sense for Baxter from a business standpoint,” Aarsvold said.
According to Aarsvold, the facility is highly specialized, and there aren’t many like it in the U.S. or even world. He cited Genmab’s purchase of the facility as evidence.
“The only reason that company came to Minnesota, or the United States for that matter, was because of this facility,” he said. “So (that’s) the level of draw that this thing has, but it’s also kind of its downfall, because it’s so specific.”
Aarsvold said if a medical company didn’t resume production at the facility, the alternative uses would likely be limited to simple warehouse or office uses.
Originally the facility was developed by Protein Design Labs, Inc. about 10 years ago with assistance from the Brooklyn Park EDA. The EDA agreed to pay the company $800,000 in tax increment financing (TIF) dollars. Under tax increment financing plans, new taxes generated by a development return to the developer for a specified period of time.
$800,000 of tax money????
In 2008 Genmab acquired the rights and obligations under the EDA contract. Genmab suspended operations at the property the following year, and the EDA stopped making TIF payments, because the company failed to maintain operations in the building for eight years.
The city has been holding the remaining $490,000 of TIF money for possible future payment, because it hoped to see medical manufacturing resume at the property.
The EDA has committed to offering that TIF money to Baxter. It has also committed to giving Baxter property tax abatements – refunds – of $4,000 or $8,000 for each qualified job the company creates, depending on the salaries.
“We’re just happy that it was another bioscience company that bought it,” Aarsvold said.
What ever happened to capitalism? Here’a an idea; LOWER TAXES FOR EVERYONE!!!!!!!!