Title
RESOLUTION AUTHORIZING A DEVELOPMENT AGREEMENT BETWEEN THE DULUTH ECONOMIC DEVELOPMENT AUTHORITY AND SOFIDEL AMERICA CORP. FOR THE DEVELOPMENT OF THE DULUTH PAPER MILL
Body
CITY PROPOSAL:
BE IT RESOLVED that, pursuant to the provisions of Minnesota Statutes §116J.994, Subdivision 3(d), and Resolution 10-0229, the city council of the city of Duluth does hereby approve the development agreement between the Duluth Economic Development Authority ("DEDA") and Sofidel America Corp. ("Developer"), substantially in the form of that attached as Exhibit A, related to the development of a new converting facility and automated warehouse at the Duluth Paper Mill site located at 100 N Central Ave, Duluth, Minnesota.
Statement of Purpose
STATEMENT OF PURPOSE: The purpose of this resolution is to obtain the city council’s approval of the development agreement between Sofidel America Corp. (“Sofidel”) and the Duluth Economic Development Authority (“DEDA”) to support Sofidel’s expansion project of the Duluth Paper Mill. DEDA approved the agreement at its September 25th, 2024 meeting via resolution 24D-41, attached hereto as Exhibit B. To support the proposed creation of approximately 160 new jobs, tax increment financing (“TIF”) will be utilized. DEDA set the wage and job goals after a public hearing in accordance with the Business Subsidy Act, Minnesota Statue Sections 116J.993-116J.995.
This $200M investment by Sofidel would add 160 new jobs at an average wage of $32 per hour, annual payroll of $11M into the local economy and an estimated $37M in tax value to the property, increasing the estimated annual taxes collected by the City by $244,000.
An Economic Development TIF subsidy of $14.3M over 9 years, once certified, will see the continued payment of taxes by Sofidel at their current tax rate during that period, while allowing the future tax capacity (a result of the expansion) to be captured for investment in the project.
To support job growth from this project, the State of Minnesota is considering several subsidies for this project through MN DEED: a $3.1M Minnesota Investment Fund loan, a $1.7M Job Creation Fund grant, and a $2.4M Clean Up Grant. The proposed subsidies terms are tied to job numbers, wages and use of project labor agreements.
The Duluth Paper Mill was built in 1987 and expanded in 1993 to supply recycled pulp to Duluth and other paper mills across the region. The mill formerly owned by Verso was an economic driver in the region for over 30 years. As the largest utility user, the Duluth Mill’s expansion will continue to subsidize Comfort Systems utility rates for residential consumers. This expansion also opens the potential for Duluth businesses to serve as pipeline businesses for supplies and equipment to the enterprise. Sofidel’s production lines will be manufacturing final products for shipping and expanding their use of port infrastructure.