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Report: Data spotty that tax break created jobs

MINNEAPOLIS -- Legislation that allowed local governments to direct excess property tax dollars from tax-increment financing districts into other private developments was supposed to kick-start construction hiring in Minnesota, but an examination published Wednesday found evidence of job creation was spotty at best, even as many companies cashed in on the new law.

Target Corp. even took a double-dip at taxpayers' expense last year, Finance & Commerce reported ( http://bit.ly/Tg4ujl). Brooklyn Park gave the discount retailer $2.5 million for its northern office campus expansion, just months after Inver Grove Heights gave $1.25 million to land a store.

The idea behind the 2010 legislation was to create work in a Minnesota construction industry that lost 50,000 jobs in the recession. The business newspaper found that 35 cities and other public entities statewide used the authority to funnel $35.9 million to 76 building projects before a July 1 deadline.

Supporters claim the "temporary authority to stimulate construction" helped leverage $510.6 million-worth of construction projects. Critics say tracking the program's performance matters because home and business owners paid more in property taxes than they might have had to pay if the money was not diverted to building projects.

Finance & Commerce found that numbers on construction jobs were unavailable for 44 out of 76 projects. Some cities did not keep track of the jobs created at all, while others had incomplete or unverified counts, the newspaper found. That's because the legislation did not require them to compile that data.

The lack of oversight troubled Sen. James Metzen, D-South St. Paul, an author of the 2010 law. Metzen said it's "common sense" that because job creation was the goal, tracking it would hold communities accountable.

"The cities should be counting. And if they're not, we ought to say to them, `What did you do with the money? And how many construction jobs and permanent jobs were created?'... If they're not disclosing, maybe it has to be a requirement going forward: `Tell us what you're doing,' " Metzen said.

Finance & Commerce said the legislation appears to have created 2,199 construction jobs in 14 cities and is creating or retaining at least 7,681 permanent jobs in 24 communities. But the newspaper said its figure for permanent jobs was misleading _ less than a third are new jobs. And of jobs counted as retained, nearly three-fourths come from Target, which plans to move 3,900 jobs from its downtown Minneapolis headquarters to Brooklyn Park.

Among the cities keeping track of jobs, each construction job cost an average of $8,213.53 in property taxes, and the cost was $3,761.17 per permanent job, according to F&C's analysis. The total public and private investment was an average of $92,817.20 per construction job and $48,617.77 per permanent job.

Those dollars-per-job numbers are in line with what the U.S. Economic Development Administration describes as typical in such deals, said Janna King, president of Economic Development Services, a management consulting company in Minneapolis.

Target wasn't the only multibillion-dollar company to use the program. Its chief competitor, Bentonville, Ark.-based Wal-Mart Stores Inc., indirectly benefited from $2.4 million going toward the redevelopment of the former Brookdale mall in Brooklyn Center, now anchored by a Walmart store that opened in September.

Duluth steered $350,000 to aircraft maintenance company AAR Corp. as part of a $7.5 million package for reopening a long-closed Northwest Airlines maintenance facility.

Some of the money went to restaurants, such as $90,000 to help bring a Pizza Ranch to Elk River. The cash also helped build gas stations in Sauk Rapids and St. Peter, spruce up downtown businesses in Breckenridge and Stillwater, and tear down blighted homes in West St. Paul. The largest award _ $3.8 million _ is helping to build a $28 million luxury apartment complex in Ramsey.

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Information from: Finance and Commerce, http://www.finance-commerce.com