Duluth Economic Development Authority may offer financial relief to AAR, Playhouse in wake of COVID-19 downturn

The national economic impact of the COVID-19 pandemic has been so swift and so severe that the Duluth Economic Development Authority has called a special meeting Friday in an attempt to offer assistance to vulnerable local businesses and the Duluth Playhouse.

The Authority will be asked to waive three months' worth of lease payments for the maintenance base that AAR Corp. uses to service commercial aircraft. A resolution heading to the body proposes to charge the company no rent from April through June — payments that would total about $111,700.

With as much as 80% of commercial airline flights grounded since a novel coronavirus outbreak struck, AAR is expected to see far less business in coming months.

Chris Fleege, director of Duluth's planning and economic development division, said the company has "limited options."

AAR had employed about 340 people as of last summer, and Fleege said: "We want to keep the workers employed there. We definitely want to keep them a going concern, and quite frankly, at the end of the day, the dollars that go into that lease payment are used to be reinvested into the building. ... And if they weren't up and operating, there would be a carrying cost just to maintain the building and heat it."

Fleege suggested anything DEDA can do to help AAR weather this recession and continue to operate out of the Duluth facility would be "mutually beneficial." The company has occupied the maintenance base, which was formerly operated by Northwest Airlines, since 2012.

DEDA also will take up a resolution that would grant the Duluth Playhouse three months of forbearance on a loan the nonprofit is repaying, related to the renovation of the NorShor Theatre. The organization makes monthly payments of $8,333 on that theater loan. So, a three-month pause in those payments could keep $25,000 in the nonprofit's pockets.

Fleege noted that with public gatherings currently forbidden, the Playhouse really has no revenue stream.

"The city and many partners invested significant dollars into that theater, so we definitely want them to stay afloat," he said.

On Friday, DEDA will be asked to consider providing the Entrepreneur Fund Inc. with $90,000 in funding to provide small businesses with low- to no-interest emergency loans as well.

"The idea is that there are stimulus dollars in play or motion, but it's going to take some time for them to get to businesses. So, the thinking was if we could have some dollars available more quickly and then also to kind of fill the gaps where businesses don't fit the state criteria for the emergency business loans or for the small business loans," said Fleege, explaining that assistance from the Entrepreneur Fund could serve as bridge funding to help local companies make it through until other additional aid becomes available.

"There's just no playbook for this," Fleege said. "To have this many businesses with these many layoffs."

"There have been tough choices for businesses to make," he said.