A $5 million tax incentive proposal is in the works in Shakopee in an effort to bring online retailer Amazon to the city, according to media reports.
Amazon has reportedly been in talks with the city to build a large distribution center which would employ up to 1,000 people, according to media reports.
Shakopee Mayor Brad Tabke told the Minneapolis-St. Paul Business Journal that the city and Amazon are discussing a tax increment financing district on the 63 acres being considered for the facility.
A TIF district is a commonly used economic development tool that helps municipalities recoup the expenses they incur on new infrastructure to attract new construction.
In Shakopee, the city would spend about $5 million on infrastructure for the proposed Amazon site on Minnesota 101, and then pay itself back through the higher property taxes generated by the new development, the St. Paul Pioneer Press explains.
Amazon is planning to build an 820,000-square-foot warehouse and distribution center in the Shenandoah Business Park on Hwy. 101, at a cost of $55 million, the Business Journal reports. The company would likely spend tens of millions more to install high-tech sorting equipment.
"It is an extraordinary project we are really excited about," Tabke told the Star Tribune.
Amazon would purchase the land from United Properties, which is owned by the Pohlad family – who are also owners of the Minnesota Twins. Construction would likely begin this year and the facility would be open in early 2017.
Speculation about Amazon's plans to enter the Twin Cities market surfaced last October, when the company began charging sales tax on purchases by Minnesota residents, which is not required unless a merchant has a physical presence in the state.
Amazon's closest distribution center is in Kenosha, Wis., and it also has a customer service center in Grand Forks, N.D.
A distribution center in Shakopee would mean more items could be shipped in a shorter period of time to customers in surrounding areas. Somewhere down the line, same-day delivery would likely to be offered in the metro area, said the Star Tribune.
Amazon currently offers same-day delivery in about a dozen cities.
Neither Amazon nor United Properties has commented on the plan, and Tabke said he doesn't expect an official announcement until the deal is finalized, according to the Business Journal.
A draft version of the proposal will come up for discussion at the city's Economic Development Advisory Committee April 29, the Business Journal said.
Shakopee, a city in the southwest metro, scored another high-profile employer when Shutterfly opened a distribution center in the city in 2014. It employs about 400 people.
The city of Shakopee and Scott County each granted Shutterfly tax abatements worth up to $1.4 million over nine years to help land the California company's facility.