Mar. 29—ESKO — Essentia Health is slated to be the latest tenant of Esko's industrial park, with a new warehouse scheduled to be completed in 2024.

Brian Zuck, vice president of supply chain for Essentia Health, said the decision came from Essentia evaluating its supply chain and the lease on its current 50,000-square-foot building in West Duluth expiring in 2024.

Zuck presented background on the project to the Carlton County Board of Commissioners on Monday, March 27.

The Esko Industrial Park was chosen for its proximity to Interstate 35, which would allow the building to be easily accessed for service required to Fargo, Bismarck and Brainerd.

"Ultimately this building (the current warehouse) is not feasible for future operations for Essentia Health," he said. "The intent is to centralize that in the Esko Business Park."

According to county documents, the warehouse is slated to be 163,000 square feet, and Zuck added the building with be mostly warehouse space with 5,000 square feet anticipated for office space.

Tony Matt, media relations specialist for Essentia Health, said the need stems from ongoing supply chain challenges and the health care system wanting to use available technology to address them.

"The new distribution center's automated storage and retrieval system will allow us to more efficiently and accurately fetch supplies and prepare them for shipment," he said.

Essentia Health closed on the property in Esko's Industrial Park in December 2022, according to Matt. Groundbreaking is expected for summer 2023, with an occupancy date set for late 2024.

Around 20-25 people are expected to be employed at the warehouse, which includes staff who are currently working in the West Duluth Building, according to project information provided by the county.

The presentation was held before commissioners took the first step in allowing Essentia to use conduit bonding through Carlton County for the project. Conduit bonding allows Essentia to qualify for municipal bonds that are exempt from federal and state taxes.

The request totaled $51 million, and includes a new clinic project in Staples, Minnesota. Essentia representatives explained that this was done to streamline the process rather than apply for two separate conduit bonding proposals.

According to the motion passed by the county board, the warehouse portion of the project is estimated to cost $38 million.

County Auditor Kevin DeVriendt assured the board that the county would not assume any obligation for the bonds should anything happen with the project.

The next step in the process is for the county to hold a public hearing at 4 p.m. April 24, before the board can vote on the request.

There was some discussion on whether the project would be taxed, with board members wanting clarity on the matter. Since hospitals are exempt from property taxes, DeVriendt said he looked into the proposal, along with County Assessor Kyle Holmes. They came to the conclusion that the property would be taxed regularly by the county because it is not tax exempt like a hospital.

"Parcels with an improved property will be taxed year after year," DeVriendt said.