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Story updated to include statements from Hormel Foods Corporation

With concerns of precedent and length of time, the Austin Public Schools Board on Monday night denied a request from Hormel Foods Corps for a 15-year tax abatement toward a  $5 million child care center the company is planning to build on a plot of land near the 18th Avenue NW corridor.

The tax abatement request had previously been approved by both the Austin City Council and the Mower County Board of Commissioners, but school board members denied the vote along a 5-2 line with Board Chair Kathy Green, Carolyn Dube, Cece Kroc, Peggy Young and Carol McAlister voting against the request.

Only Don Leathers and Evan Sorenson approved it.

“We’ve never approved a tax abatement that’s not housing,” Dube said. “It’s very important for us to be supportive of things happening in the community. My concern is this could open up precedence in the future for businesses to cover the same expense.”

Hormel pursued the request to help offset the expectation that the center will run at a deficit yearly.

“We are very disappointed that the Austin Public School Board chose not to support a very important initiative for the community of Austin,” said Hormel Chief Communications Officer Wendy Watkins. “Hormel Foods has, once again, made a large commitment to the Austin community in order to address a longtime, well-known need for so many families. This project is an opportunity for the school board to be part of a solution to fill the childcare gap that exists.” 

During a County Commission meeting in February, Jeff Holt, senior manager of Corporate Properties explained the reasons of pursuing the tax abatement were to help ensure the center is financially feasible.

“If we price this at a rate to break even, it would be similar to ones in the metro,” Holt said. “It’s not sustainable.”

At Monday night’s meeting Holt also said, “We’ll experience a loss of nearly $1 million a year to open each year. The company is making a long term commitment.”

None of the school board members argued against the merits of the center, but they stuck to the theme of precedent, with Dube continuing to state that tax abatements are for housing.

“I believe there is a real need for child care in Austin,” Dube said. “I’m focusing on the tax abatement portion. The aspect of us entering into an agreement to abate taxes for 15 years as opposed to five years for the regular abatement program we have for housing.”

However, Leathers argued that the board had the right to balance each request on its importance to the community, something he believed outweighed precedent concerns.

“We judge the merit of each and every tax abatement request,” he said. “It’s in our power to say yes or no.”

Sorenson joined Leathers, pointing out that there hadn’t been a tax abatement request passed by the City and County, but denied by the district.

“What sways me is that the City and County has agreed on this,” he said. “That’s where I’m sold; $23,000 a year is not that much.”

Also in their statement, Hormel pointed out the limited tax impacts as well as the economic boost the businesses will receive in the area from the added traffic.

“It is also important to note that there are no tax implications to taxpayers, and in fact, there is a positive economic benefit to the community in terms of additional jobs and families moving to or staying in the community due to childcare opportunities,” Watkins said. “We appreciate the support we have received from the City of Austin and Mower County as we work to meet the needs and advance the community of Austin.”

Along with precedent concerns was the concern of how long the request was for, a point made by Kroc.

“It seems really, really long,” she said. “It’s a long time for an Austin Public Schools project.”

Had it been approved, taxes abated would have been $23,000 each year of the 15-year duration.

The board’s vote for denial does not affect either of the City’s or the County’s approval and Hormel will still receive the tax abatement through those entities.

The center itself, which will offer 130 slots for children, with 100 slots dedicated to infant and pre-kindergarten students in the over 13,000 square foot facility, will be located along 17th Avenue NW, just across from Worlein Funeral Home.

Construction is expected to last 12-16 months once ground is broken, hopefully sometime in late April and early May.

“We had been hearing feedback from our team members as well as other employers in our community that available childcare options are a very important piece of establishing a vibrant community,” said Angie Bissen, manager of HR Business Partners in February. “It has become a challenge for attraction and retention. There’s also an economic development aspect so we started looking into it from that angle.”

In other news:

• The board unanimously to update its scoreboards in both Packer and Ove Berven gyms. The Minnesota State High School League determined that starting next year, shot clocks will be utilized for both boys and girls basketball games, however, the current scoreboards are incapable of supporting the addition of the shot clock due to age. The equipment for the shot clocks themselves were purchased last summer.

For a quoted price of $80,120 from Aim Electronics, a local Daktronics representative, four scoreboards will be purchased — two for both gyms.