Title
AN ORDINANCE AUTHORIZING THE CONVEYANCE OF REAL PROPERTY AT DULUTH INTERNATIONAL AIRPORT TO THE DULUTH ECONOMIC DEVELOPMENT AUTHORITY FOR NOMINAL CONSIDERATION.
Body
CITY PROPOSAL:
The city of Duluth does ordain:
Section 1.
(a) Pursuant to Section 2-176(a) of the Duluth City Code, 1959, as amended (the “Code”), the city council stated its intention to sell or convey certain property as set forth in Resolution No. 22-1068, which property is legally described in the attached Exhibit A (the “Incubator Building”).
(b) Pursuant to Section 2-176(b) of the Code, the city’s planning department reviewed the proposed conveyance of the Incubator Building for conformity to the city’s comprehensive plan and reported that the conveyance of the Property conforms with said comprehensive plan and is surplus to the city’s future needs.
(c) Pursuant to Section 2-176(c) of the Code, the St. Louis County Assessor determined that the estimated market value of the Incubator Building has a current estimated market value of $4,179,000; however, an independent appraisal of the property is currently in process and, when completed, the City presumes the property will be appraised at a different value.
(d) Pursuant to Section 2-177.3 of the Code, the city council finds that a conveyance of the Incubator Building to the Duluth Economic Development Authority, a body politic and corporate, organized under the laws of the State of Minnesota (“DEDA”), is in the best interests of the citizens of the city and exceeds the needs of the city to retain the property.
Section 2. That the proper city officials are hereby authorized to: (i) convey the Property to DEDA in accordance with the terms of a Purchase Agreement for One and No/100 Dollars and (ii) execute a deed and all other documents necessary to effectuate the conveyance of the Property to DEDA.
Section 3. That this ordinance shall take effect 30 days after its passage and publication.
Statement of Purpose
STATEMENT OF PURPOSE: The purpose of this ordinance is to authorize the conveyance of real property legally described above, the Incubator Building, to DEDA near the Duluth International Airport.
The city of Duluth was awarded a grant from the U.S. Department of Commerce Economic Development Administration of $3,450,000. This project, which supported advanced aircraft manufacturing, met its goal of creating higher-skill, higher-wage employment opportunities during a period hard-hit by a declining iron mining industry. The purpose of the grant award was to construct a city-owned building at the Duluth International Airport and parking to lease for business and manufacturing. All required financial and program reporting has been submitted and receipt acknowledged. As a result of these activities, the grant award supported the creation of 233 permanent jobs at the new facility, through the long-term manufacturing tenant Cirrus Aircraft. The city of Duluth has submitted Exhibit B, (“Federal Release Request”) for a Federal Release of the property with the expiration of the mortgage in October, 2022 per CFR Title 13, Chapter 314.3. A sale of this Property is contingent upon this release.
The future use of the building will continue to be for aircraft manufacturing. The sale and transfer of the property from the city of Duluth to DEDA will allow DEDA to sell the building alongside a development agreement, enabling the sale to be contingent on investment and further job growth by a prospective buyer. Per the US EDA guidelines, any future sale of the property to a private entity must be sold for fair market value. After the conveyance to DEDA, DEDA will bring forward a development agreement which includes such sale and attendant job growth and investment requirements.