DISCLAIMER

 

05-0734R


RESOLUTION APPROVING USE OF GRANT, TAX ABATEMENT AND TAX INCREMENT PROCEEDS BY DEDA TO FUND COSTS OF THE 2005 CIRRUS EXPANSION PROJECT AND/OR REPAY LOANS MADE TO DEDA BY THE DULUTH 1200 FUND, INC., AND/OR THE DULUTH RECOVERY LOAN PROGRAM AND AUTHORIZING PROPER CITY OFFICIALS TO EXECUTE AND DELIVER DOCUMENTS OR AGREEMENTS NECESSARY TO EVIDENCE SUCH APPROVALS.

BY COUNCILOR GILBERT:

     WHEREAS, the Duluth economic development authority (DEDA) has entered in a development agreement (development agreement) with Cirrus Design Corporation (Cirrus) to assist Cirrus in the construction of an expansion to its manufacturing facility in Duluth (2005 Cirrus expansion project); and

     WHEREAS, the following funding sources (funding sources) have been identified to provide DEDA with the funds to provide such assistance to Cirrus:

     (a)  A grant loan (MIF grant/loan) in the amount of $500,000 to be obtained from the Minnesota department of employment and economic development (DEED);

     (b)  An infrastructure grant (infrastructure grant) in the amount of $500,000 to be obtained from DEED;

     (c)  A pollution grant in an undetermined amount (the amount is dependent upon the pollution cleanup required with respect to the 2005 Cirrus expansion project) to be obtained from DEED;

     (d)  A redevelopment grant in the estimated amount of $300,000 to be obtained from DEED;

     (e)  Proceeds of tax abatement on the west expansion site and Site 102 (as those sites are defined in the development agreement);

     (f)  Proceeds of tax increment from the east expansion site (as that site is defined in the development agreement); and

     WHEREAS, DEDA may be obligated to pay for certain costs of the 2005 Cirrus expansion project prior to the receipt of some or all of the funding sources; and

     WHEREAS, in such event DEDA has available to it loans from the Duluth 1200 Fund, Inc., (the 1200 Fund loan) and the Duluth recovery loan program (DRLP loan); and

     WHEREAS, the 1200 Fund loan and DRLP loan are to be repaid from the funding sources; and

     WHEREAS, the DRLP loan and the 1200 Fund loan were also contemplated to be repaid by an assignment of the lessor’s interest in the lease of the west expansion area, the lease of Site 102 area and an assignment of revenues from the parking lot; and

     WHEREAS, in lieu of granting the assignments contemplated by the immediately preceding whereas clause the DAA has agreed to make the payments as and when they come due on the MIF grant/loan thereby freeing up the other funding sources to be available to repay the DRLP loan and 1200 Fund loan; and

     WHEREAS, DEDA has been presented with the 1200 Fund note and DRLP note (Public Document No. _______________) to evidence the 1200 Fund note and DRLP note respectively; and

     WHEREAS, the city has been requested to execute the joinder attached to the 1200 Fund note and DRLP note to evidence its agreement to make the funding sources available to DEDA to repay the 1200 Fund loan and DRLP loan; and

     WHEREAS, some of the funding sources may become available before costs are incurred in connection with the 2005 Cirrus expansion project; and

     WHEREAS, in such event DEDA desires to utilize the proceeds of such funding sources in lieu of borrowing funds under the DRLP note or the 1200 Fund note; and

     WHEREAS, as the proceeds of the various funding sources are received such proceeds will need to be assigned to DEDA by appropriate documentation; and

     WHEREAS, the city council of the city of Duluth has duly considered this matter and believes that it is in the best interest of the city of Duluth to proceed as provided herein.

     NOW, THEREFORE, BE IT RESOLVED, by the city council of the city of Duluth as follows:

     (a)  The use of funding sources by DEDA to fund costs of the 2005 Cirrus expansion project and/or to repay the 1200 Fund loan and/or the DRLP loan is hereby approved;

     (b)  The agreement by the DAA to make payments as and when they come due on the MIF grant/loan in lieu of granting an assignment of the lessor’s interest in the lease of the west expansion area, the lease of the Site 102 area and an assignment of revenues from the parking lot is hereby approved;

     (c)  Proper city officials are hereby authorized to execute and deliver appropriate documents or agreements necessary to evidence the approval made by this resolution, including without limitation joinders to the 1200 Fund note and DRLP note.