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RESOLUTION AUTHORIZING THE CITY OF DULUTH TO SUBMIT AN APPLICATION TO THE DEED MINNESOTA INVESTMENT FUND FOR DEVELOPMENT AND JOB CREATION WITH CIRRUS DESIGN CORP.
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CITY PROPOSAL:
BE IT RESOLVED, that the City of Duluth (City) act as the legal sponsor for that project described in the Minnesota Investment Fund Application for development and job creation at the Duluth International Airport by Cirrus Design Corp. in the amount of up to $500,000 which was submitted on or about February 15th, 2022, and that the Mayor and Chief Administrative Officer of the City are hereby authorized to apply to the Minnesota Department of Employment and Economic Development (DEED) for funding of this project on behalf of the City.
FURTHER RESOLVED, that the City has the legal authority to apply for financial assistance, and the institutional, managerial, and financial capability to ensure professional administration of the grant.
FURTHER RESOLVED, that the City has not violated any federal, state, or local laws pertaining to fraud, bribery, kickbacks, collusion, conflict of interest or other unlawful or corrupt practice.
FURTHER RESOLVED, that upon approval of its application by the state, the City may enter into a Grant Contract with the State of Minnesota for the above-referenced project and that the City certifies that it will comply with all applicable laws and regulations as stated in the Grant Contract.
FURTHER RESOLVED that the City has obtained credit reports, credit information and completed searches of tax liens, judgments, court actions and filings with state, federal and other regulatory agencies on Cirrus Design Corp. and that upon review of said documentation by the City, no adverse findings or concerns regarding, but not limited to, tax liens, judgments, court actions, and filings with state, federal and other regulatory agencies were identified; failure to disclose any such adverse information could result in revocation or other legal action.
FURTHER RESOLVED, that the proper City officials are hereby authorized to execute the Grant Contract and amendments thereto, as are necessary to implement the project on behalf of the City.
Statement of Purpose
STATEMENT OF PURPOSE: The Duluth MRO Building was designed and operated for the maintenance, repair and overhaul of wide body (A320) heavy commercial aircraft. However, with the recent economic downturn resulting from the COVID-19 pandemic, AAR decided abruptly to close the Duluth MRO operation in May of 2020 that resulted in the elimination of over 240 jobs in Duluth. The DEDA owns the MRO building that has remained largely vacant and underutilized since that time. The City and DEDA have been seeking a tenant (or buyer) that could utilize the facility and redevelop the MRO building since ARR terminated their lease which became effective October 2020. Cirrus Design Corp. (“Cirrus”) is experiencing significant market growth and demand for their products and is evaluating the potential to expand their production capacity on the Duluth Campus. The MRO facility will provide the necessary space to support the Cirrus expansion plans here in Duluth. However, Cirrus will need to make significant and substantial capital investments across multiple facilities on their Duluth Campus. Project Costs will include moving support staff, research and development personnel and equipment, and investing to reconfigure their overall manufacturing operations through the redevelopment and re-purposing the MRO facility. These investments will contribute to the retention of the current 1,206 FTE positions and the creation of at least 80 additional positions. The cost of the project and retrofitting the MRO buildings is significant, and requires substantial public assistance to make it feasible.
The total cost of the project is expected to be approximately $7,000,000. The City will seek a Minnesota Investment Fund forgivable loan (MIF) from MN DEED of up to $500,000, and support Cirrus’s application in seeking a Job Creation Fund (JCF) forgivable loan to MN DEED for up to $1.5 Million, and private equity in excess of $3.5 Million, and the assistance provided for under this agreement which will include up to $600,000 in City property tax abatement along with $600,000 in property tax abatement from St. Louis County. In addition, a City Forgivable Loan of up to $300,000 for disposal of the FSSS foam fire suppression system if Cirrus elects to purchase the MRO facility.
This resolution authorizes staff to submit the application in the amount of up to $500,000 and the City to accept and administer the forgivable loan. If approved, a second resolution will be brought to the Council for approval of the MIF loan agreement with Cirrus.