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Minn. plans 'very restrained' tax-break offering to lure Amazon

ST. PAUL — Minnesota may not pony up huge tax breaks to woo Amazon to pick the state for its planned second headquarters, Gov. Mark Dayton said this week.

Dayton, a Democrat, said any financial inducements to land the digital retail behemoth's new headquarters would be offered "in a very restrained way," in part because retailers Best Buy and Target make their home in Minnesota.

Best Buy and Target are Amazon competitors and have about 34,000 employees in Minnesota, 12,000 of those in their headquarters, the governor's office said.

Minnesota officials want Amazon to pick the state to house the 50,000 potential employees the company dangled in its request for proposal. Dayton said Tuesday, Sept. 12, that the state does not want it bad enough to give the company massive tax breaks.

If Amazon, which released a detailed list of specifications it would require for its headquarters last week, makes its siting decision based on incentives alone, Minnesota might be out of the running.

But it is not at all clear that Amazon would put government giveaways at the top of its priority list, said Timothy Bartik, senior economist at the Michigan-based Upjohn Institute for Employment Research.

He said Amazon's invitation for bids was designed to solicit big incentives, but "it's clear that there are a lot of other location criteria that are really important."

"I'm sure that some city or state will offer massive incentives," said Bartik, whose research centers on economic development and labor markets. Amazon, however, may make its decision based on other issues.

Amazon said it wants to land in a North American metro area of at least 1 million people with a college and universities, public, surface and air transportation nearby that has a "cultural community fit" and stable business environment. The company's criteria did not explicitly outline its need or desire for tax breaks or other incentives.

Dozens of states and cities said in the past week that they would bid to land Amazon, and wonks and pundits placed their bets on which place would win the chance to host the new offices. The company says it would keep its Seattle base and expand into a second base.

Dayton said Minnesota could offer Amazon what it is looking for but it would be "inappropriate" to give Amazon huge tax breaks.

"We think we have a strong case to make," Dayton said. But he added Best Buy and Target, and other smaller retail companies that make Minnesota home, could fairly "look askance" at any major tax breaks Amazon would get that they didn't get.

"I'm not ruling anything out, but I'm raising a cautionary note," he said.

The governor said he called the CEOs of both Target and Best Buy to let them know how much he — and the state — appreciates their companies being in Minnesota.

Dayton, a scion of the department store chain that sired Target, reported that the CEOs expressed some concern about using tax dollars — including those they pay to Minnesota — being used to woo Amazon.

"But they recognized that this is an opportunity for the state and they're good corporate citizens," Dayton said. "And they're understanding that we are going to proceed."

Best Buy spokesman Jeff Shelman confirmed that CEO Hubert Joly and Dayton spoke but "beyond that, however, it isn't appropriate for us to comment on another company's activity." Target's communication staff did not reply a request for comment.

Amazon has asked localities that bid on the new headquarters to mark their bids "confidential."

Last week, state Department of Employment and Economic Development Commissioner Shawntera Hardy said, given that, disclosing details on Minnesota's bid would be inappropriate.

Dayton, a former economic development commissioner who has backed incentives for businesses, has defending secrecy when wooing businesses before but said he's got nothing to hide in wooing Amazon.

But, he said, if Amazon wants things kept quiet for now, he's comfortable with that.

"They're in charge of this," he said.

The company said it wants bids by Oct. 19 and will make a decision next year.