Cirrus Design Corp. will waste little time moving into the former Northwest Airlines maintenance base after a vote Thursday by the Duluth Economic Development Authority.
DEDA commissioners unanimously passed a resolution of intent to lease the base to Cirrus for 25 years. Cirrus also would have an option to renew the lease for 25 more years.
The agreement could return a vacant building to productive use and lift the financial burden of its upkeep from DEDA's shoulders.
If the lease is approved, Cirrus will assume all operating costs associated with maintaining the base.
Final action Jan. 3
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The lease agreement won't become official until DEDA meets Jan. 3 to hold a public hearing on a proposed business subsidy component of the deal and then casts a final vote. But Cirrus has been given the green light to begin moving equipment into the 189,000-square-foot facility, with the understanding that it is doing so at its own risk.
Bill King, Cirrus' vice president of business development, said moving trucks were being loaded Thursday in anticipation of DEDA giving final approval to the deal.
Under the terms of the proposed lease, Cirrus will pay $25,000 per month for the facility during 2008, or $300,000 for the year. That rent will increase incrementally, however, and by year seven of the lease, Cirrus will pay full market rate for the facility - $96,833 per month or $1.16 million annually.
Plans for facilityCirrus, which also has a plant in Grand Forks, intends to initially use the former maintenance base to house research and development efforts, as the company prepares to introduce a new personal jet expected to sell for about $1 million. It is Cotruvo's hope that the facility eventually will accommodate Cirrus' jet production line.
The airplane manufacturer will need to move quickly, as its current jet development team is cramped for space and must vacate Hangar 103, a building that it recently leased from Duluth Airport Authority on a short-term basis. Come Tuesday, a U.S. Army cold weather testing team will begin using the hangar to evaluate helicopter de-icing systems. That testing operation is expected to bring about 50 jobs to the facility for the next four months, said Brian Ryks, Duluth Airport Authority director.
Initially, Cirrus is expected to occupy only about one-third of the former Northwest base. Cotruvo said shop and office space in the facility could suit Cirrus' purposes well with relatively modest modifications.
But the 80,000-square-foot hangar on the south side of the building was built to service commercial Airbus jets and is vastly oversized for Cirrus' operations.
Could be oustedAs part of the proposed lease, DEDA keeps the right to provide replacement space to Cirrus if it finds a more suitable tenant for the hangar portion of the building, such as an operation servicing large aircraft.
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With DEDA approval, Cirrus may sublease unused space in the facility, but it must evenly split any revenues it receives from tenants with the authority.
As part of the lease agreement, Cirrus also pledges to create 100 new jobs by 2011 and an additional 100 new jobs by year six of its lease.
The News Tribune and the Herald are both Forum Communications Co. newspapers.
