Off Target: The Twin Cities’ cannibalistic economic development practices
[Title page image from minneapolis-photography.blogspot.com]
[Target's Brooklyn Park suburban corporate campus mirrors a city streetscape]
Target Corp. confirmed this week that they will be moving 2,400 employees and 1,500 contractors from downtown Minneapolis to Brooklyn Park within the next two years into a new suburban office.
“The $66 billion Minneapolis-based retailer said 2,400 employees in technology services and 1,500 contractors will move to the office complex in the north suburban city.” [Star Tribune]
Target’s downtown office towers were originally designed for approximately 6,000 employees, but due to recent company growth, the Minnesota-based retailer has run into an office space shortage. This is a good thing, but expansion into the far out Brooklyn Park suburban campus isn’t a wise business decision (even if they do get generous tax abatements).
This taxpayer-funded out-migration to Brooklyn Park is another example of the Twin Cities’ cannibalistic economic development practices that no only hurt our urban vitality and promote job dispersion, but also push negative externalities onto employees, add congestion to our roads and don’t create real, sustainable job or economic growth.
The bucolic business office is not a state-of-the-art workplace but rather a decades-old model of corporate retreat … These workplaces embody a new form of segregation, where civic space connecting work to the shops, housing, recreation and transportation that cities used to provide is entirely absent. Corporations have cut themselves off from participation in a larger public realm. [NYT]
For decades, the suburbs benefited from companies seeking lower rent, less crime and a shorter commute for many workers. But now, office buildings in many city downtowns have stopped losing tenants or are filling up again even as the office space in the surrounding suburbs continues to empty, a challenge to the post-war trend in the American workplace and a sign of the economic recovery’s uneven geography. [WSJ]
For a quick background: Target Corp. wasn’t always downtown. In 1998, Target received $62 million tax increment financing and two towers and a retail store were developed along Minneapolis’ pedestrian-friendly Nicollet Mall. Five years later (2003), Target announced expansion plans in the northern suburb of Brooklyn Park. The initial plan was to create a $1.75 billion mixed-use New Urbanist development that would include a traditional Main Street, corporate office park and various residential housing. Target signed a deal for $20 million in tax abatements [read the agreement here] for the mixed-use plan. That deal eventually expired and, just recently, Target went back at the negotiating table [Minneapolis-St.Paul Business Journal].
Target has an interesting (polarizing) dynamic between its corporate and retail cultures. Their Corporate office is intensely urban (and even their suburban ambitions had New Urbanism in mind). Yet, the very nature of their retail business is inherently “big box”. In fact, Target (then Dayton’s) was the first company to develop the traditional suburban shopping mall [Southdale] in 1956.
As of now, the ambitious mixed-use development plan is a no-go. Instead, Target will be building a standard suburban office building and will be receiving a tax abatements to $1.7 million to $2 million.
While this proposal is touted as a “jobs” initiative, it will be relocating workers 16 miles north. Besides diverting limited tax revenue to relocate workers, there are a number of negative externalities to this location:
- Public transportation is no longer an option
- Walkability has been eliminated
- Up to 3,000 some additional cars will be traveling on already congested highways
- Walking somewhere interesting for lunch is now impossible
- Grabbing a beer with co-workers or catching a Twins game after work can’t be done
To illustrate the stark difference in environments, I opened up Google Maps, centered each office location and set the frame size and scale [1000ft /200m] exactly the same. This is what happened:
[Walk Score: 91 - "Walker's Paradise"]
[Walk Score: 26 - "Car Dependent"]
It’s understandable that Target would look to Brooklyn Park for expansion. The company already has an office building on the site, cheap land is available and Brooklyn Park will likely expedite any building application to its final stages without any public input. To a degree, it seems like this site might be a natural fit for Target even without the tax subsidy.
What I don’t understand is why Brooklyn Park was so willing to offer $2 million in tax subsidies – especially considering that $2 million is a lot of money for the financially struggling Brooklyn Park and an inconsequential amount of money for the success retailer.
Brooklyn Park’s budget has been hammered by the housing crisis. By the end of 2013, close to 20 percent of the houses in town will have gone through foreclosure. The city’s residential tax base has plummeted 37 percent since 2007 … In response, the city has laid off workers and frozen wages. [MPR]
On the other hand, Target is doing quite well. It takes approximately 15.68 minutes for Target to generate $2 million in revenue. Here’s the rundown:
|Revenue Per Day||$183m|
|Revenue Per Hour||$7.6m|
|Revenue Per Minute||$127,473|
|$2 million subsidy / $127,473 Revenue Per Minute|
[Note: All figures are from 2010, rounded to the nearest 'easily manageable' number and assume Target is open 24 hours a day for 365 days a year]
The elephant is the room: Why isn’t Target considering building downtown?
There are probably a lot of answers. One, it’s cheaper and easier to move back-office IT personnel out to the suburbs. Two, building downtown Minneapolis is a lengthy and expensive process. Furthermore, I’d estimate that Target only needs a home for 3,000 to 4,000 employees in the short-to-near term. This small number doesn’t justify the construction of an additional downtown skyscraper [although Target has purchased three strategic parcels of land downtown]. The market downtown still might not be strong enough to either lease out additional/unused office space or to combine with residential condos.
At the end of the day, Target will be moving a good portion of its workforce out to Brooklyn Park. This move, tax subsidies and all, is yet another example of regressive local cannibalistic ”economic development” policies. This situation is the worst of both worlds – it spends taxpayer money to shift jobs (not create them) AND its shifting them to a less efficient and less environmentally-friendly suburban office park.