Digi-Key Sees Secretive Welfare Handout Amidst New State Budget

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Minnesota’s $1.5 billion dollar/year electronics e-commerce distributor Digi-Key first announced the potential for a Thief River Falls expansion of operations back in March, 2017.

The pending one million square foot facility, possibly constructed adjacent to current headquarters, could cost between $200m to $300m and might employ up to 1,000 people within ten years. Maybe?

The uncertainty in this expansion comes down to the contingencies, as the lobbyist aptly noted, based on money from the public (accounts of the many) transferred to the private owners (accounts of the few) at Digi-Key, it was reported:

“Although Digi-Key is considering other locations for expansion, Thief River Falls remains its “preferred location,” said Rick Trontvet, Digi-Key’s vice president of administration and human resources. Digi-Key will give the city and state a chance to put together an incentives package before expanding the search to other sites.”

Extortion — also known blackmail or coercion — is defined as: the practice of obtaining something, especially money, through force or threats.

As time passed, Digi-Key since came out with this announcement on June 1, indicating that they would in fact pursue a $300m expansion in Thief River Falls sometime in the TBD future.

How did they ever surmount the “Huge cost and competitive hurdles needed to be overcome compared to other location options”? Well, “The State of Minnesota and local Thief River Falls and Pennington County leaders took decisive action to support our growth,”  it goes on to say.

Because if you can’t do something on your own accord — your own money, your resources and risk– then you turn to the government and ask for a handout, that for some cash money be taken from the public purse and put your private pockets.  Innovation!

So what exactly does Digi-Key get, when and how?  Who knows because they aren’t legally obliged to tell anyone about their involvement in the government, as company spokesperson Kayla Krosschell did say:

“This financial assistance, in the form of 10 years of state sales tax relief, a state forgivable loan and an infrastructure grant from the state–as well as local Tax Increment Finance program support–is helping Digi-Key in overcoming competitive and cost hurdles that had previously made a local expansion in TRF much more challenging.”

Four different mechanisms and how much is that projected to become, financially, in total?  “We’re choosing to be a bit vague with this one,” she added.

Truth is, any specifics are buried somewhere within a new body of laws that were passed late last month as part of the broader budget bill, among other disparate sources.  Reportedly though, the combined handout could reach $30-$40m, or approximately 10% of the project scope:

“The legislative package includes a $4 million loan to Digi-Key, which the company would not be forced to repay if it hires and keeps as many workers as planned. Legislation also would provide Digi-Key up to $30 million in tax breaks to build the expansion and give Thief River Falls $1.6 million to improve infrastructure.”

“I am extremely grateful to Digi-Key for its commitment to Minnesota and the Thief River Falls community. I congratulate Digi-Key on its planned expansion, which will create over 1,000 new jobs in Thief River Falls. Digi-Key is truly a fantastic success story,” said Mark Dayton about Digi-Key’s secretive welfare package that he signed off on.

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  • http://thebigidea.com/ LittleDuke

    “Sunshine is the Best Disinfectant”

    Great commentary on this one Jeff!! I too consider this kind of coercion to be a form of “economic terrorism” and I applaud and admire your willingness to shine a light on it.

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