BY COUNCILOR FEDORA:
(a) The Duluth City Council adopted Resolution No. 03-0731 which authorized the Arrowhead Regional Development Commission to act as job opportunity building zone (JOBZ) zone sponsor and administrator and to make program commitments on behalf of the city of Duluth.
(b) The Minnesota department of employment and economic development (DEED) approved the nrtheast Minnesota regional JOBZ application for 4,031 acres, including 351.12 acres within the city of Duluth.
(c) The Duluth City Council adopted Resolution No. 04-0236 designating those 351.12 acres within the city of Duluth into 11 subzones, including 95.78 acres in Airpark Subzone Number 97.
(d) The Duluth Seaway Port authority subsequently desired to reallocate 3.7 acres in Airpark Subzone Number 97 to a 3.34 acre project site (resulting in a net reduction in Airpark Subzone Number 97 of 0.36 acres), and the Duluth
City Council approved said reallocation pursuant to Resolution 06-0577 adopted August 14, 2006.
(e) The Duluth Seaway Port authority desires to reallocate an additional 5.3 acres from Lot 3, Block 2, Second Rearrangement of Part of Airpark Division (PID #010-0164-00051) to a 2.45 acre parcel (resulting in an additional net reduction in Airpark Subzone Number 97 by 2.85 acres) described as Lot 3, Block 2, Airpark Division (PID #010 0164-00050).
(f) The JOBZ program created in Minnesota Session Laws 2003, First Special Session, Chapter 21, Article 1, allows for the formation of tax free zones and for subzone boundaries to be amended with the approval of all taxing authorities.
(g) The Duluth Seaway Port authority further desires to provide JOBZ benefits to a new startup business on the 2.45 acre parcel.
NOW THEREFORE, BE IT RESOLVED, that the city of Duluth approves an amendment to Airpark Subzone Number 97 as follows:
(a) Remove a total of 5.3 acres from Lot 3, Block 2, Second Rearrangement of Part of Airpark Division (PID# 010-0164-00050);
(b) Add 2.45 acres to Lot 3, Block 2, Airpark Division (PID #010-0141-00110).
STATEMENT OF PURPOSE: Pursuant to Resolution 04-0236, 95.78 acres in the airpark were designated as JOBZ Airpark Subzone Number 97. The Seaway Port Authority, which owns the airpark property and administers the JOBZ subzone within, subsequently requested removing a total of 3.7 acres of property from the subzone designation and applying the designation to a 3.34 acre parcel for a net reduction in the subzone of 0.36 acres. As one of the taxing jurisdictions, the City of Duluth approved the reallocation.
The Seaway Port Authority is now requesting that the City approve the removal of an additional 5.3 acre parcel from the current subzone designation in order to designate a 2.45 acre parcel for an additional net reduction in the subzone of 2.85 acres. Again, as one of the taxing jurisdictions, the approval of the City of Duluth is required in order for the reallocation to occur.
The Seaway Port Authority has entered into a JOBZ Business Subsidy Agreement with Eliminator Machine Center, Inc., a newly formed manufacturing company that will employ 5 new employees with average wage + benefits of $22.20 per hour. The company performs machining, remanufacturing, and assembly of industrial pumps. The company will be leasing a portion of a vacant building of approximately 18,000 square feet on the 2.45 acre site and will be moving into 6,000 square feet of the building.
Tax Base Impact Summary:
The designation of the site as a JOBZ Subzone and the utilization of 6,000 square feet of the building by a JOBZ Qualified Business will result in a loss of 2008 tax revenue to the City of an estimated $714. Additionally, in the event of future expansion of the company into the remainder of the building, there will be an additional tax revenue loss to the City of Duluth. For example, if company were to move into the entire 18,000 square feet today, the loss of 2008 tax revenue to the City would be $2,142. This JOBZ property tax exemption associated with the building will extend to the sunset of the JOBZ program, which is December 31, 2015. It should be noted that the land remains taxable throughout the term of the JOBZ program.