Public assistance, building lease to help Cirrus grow production in Duluth
All the pieces are falling into place to help the city's largest manufacturer employ even more people.
DULUTH — The Duluth Economic Development Authority called a special meeting at noon Wednesday to enable Cirrus Aircraft to proceed with its expansion plans immediately.
Members of the authority were unified in their support of a proposal to lease an aircraft maintenance, repair and overhaul facility formerly occupied by AAR Corp. to Cirrus for up to 16 months at a cost equivalent to the building's holding costs, including property taxes. At the end of that term, Cirrus will have the opportunity to purchase the facility outright for $1.
The maintenance building belongs to DEDA and has sat almost entirely vacant since AAR left Duluth resulting in the loss of more than 240 jobs in May 2020, as the commercial airline industry reeled due to the COVID-19 pandemic.
Maintaining the cavernous building with its complex fire-suppression systems, absent a suitable tenant, costs DEDA about $57,000 to $58,000 per month, said Chris Fleege, director of the Duluth's planning and economic development division. The highly specialized facility was designed to service large wide-body commercial jet aircraft.
But Cirrus is poised to sink about $3.6 million into the structure, converting it to accommodate office and operations staff and freeing up space on the south side of a current company facility for expanded manufacturing capacity.
The airplane maker already employs more than 1,200 people in Duluth and expects to hire at least 80 more to meet growing demand for its popular general aviation piston-engine and jet aircraft.
Cirrus will get some local help to advance its plans. Both the city and St. Louis County have agreed to abate $600,000 in future property taxes for a combined tax break of $1.2 million.
However, a procedural error will force the Duluth City Council to take up anew the tax abatement request councilors thought they had already approved earlier this week. That pending special meeting with a public hearing at the front end is slated for March 1.
Additionally, Cirrus is seeking $500,000 in assistance from the Minnesota Jobs Creation Fund and a $1.5 million forgivable loan from the Minnesota Investment Fund.
If the sale of the maintenance building goes through, the city of Duluth also will be asked to offer Cirrus a forgivable loan of up to $300,000 to cover the cost of removing and properly disposing of the facility's fire-suppressing foam containing hard-to-break-down per- and polyfluoroalkyl chemicals that have been flagged as a public health concern in recent years.
DEDA Commissioner and 3rd District Duluth City Councilor Roz Randorf said Cirrus' occupancy of the maintenance building could save DEDA nearly $700,000 annually, allowing the authority to redeploy those funds for other valuable economic development purposes.
"Just imagine all the other things DEDA could invest in," she said.