Title
RESOLUTION OF INTENT TO SELL OR CONVEY CERTAIN PROPERTY NEAR THE DULUTH INTERNATIONAL AIRPORT.
Body
CITY PROPOSAL:
WHEREAS, Section 2-176(a) of the Duluth City Code, 1959, as amended, requires that prior to any city-owned property being offered for sale or conveyance, the city council shall, by resolution, state its intention to sell or convey such property.
NOW, THEREFORE, BE IT RESOLVED, that the Duluth city council hereby states its intention to offer for sale or conveyance property in the city of Duluth legally described as:
The building and other improvements located on the real property located in St. Louis County, Minnesota described as follows (the “Building”):
The South 120.00 feet of Lot 17, Block 4, Airport Division and the South 152.13 feet of the West 65.00 feet of said Lot 17, Block 4, EXCEPT the vacated westerly adjacent spur street; Lot 1, Block 5, Airport Division; and the vacated Taylor Circle, as dedicated in said Airport Division, EXCEPT that part of said Taylor Circle lying easterly of the northerly extended centerline of the easterly portion of said Taylor Circle.
FURTHER RESOLVED, that the city’s fee simple or leasehold interest in the real property that the Building sits upon is expressly not being proposed to be sold or conveyed.
Statement of Purpose
STATEMENT OF PURPOSE: The purpose of this resolution is to state the City’s intent to sell or convey property located near the Duluth International Airport. The property proposed to be sold or conveyed is legally described above (the “Incubator Building”) and is depicted on the attached Exhibit A. The City only intends to only sell or convey the Incubator Building, a 69,000 square foot structure located on the land legally described above, and not the fee simple or leasehold interest in the real property that the Incubator Building sits upon. The City desires to sell or convey the Incubator Building to provide for its continued use for aviation-related manufacturing. The current tenant of the Incubator Building is Cirrus Aircraft, an aircraft manufacturing company headquartered in Duluth (“Cirrus”).
In 2002, the City was awarded a grant from the U.S. Department of Commerce Economic Development Administration (“EDA”) in the amount of $3,450,000 (the “Grant”) to construct a City-owned building and adjacent parking near the Duluth International Airport to lease for business and manufacturing purposes (the “Project”). The Project, which aimed to support advanced aircraft manufacturing, met its goal of creating high-skill, high-wage employment opportunities at an economically challenging point in time for the region. As a result of these activities, the Grant supported the creation of 233 permanent jobs at the Incubator Building through Cirrus, the long-term manufacturing tenant. All required financial and program reporting associated with the Grant have been submitted and accepted by EDA, as evidenced by the Covenant of Use and Release of Agreement and Mortgage attached as Exhibit B.
The future use of the Incubator Building is intended to match its current use for aviation-related manufacturing. The conveyance of the Incubator Building to the Duluth Economic Development Authority (DEDA) allows for DEDA to sell the Incubator Building to Cirrus subject to the terms and conditions of a development agreement that requires further investment and job growth.
The city’s planning department reviewed the proposed sale or conveyance for conformity to the city’s comprehensive plan and determined that a sale or conveyance of the Incubator Building conforms with said comprehensive plan and it is surplus to the city’s future needs. The letter of conformity is attached as Exhibit C.
According to the St. Louis County assessor, the Incubator Building intended to be sold or conveyed has a current estimated market value of $2,912,200. The actual market value, as established through an independent appraisal, is $4,800,000.
In conjunction with this resolution of intent to sell, the City will bring forward an ordinance authorizing the sale of the Incubator Building to DEDA subject to the terms and conditions of a purchase agreement. In light of the substantial public benefit associated with conveying the Incubator Building to DEDA, the city intends to convey it for nominal consideration. DEDA will subsequently enter into a development agreement with Cirrus to convey the Incubator Building, which agreement will set forth the purchase price, terms and conditions governing the conveyance and other initiatives. The anticipated sales price from DEDA to Cirrus is $3,450,000 (the “Purchase Price”). DEDA will remit the Purchase Price to the City after the sale of the Incubator Building from DEDA to Cirrus.
The fee simple in the real property that the Incubator Building sits upon will continue to be owned by the City, subject to management by the Duluth Airport Authority under the laws of the State of Minnesota, 1969, Chapter 577, as amended. The City will continue to hold a ground lease for the real property that the Incubator Building sits upon under a lease agreement from 1993 that was assigned to the City in 2002 (the “Ground Lease”). The City will continue to sublease the Ground Lease to Cirrus under a separate lease agreement.