DISCLAIMER

 

07-0277R


RESOLUTION APPROVING PROPERTY TAX ABATEMENT FINANCING (TAF) FOR CERTAIN PROPERTY IN THE CITY AND APPROVING A TAF AGREEMENT WITH DEDA.

BY COUNCILOR STAUBER:

     BE IT RESOLVED, by the city council (the council) of the city of Duluth, Minnesota (the city) as follows:

Section 1. Recitals.

     1.1  The city has determined a need to grant a property tax abatement to property (the property) in order to finance the costs of site improvements required for an expansion of the Cirrus Design Corporation (Cirrus) production facility (the improvements), pursuant to Minnesota Statutes, Sections 469.1812 to 469.1815 (the act).

     1.2  On the date hereof, the council conducted a duly noticed public hearing on the city abatement (as hereinafter defined) at which the views of all interested persons were heard.

     1.3  Under the act, the city is authorized to use abatement proceeds from property in order to pay for the cost of improvements made to the property.

     1.4  The Duluth economic development authority (DEDA) entered into a development agreement (development agreement) dated September 12, 2005, with Cirrus.

     1.5  Under the development agreement, Cirrus agreed to construct improvements to the property (improvements), increase the number of employees in its production facility and expand its manufacturing operation.

     1.6  Under the development agreement, DEDA agreed to reimburse Cirrus for certain costs incurred by Cirrus in connection with the construction of the improvements (improvement costs).

     1.7  DEDA, by Resolution No. 05D-64, and city, by Resolution No. 05-0587, considered and approved the business subsidy that DEDA agreed to provide Cirrus under the development agreement.

     1.8  City, by Resolution No. 05-0734 (preliminary abatement resolution), approved the use of tax abatement proceeds to reimburse DEDA for payments made by DEDA for improvement costs.

     1.9  City, by this resolution, intends to implement the provisions of the preliminary abatement resolution.

Section 2. Findings.

     2.1  It is hereby found and determined that the benefits to the city from the city abatement will be at least equal to the costs to the city of the city abatement, because the improvements will benefit the property that is the source of the abatement.

     2.2  It is hereby found and determined that the city abatement is in the public interest for the reasons described in Section 1 and Section 2.1.

     2.3  It is further specifically found and determined that the city abatement is expected to result in a public benefit because the improvements will increase employment opportunities, expand the tax base and allow a manufacturing facility to expand.

Section 3. Actions ratified; abatement approved.

     3.1  The council hereby ratifies all actions of the city's staff and consultants in arranging for approval of this resolution in accordance with the act.

     3.2  Subject to the provisions of the act, the city abatement is hereby approved and subject to the following terms and conditions:

     3.2.1  The term abatement means the real property taxes or personal property taxes in lieu of real property taxes generated in any tax-payable year by extending the city's total tax rate for that year against the tax capacity of the property.

     3.2.2  The abatement will be paid in accordance with the terms of the abatement agreement between the city and DEDA described in Section 3.3 hereof, commencing with taxes payable in 2008 and continuing for a period of 15 years (through taxes payable in 2022). The abatement will terminate after the 15th year of collection of abatement from the property or upon payment in full of the obligations of the city under the abatement agreement described in Section 3.3 hereof.

     3.2.3  In accordance with Section 469.1813, subdivision 8 of the act, in no case shall the abatement, together with all other abatements approved by the city under the act and paid in any one year exceed the greater of ten percent of the city's levy for that year or $200,000.

     3.2.4  In accordance with Section 469.1815 of the act, the city will add to its levy in each year during the term of the city abatement the total estimated amount of current year abatement granted under this resolution.

     3.3  The proper city officials are hereby authorized to enter into the tax abatement financing agreement, a copy of which is on file in the office of the city clerk as Public Document No. ____________, with DEDA to implement the tax abatement as described above, on behalf of the city.


STATEMENT OF PURPOSE:  The purpose of this resolution is to approve the granting of approximately $147,000 in tax abatement benefits to Cirrus project originally approved in 2005 and to authorize an agreement transferring those benefits to DEDA to defray the cost of soils correction and environmental clean-up on city-owned property at Duluth international airport upon which the Cirrus expansions are located.


The resolution implements that part of the financing structure originally approved in 2005 pursuant to which DEDA agreed to pay for certain project costs, the amount of which it borrowed from the 1200 Fund, Inc. and the Duluth recovery loan program. As anticipated earlier, the abatement proceeds will be assigned by DEDA to the 1200 Fund to pay back the loaned funds.