DULUTH -- Cirrus Aircraft and Duluth city staff have hammered out an agreement that could resolve an outstanding dispute over a broken lease and unpaid bills. The workout also may set the stage for the company to one day build jets in Duluth.
Cirrus had agreed to lease the former Northwest Airlines Maintenance Base to support development of its first jet aircraft. But when the economy crashed and Cirrus scaled back production, it no longer needed the space and moved out in September, just 1½ years into a 25-year lease.
At the time, the company was $225,000 in arrears on payments to DEDA and the Duluth Airport Authority for the base.
The city announced Thursday it had reached a tentative deal with Cirrus, pending approval by the Duluth Economic Development Authority, which is expected to take up the matter Wednesday May 19 . Under the agreement, Cirrus will be released from its lease, retroactive to September 2009.
Of the $225,000 in unpaid , $37,500 would be repaid directly to the Airport Authority.
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The remaining $187,500 Cirrus owes DEDA would be restructured into a forgivable five-year loan. The loan would be forgiven if Cirrus expands operations in Duluth during the next five years. It would be due in full immediately if the company moves any current operations out of Duluth.
Cirrus employs about 500 people, with about 85 percent of its work force in Duluth. The company also has operations in Grand Forks. At its peak in 2008, the company boasted about 1,300 employees.
Brian Hanson, DEDA's executive director, fears jobs would be at risk if DEDA played hardball and demanded complete payment of backrent from Cirrus right now.
"The company is in unprecedented difficult times," he said. "But its product is a good one, and its market share is growing. In a tough market, Cirrus is outperforming its competitors, and I believe it will bounce back stronger than ever."
The agreement, if approved, could position Duluth to be the site for future production of the Cirrus Vision jet, now in development.
"All of the design and manufacturing of the new Cirrus jet has taken place and continues to take place here in Duluth. When the time comes for the new jet to go into full-scale production, I want Cirrus to build those jets in Duluth as well," said Duluth Mayor Don Ness in a prepared statement.
Ness also contends the agreement sets a positive tone.
"This agreement builds upon a strong and cooperative relationship that will help ensure Duluth is in good position to bring all of those additional jobs to our region. Cirrus remains one of our most important employers -- we are confident about their future in Duluth and are committed to their success," said the mayor.
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Bill King, Cirrus' vice president of business administration, praised city staff for remaining flexible in negotiations.
"The long and short of it is that Duluth is our home, and it's where we want to expand," he said.
While that doesn't necessarily mean Cirrus' jet production -- tentatively slated to begin in 2013 -- will land in Duluth, King said: "That would be our first preference."
The Duluth News Tribune and the Herald are is owned by Forum Communications Co.
