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Tax break could attract turbine manufacturer

ST. PAUL - A European wind-turbine manufacturer is more likely to build plants in Duluth and the Iron Range if Minnesota gives it tax breaks, backers of the proposal tell legislators.

A House jobs bill contains a provision to give the manufacturer $12.7 million in tax breaks and a similar Senate bill is expected to include it, too, in an effort to compete with an Ohio offer. Votes on the two measures could come by Monday, when lawmakers begin a week-long Easter-Passover break.

The tax breaks would come in Job Opportunity Building Zones already set up to eliminate a variety of taxes for 10 years. JOBZ is a controversial program established to help rural Minnesota attract and retain businesses.

While the company would get tax breaks, 1,350 employees and others in related businesses would pay $24.3 million annually in income, property and sales taxes, the Duluth-based Area Partnership for Economic Expansion told lawmakers.

If tax breaks are granted, the company could break ground by this July 1, Rep. Ron Reinert, DFL-Duluth said.

Minnesota needs to build a financial package to compete with Ohio, the other state still in the running, Reinert said. "It's got to happen this year."

The company, whose name and exact Europe location remain private, would build a plant in the Hibbing or Grand Rapids area to make 180-foot-long turbine blades. When the plant is fully operational, the plant would employ about 600 people.

In Duluth, a plant eventually employing 700 people would be built to make 200,000-pound tower-top units that hold electric generators. Also, 50 people would be in the company's Duluth headquarters.

House Majority Leader Tony Sertich, DFL-Chisholm, said he expects the tax-break provision to pass, and Reinert said it has Pawlenty administration support.

Usually, JOBZ is controversial, but Sertich said he does not expect a problem this time. "We've got to be creative in attracting jobs to Minnesota."

Overall, JOBZ is due to end before the 10 years is up, but the new provision extends the specific northeastern Minnesota project for a full 10 years.

Reinert said he worked through the weekend to get the provision folded into a jobs bill.

When he recently met with company leaders, Reinert said, he was convinced that a tax package was needed to bring Minnesota into competition with Ohio. However, he said, company officials said that Minnesota did not need to top Ohio's "bucketload of incentives" offer, just be in the ballpark, and the JOBZ plan would do that.

Reinert and Sertich said the company is narrowing down sites where it would build.

The chance to add a manufacturer in an area with high unemployment "is really exciting," Reinert said.

"Twenty-four months from now, Duluth's economy could look really different," Reinert said, with new high-quality jobs.

Sertich compared the news to a comment made to President Barack Obama before he signed the health-care reform bill earlier this week: "Joe Biden would call this a big f------ deal."

Davis reports for Forum Communications Co.

Don Davis
Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.