St. Louis County agrees to Cirrus tax rebate

• Cirrus

Cirrus

Talk about it

St. Louis County Commissioners agreed to new terms Tuesday on a deal that will resume an annual $27,770 tax rebate to Cirrus Aircraft.

The deal calls for Cirrus to continue paying its full property taxes on its Duluth aircraft manufacturing plant and for the county to give the rebate to Cirrus each year through 2017. Cirrus, in turn, uses the money to help pay off part of the cost of its 2007 expansion that cost $14 million.

The resolution passed as part of the board’s noncontroversial consent agenda and drew no discussion.

“It’s a good-will move for an important employer. We want to see those jobs maintained and we hope that they do grow once the economy improves,” said Barb Hayden, the county’s director of planning and economic development.

Cirrus and the county struck a deal in 2007 that would give the company an annual abatement, or rebate, on one-tenth of $277,700 worth of property taxes each year for 10 years tied to the company’s expansion at its main manufacturing plant at Duluth International Airport.

Cirrus received its first rebate under the deal, for $27,770, in 2008. But because Cirrus has failed to keep its end of the deal related to employment levels, the airline was supposed to give the money back to the county. The county forgave that obligation, but stopped offering the rebate in 2009 and 2010.

Cirrus had promised to add 220 jobs after the expansion and employ more than 930 people in Duluth as part of the 2007 agreement. Instead, Cirrus has been hit hard by the economic recession, and laid off hundreds of employees in recent years as it scaled back production to meet reduced demand for its planes.

Now, the company has nearly 400 workers in Duluth and no plans to reach the 930 level originally promised. So county officials re-worked the deal to keep the rebate going as long as Cirrus maintains at least 300 employees in Duluth through 2022, five years after the rebate concludes. Cirrus would have to repay the rebate for any of those years that employment drops below 300.

Cirrus Vice President Bill King sees keeping that level of employment as doable. “I don’t see a scenario where we’ll get smaller,” he said.

But King said calling it a rebate is a misnomer. He said it’s part of the company’s property taxes that goes toward paying for a costly road improvement during their rapid expansion.

“We get no tax refund,” he said. “It’s not a tax break to Cirrus. It’s not a windfall for us in any way, shape or form. It’s just housekeeping on the part of the county.”

The total abatement for the years 2008 and 2011-17 will amount to $222,160. Much of the county’s portion of the Cirrus deal went to clean up contaminated soil at the expansion site at Duluth International Airport.

County officials say the downsizing of Cirrus reflects the reality of the general aviation industry, which tanked along with the economy in 2009. Cirrus sold 716 planes in 2006 but just 264 in 2010.

In 2010, Duluth city officials approved a deal that erased a $287,000 debt Cirrus owed the city. The newly crafted forgivable loan, for back rent on a city-owned facility, won’t have to be paid if Cirrus maintains its facilities here.

Tags: st louis county, news, business, money, aviation