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RESOLUTION RELATING TO A TAX ABATEMENT; GRANTING THE ABATEMENT FOR THE CIRRUS DESIGN CORPORATION PROJECT.
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CITY PROPOSAL:
BE IT RESOLVED, by the City Council (the “City Council”) of the city of Duluth, St. Louis County, Minnesota (the “City”), as follows:
Section 1. Purpose and Authorization.
1.01 The City, pursuant to the provisions of Minnesota Statutes, Sections 469.1812 to 469.1815, as amended (the “Act”), is authorized to grant an abatement of the property taxes imposed by the City on a parcel of property, if certain conditions are met, through the adoption of a resolution specifying the terms of the abatement.
1.02 Cirrus Development Corporation (“Cirrus”) is a major manufacturer of general aviation aircraft with its main manufacturing facilities and related offices located at the Duluth International Airport (the “Airport”). Cirrus desires to expand its manufacturing and assembly facilities at the Airport to include facilities to manufacture the new Vision SF50 personal jet and to develop needed research and development facilities adjacent thereto. Cirrus desires to relocate its painting and finishing operations for its product lines to a new location so that it may repurpose its existing facilities for manufacture and assembly of the new Vision SF50 personal jet and for development of its research and design operations. Cirrus proposes to develop a new approximately 68,000 square foot facility, which is expected to be used for such painting and finishing operations, and to construct certain on-site and off-site improvements relating to such facility (the “Project”).
1.03 Pursuant to the Act, on the date hereof, the City Council conducted a public hearing on the desirability of granting an abatement of property taxes on certain properties expected to be benefitted by the proposed Project, which properties are identified on the list attached hereto Exhibit A (the “Properties”). Notice of the public hearing was duly published as required by law in the Duluth News Tribune, the official newspaper of the City, on December 2, 2015, which date is no fewer than 10 and no more than 30 days prior to the date hereof.
Section 2. Findings. On the basis of the information compiled by the City and elicited at the public hearing referred to in Section 1.03, it is hereby found, determined and declared:
2.01 The Project is in the public interest because it will increase and preserve tax base in the City, will provide employment opportunities in the City, and will redevelop unused real property.
2.02 The City expects that the benefits of the proposed abatement are not less than the costs of the proposed abatement. The public benefits that the City expects to result from the abatement are the increase in tax base by an estimated amount of $4,588,700 created by the Project, the increase of 150 jobs resulting from the Project, the retention of the 689 jobs currently employed at the existing Cirrus facilities at or near the Airport, and will redevelop unused real property.
2.03 The Properties are not located in a tax increment financing district.
2.04 The granting of the proposed abatement will not cause the aggregate amount of abatements granted by the City under the Act in any year to exceed the greater of (i) 10% of the City’s net tax capacity for the taxes payable in the years to which the abatement applies, or (ii) $200,000.
2.05 It is in the best interests of the City to grant the tax abatement authorized in this Resolution.
2.06 Under Section 469.1813, subdivision 9 of the Act, it is not necessary for the City to obtain the consent of any owner of any of the Properties to grant an abatement.
Section 3. Granting of Tax Abatement.
3.01 A property tax abatement (the “Abatement”) is hereby granted in respect of property taxes levied by the City on the Properties for 15 years, commencing with taxes payable in 2017 and concluding with taxes payable in 2031. The Abatement will reduce all of the City’s portion of the taxes for each of the Properties, and the Abatement will not exceed $566,667 per year and a total aggregate amount of $8,500,000.
3.02 The City shall retain the Abatement and apply it to payment of a portion of the costs of constructing the Project and/or to the payment of bonds of the City issued to finance costs of constructing the Project.
3.03 The Abatement may be modified or terminated any time by the Council in accordance with the Act.
Statement of Purpose
STATEMENT OF PURPOSE: This resolution authorizes the abatement of taxes for the purpose of providing for a portion of the costs of the Cirrus Completion Center, a new facility at the Duluth International Airport, to be utilized by Cirrus Design Corporation for its painting and finishing operations. This new facility will allow Cirrus to expand its manufacturing capacity sufficient to produce the new Vision SF50 personal jet and its consolidated R&D facilities into its existing facilities. The plan of finance calls for the City to issue taxable general obligation tax abatement bonds and loan the proceeds to Cirrus. The loan repayments will be sufficient to repay such bonds.