FARGO — Tax incentive supporters are putting the pressure on to show that programs being offered to businesses and developers are not only going to eventually provide impressive property tax payments but also provide positive ripple effects in the community.
Mayor Tim Mahoney went as far as to say Tuesday, Aug. 27, at a Tax Exempt Review Committee meeting that Fargo is becoming nationally known for its economic growth and projects.
The major example lately has been the tax breaks for Aldevron, the leading global supplier of plasmid DNA used in cell and gene therapies that help fight diseases. The company recently broke ground on its 14-acre campus expansion that will quadruple its current capacity and provide jobs for at least another 100 people. The company is building a new manufacturing facility as well as expanding its current building for a price of $46 million, plus adding $26 million in equipment.
Joe Raso, president and CEO of the Greater Fargo/Moorhead Economic Development Corp. (GFMEDC), told the committee that the expansion will have a ripple effect of $500 million, or "a half a billion" as he put it, on the community despite five years of a 100% property tax break and five years of a 50 percent reduction for a total of about $4.6 million.
Dean Bangsund, a research scientist and economist at North Dakota State University, was hired by the GFMEDC to study the project benefits. His report noted that during the coming five years there will be a $27.2 payroll boost, an increase of $380 million in annual sales involving other businesses in the region, a construction payroll for 100 workers and other related paycheck benefits of $38.6 million. Also, despite the tax break, local units of governments will still gain $1.5 million in taxes.
Raso said Aldevron could have easily expanded at its two other facilities in Madison, Wis., or Germany, but choose Fargo. There was even a report of the city of Dallas, Texas, was trying to lure the company headquarters there.
Raso said Bangsund uses a software program recognized nationally in determining spin-off benefits to the community.
Raso, who has worked in economic development in three different states in the past 25 years, said after his first year on the job that "it's very impressive what's happening here."
He also presented another report to the committee that shows benefits during the past five years of 125 projects the GFMEDC supported that added 2,055 direct jobs.
Using the economic impact modeling software, the report found ripple effects on almost all types of businesses, industries and even nonprofit organizations. Some examples were $125.9 million on the construction sector, $66.5 million on insurance carriers, $49.4 million for food and drinking establishments, $176 million on real estate, $8.9 million for personal and laundry services and $350,000 even for museums and historical sites. The list goes on, but Raso said some of the numbers were at the "bare minimum level."
New committee member and former City Commissioner John Cosgriff, known for being fiscally conservative, said as far as the tax exemptions go, it "shouldn't be looked at as what we are giving, but what we are investing in."
Property tax exemptions are just a small part of the economic picture and that the city leaders need to be "good partners" to keep the economy growing here, he said.
In response to a question from City Commissioner Dave Piepkorn, Raso said 70 percent of the projects and job creation is helping businesses already here to grow, while the other 30 percent is attracting new businesses and employers here.
"We need to take care of our own," Raso said, adding that his organization makes a concerted effort to try to talk with local businesses and companies who are considering projects or have complaints.
Piepkorn and Mahoney suggested that a report on other economic benefits of the project could be included when tax breaks are approved by the city commission.