Discussion:
The Southwest Logistics Center was developed by WPT REIT just prior to COVID and was one of the largest speculative distribution centers constructed in Minnensota. When COVID struck, the tenant that the city and WPT had worked with, canceled its lease because of the uncertain economy.
Since that time, WPT has marketed the structure and had several tenants where they have tried to come to terms with but have been unsuccessful. One of the issues has been the property tax on per square foot basis that currently includes no tenant improvements.
The current proposed tenant would use the facility for the Sam's Club logistics center. Product for the region would be delivered into one side, racked and stacked for distribution to individual stores and shipped out on the other side. The tenant will be requesting from the Board of Adjustment and Appeals a Conditional Use Permit for outdoor storage for its tractor trailers that will be stored overnight and during peak season deliveries on the site. The building owner is planning to make additional site improvements including concrete pads to support the trailer legs.
The proposed tenant would bring130 new jobs to the region at a minimum wage of $21 an hour plus benefits. The average wage of all jobs on site, excluding the highest wage position, is more than $24 an hour, the minimum for application for any business subsidy. The proposed wages for this facility would be some of the highest in Shakopee for a distribution/logistics center.
The proposed business subsidy is an abatement of only the city's portion of the property taxes on the tenant's proposed improvements. The current tax payment on the existing building and structure, would remain with the city. The tenant would pay the increased taxes due to its minimum of $8 million in improvements and then the city would send them a payment twice per year, based on their performance and conformance to the Business Subsidy Agreement. The projected tax abatement per year is $28,659.10. The subsidy per job per year amounts to $220.45.
If WPT can not complete this lease transaction, it is likely they will be petitioning Scott County for a property tax reduction since the building would be vacant and has not generated revenues for the past two years.
This tenant brings top of the market logistic jobs at a minimal tax impact. The city will benefit from putting a new building to use and the city will also receive more than $100,000 in permit revenues.
This property is in XCEL's territory and they have been working with the tenant on this location since the site was designed in its network to be a large energy user.