Shakopee raises minimum wages to $19 for businesses seeking city subsidies

If large businesses eyeing Shakopee want certain tax breaks, they must pay employees at least $19 per hour.

The City Council voted last month to increase the minimum wage for new businesses receiving economic incentives to a rate that's twice Minnesota's new $9.50 hourly minimum for those large employers. The vote followed a public hearing on subsidizing large businesses, an ongoing topic in the city whose job growth has climbed alongside industry development in recent years.

Shakopee is home to a new Amazon.com Inc. distribution center that created more than 1,000 jobs. It is also in discussions for a Hy-Vee grocery store. Candidates for the new minimum-wage requirement would exclude Amazon, said Samantha DiMaggio, the city's economic development coordinator. The target is companies with higher-wage jobs that the city hopes to attract, DiMaggio said, like a medical device company.

"The City Council has asked that [the minimum-wage requirement] be updated because they don't think families can live off $14.50 an hour," the previous minimum, DiMaggio said. "They want to see higher wage jobs."

This new minimum will not affect the city's existing companies — including apparel company San Mar, digital publisher Shutterfly or Emerson Process Management Rosemount — that have arrived in recent years. Amazon had some sewer fees paid by the city but did not receive a tax-increment financing package, so it doesn't fit the criteria for the minimum wage requirement.

In 2012, Shakopee cut its minimum-wage requirements from $19.94 to $14.50 an hour for companies seeking economic incentives. According to past reports, the reduction was propelled by the recession, although economic recovery was already underway.

Criteria for businesses seeking tax breaks are at a city's discretion. Depending on job, land and housing availability, some cities develop specific criteria, while others don't outline requirements at all.

"Each city takes a look at what makes sense at the time when they instate those policies," said Stacy Crakes, business development director at Scott County's First Stop Shop, "and I guess that's what the city decided made the most sense."

In addition to minimum-wage requirements, Shakopee also sets rules for the number of jobs a company plans to create and how much a new or improved factory or office building boosts the tax base.

At a public hearing on June 21, DiMaggio listed the number of jobs and minimum wages at current industries in Shakopee. For instance, Shutterfly pays about $700,000 in annual taxes and receives around $100,000 in local incentives, DiMaggio said. The company's goal was to employ 258 people by May and employed 180 as of January, so it will not receive further incentives this year.

The new minimum-wage requirement reflects a city that's ushering in new businesses as well as looking to house more of the people who work there.

"We're becoming worldwide. We compete globally now," said County Commissioner Joe Wagner.

"I call it the ATM machine" of Scott County, Wagner said of Shakopee. "The amount of tax that's coming out of the Valley Green industrial park — it's staggering. It's a lot of revenue."

Natalie Daher • 612-673-1775