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Company seeks tax breaks, state aid to expand in northwest Minnesota

City Adminstrator Rodney Otterness of Thief River Falls shows members of a Minnesota Senate committee a map of a planned DigiKey expansion on Wednesday, March 15, 2017. Don Davis / Forum News Service1 / 2
President Dave Doherty of DigiKey in Thief River Falls, second from right, testifies to a Senate commiittee about state aid his company seeks to expand on Wednesday, March 15, 2107. With him, from leftr,are Kevin McKinnon of the state Department of Employment and Economic Development, Sen. Mark Johnson of East Grand Forks and City Administator Rodney Otterness of Thief River Falls. Don Davis / Forum News Service2 / 2

ST. PAUL—A northwestern Minnesota business, already a success story, wants tax breaks and state aid so it can add to its Thief River Falls facility and hire 1,000 more workers in the next decade.

Digi-Key President Dave Doherty told a Senate jobs committee Wednesday, March 15, that the company never has asked for state help before, but in an interview said its $307 million expansion project is so complex that it needs the state to participate in three ways:

• Give up to $30 million in tax breaks over the next decade, three times as much as would be allowed under current law.

• Provide $1.6 million next year to Thief River Falls to extend utilities, improve roads and make other improvements to prepare for the expansion.

• Loan $4 million for DigiKey to build and equip the facility; the state would not collect repayment if the company meets its goals.

"I think the numbers in the bill actually are kind of a baseline for what we need to get this thing work," he said.

If the Legislature does not provide the money, he said, "the options are open at this point in time. We have stated our preference is to stay there. But, clearly, there are other conditions we are keeping at bay at this point."

Digi-Key leases 350,000 square feet of space in Fargo, Doherty said, but he did not comment on where the company may consider building if the state package falls through.

Digi-Key Vice President Rick Trontvet said the company likes its Minnesota workforce, even though adding 1,000 workers could add to an existing Thief River Falls housing shortage.

"If this goes through," he said of the state aid, "we are ready to roll up our sleeves" and continue to work to increase housing. "We think it is worth trying to overcome these financial challenges ... because of the tremendous service our folks provide."

The company already uses buses to transport employees from outside of the Thief River Falls area.

The Senate jobs committee passed the DigiKey bill, authored by Sen. Mark Johnson, R-East Grand Forks. It will be considered by other committees before it reaches the full Senate. A similar House bill also is moving ahead.

A study Digi-Key funded indicates the construction and new employees would add $500 million to the state economy, which Trontvet said would make the project one of the largest business expansions with state participation. The biggest state-private partnership ever was the $1 billion U.S. Bank Stadium.

Digi-Key, which produces $2 billion in sales annually, sells electronic parts ranging from those that go into smartphones to medical devices. It keeps more than 1.3 million products in stock.

The company already has 3,200 employees, with beginning wages of more than $15 an hour.

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.
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