BY COUNCILOR STAUBER:
RESOLVED, that, in accordance with the requirements of Minnesota Statutes Section 116J.994, subd. 3(d), the business subsidy agreement between the Duluth economic development authority and the-jet Company, a copy of which is on file in the city clerk as Public Document No. ______________, is hereby approved.
STATEMENT OF PURPOSE: The purpose of this resolution is to approve the business subsidy agreement between DEDA and the-jet Company for the long-term lease of the old Northwest Airlines MRO facility at the Duluth International Airport. the-jet company is a subsidiary of Cirrus Design Corp. created to design and build their new business class jet aircraft.
The-jet Company is deeply into the process of designing and preparing for production of the new airplane and is in immediate need of some space for research and development and initial fabrication. While it is anticipated that in the foreseeable future they will have need of the entire 189,000 square feet of the old NWA facility, they will not be able to economically use it for the present and consequently could not afford to rent it until full production was more imminent. They do, however, anticipate needing the entire facility as production “ramps up.”
The lease gives them immediate control of the entire facility and requires them to assume immediate and total responsibility for all costs associated with holding and operating the building. It does provide a subsidy in the form of reduced rental which ramps up progressively from $25,000 per month for the first year of the lease until reaching full market rent, and therefore the end of any subsidy, by the beginning of the seventh year. In the mean time, they also guarantee that they will generate 100 new jobs by the end of the third year and 200 new jobs by the end of the sixth year; the jobs will have an average wage rate of at least $15/hour.
The lease will have a term of 25 years with the option to negotiate an extension of up to an additional 25 years.