Target Layoffs Raise Questions Over Tax Subsidies
MINNEAPOLIS (WCCO) - This week, Target laid off 1,700 people who work at its headquarters in Minneapolis and Brooklyn Park.
Both communities have given the company millions of dollars in tax subsidies.
The downtown Minneapolis Target store and the surrounding infrastructure were built with a taxpayer subsidy of $60 million, which former Mayor RT Rybak labeled "corporate welfare." And the city of Brooklyn Park has pledged up to $22 million in tax breaks for Target's headquarters there.
These tax deals were controversial when they were first proposed.
Now, with Target laying off corporate employees, there are questions again about whether the cities of Minneapolis and Brooklyn Park put corporate interests over those of their citizens.
The painful images of employees carrying out boxes from the Minneapolis headquarters were captured by every Twin Cities media outlet.
But far less attention went to Target's other headquarters in Brooklyn Park.
Target's original 2005 plan for the Brooklyn Park campus was for 15,000 employees, 3,000 units of housing and two hotels by 2020. In 2006, Brooklyn Park gave Target $2.7 million for the project. Since then, it's given the company $3 million in tax breaks and pledged to give another $17 million if Target delivers on its original plan.
Denise Butler of Northwest Community Action said many taxpayers here are concerned.
"That is a large sum of money, if you look at it over what they have already received," she said.
So far no housing or hotel has been built, and Target refused to tell us how many of the approximately 3,000 employees remain after the layoffs.
"We are worried that our tax dollars are going to continue to go to Target and no any actual benefits will be received," Butler said.
Art Rolnick is a former vice president of the Minneapolis Federal Reserve and a senior fellow at the Humphrey Insitute.
He said that if he were a Brooklyn Park taxpayer, he'd be concerned.
"There is a history throughout the country of cities and states and, often, the taxpayer end up holding the bag," he said.
Rolnick said the kind of deal Brooklyn Park reached is simply bad public policy.
"We are much better off treating all businesses the same, not favoring one or the other," he said.
Rolnick is also highly critical of the $60 million subsidy the Minneapolis City Council approved in 2000, which included a city parking ramp, skyways and office space.
Rybak made the Target deal a centerpiece of his successful 2001 Mayoral race.
The subsidy was repaid over a 12-year period with property tax dollars and other revenue from the Target headquarters, the new store and other downtown properties -- all in accordance with existing tax increment financing laws.
Current Minneapolis City Council President Barb Johnson voted for the deal in 2000 and is glad she did.
"That's changed the whole end of Nicollet Mall, so I would say it's worth it," she said.
The Minneapolis subsidy for the Target deal was paid back by 2012.
The Target store and headquarters have been back on city property tax rolls since 2013.
Brooklyn Park's economic development director Erik Hansen said he's convinced Target is committed to growing its presence in Brooklyn Park for years to come.
Target's only comment for our story was that their deal with Brooklyn Park was amended in 2012. Under the deal Target, had to stay in Brooklyn Park for five years, but those years were up in 2013, so they are not legally obligated to stay.