Not yet tanked by the Trump tariffs is the big soybean plant AGP is building here in Aberdeen. AGP has been cagy about telling us how much the total project costs, but our leaders have told us it’s the biggest economic development project in Aberdeen ever. My morning paper tells me AGP’s final building permit puts the cost of “all buildings, site work, and other elements” at $77.87 million.
Remarkably, AGP hasn’t needed to tap any EB-5 investors or other risky financing the way Northern Beef Packers (now Demkota Beef) did a decade ago. They are, however, benefiting from plenty of government subsidies. Aberdeen has set aside $354,230 for an anticipated sales tax refund. AGP and other big builders may get even more of a tax break if the Aberdeen Development Corporation has its way:
…Mike Bockorny, CEO of Aberdeen Development Corp. asked the council to consider an ordinance revision that would amend the city’s existing ordinance pertaining to tax rebates.
The city’s existing ordinance allows for a 50-percent tax rebate of city sales tax on projects that add $5 million in real property value, capital improvements of $10 million or combined property and capital improvements of $10 million or greater.
In his presentation to the council, Bockorny asked if the council would consider tax rebates of up to 100 percent and a provision that would waive the $5 million and $10 million thresholds.
“We have come across this in many states, like places that don’t charge sales tax on equipment purchases,” Bockorny said [Elisa Sand, “Northern Seeks to Vacate Part of 15th Avenue for Stadium,” Aberdeen American News, 2018.07.17].
100% refund on all sales tax? I recall Senator Brock Greenfield (R-2/Clark) opposing a break like that to poor people buying food, saying that everyone needs to pay a little so that no one pays a lot. I recall Senator Al Novstrup (R-3/Aberdeen) saying that we should give a higher priority to meeting unmet needs than to giving more tax cuts. AGP seems to be trucking along just fine with their building; they don’t appear to need any new tax breaks.
One of these days, I’d like to see Aberdeen and South Dakota flip its tax refund model. Instead of relying on trickle-down economics, let’s offer regular folks a tax break for their participation in economic development. Instead of $354K to one big business, let’s give $1K to 354 families who build new homes in Aberdeen. I know a lot of construction workers are scurrying around the AGP site and buying a lot of sandwiches and dungarees in town, but imagine how many more workers would be boosting our sales tax if they had 354 new houses to build.