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RESOLUTION AUTHORIZING THE AMENDMENT TO THE DEVELOPMENT AGREEMENT WITH ST PAPER 1, LLC TO SUPPORT THE SALE OF THE PAPER MILL LOCATED AT 110 NORTH CENTRAL AVENUE TO SOFIDEL AMERICA, CORP.
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CITY PROPOSAL:
WHEREAS, on October 5, 2022, the city and ST Paper 1, LLC (“ST Paper”) entered into a development agreement (City Contract Number 24414) attached as Exhibit A, authorizing ST Paper to convert the paper mill at 110 North Central Ave, Duluth, Minnesota, to the production of tissue paper products. Converting the paper mill to tissue paper production (“project”) is complete, however other obligations of the development agreement, such as the requirement to maintain 80 jobs, continue to apply; and
WHEREAS, on December 22, 2023, ST Paper gave written notice to the city of its intent to sell the paper mill to Sofidel America, Corp. (“Sofidel”) and requested amendment of the development agreement to substitute Sofidel for ST Paper as the paper mill owner; and
WHEREAS, the city reviewed the financial capacity of Sofidel to effectuate the sale and continue operation of the paper mill.
BE IT RESOLVED, that the proper city officials are authorized to enter into an amendment to the development agreement, substantially in the form of the attached Exhibit B, authorizing the transfer of the development agreement from ST Paper to Sofidel, and to enter into a related estoppel certificate substantially in the form of the attached Exhibit C, stating that ST Paper is not in default, no monies are owed, and that the project is complete.
Statement of Purpose
STATEMENT OF PURPOSE: This resolution authorizes city officials to enter into an amendment to the development agreement which transfers the development agreement from ST Paper to Sofidel, and to enter into a related estoppel certificate stating that ST Paper is not in default, no monies are owed, and that the project is complete. This resolution is part of a package of resolutions facilitating the transfer of the paper mill owned by ST Paper located at 100 North Central Ave. to Sofidel America, Corp., (“Sofidel”). Sofidel intends to continue to operate the paper mill for the production of tissue paper. ST Paper purchased the paper mill in 2021 and has invested over $56 Million dollars in construction and new equipment. At the time of ST Paper’s purchase, the city supported the private investment through two loans and tax abatement. A development agreement was also entered into between the city and ST Paper. ST Paper has met the requirement of 80 new jobs created, however, the requirement to maintain those jobs is continuing for the life of the loans and development agreement which have not yet expired. The change in ownership requires substituting Sofidel for ST Paper’s responsibilities in the agreements. In addition, the city utility, Comfort Systems, seeks authorization to continue to charge the new owner a preferred water rate of 0.5161 cents per unit. The paper mill is the utility’s largest water customer.