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Fri, Dec 18, 2009

Cirrus Looks For Tax Break From St. Louis County, MN

County Commission Gives Preliminary Approval, Full Vote Next Week

Cirrus Design has asked the St. Louis County Minnesota county commission for forgiveness for repayment of a $27,770 tax rebate owed the county on its Duluth manufacturing plant. Meeting as a Committee of the Whole, the commission has given preliminary approval to the plan.

When Cirrus expanded into the facility at Duluth International Airport in 2007, they made a deal with the county to receive a 10% tax break on the property as long as they maintained a certain employment level at the facility. At the time, they had expected to add 220 jobs for an employee base of nearly 1000 people. Cirrus received the first tax rebate last year.

But Cirrus has had to cut staff due to the economy, and has not been able to keep its end of the bargain, so they went to the county commission seeking relief from additional $27,770 in taxes.  Cirrus Vice President for Business Administration Bill King has also asked that the agreement be nullified, as employments levels are not likely to return to pre-recession levels soon, if ever. "They're saying there's no sense in us sending them the rebate each year only for them to have to pay it back, so they simply want to end the agreement altogether," Barb Hayden, the county's director of planning and development, told the Grand Forks Herald.

Cirrus says it is not able to afford pay back the rebate this year. "If a repayment were to be required we would clearly be doing so from our already stressed cash flow of this business and it would very likely create additional adverse impacts on our operations, at a time when we can least afford it," King wrote in a letter to the St. Louis County Commission.

"We now believe, with the restructure that we have completed to date, we will in fact survive these perilous times and continue to be operational, assuming our industry does not continue to worsen significantly," King noted.

The paper indicated that the Commission is expected to give final approval to the plan when they next meet, but it is not the end Cirrus' troubles. The company also owes $200,000 to the city of Duluth, and $800,000 to the Grand Forks Development Authority, in back rent. Cirrus President and CEO Brent Wouters has said he expects the company to return to profitability late next year, and the company should be able to clear the outstanding debt when that happens.

FMI: www.cirrusaircraft.com, www.co.st-louis.mn.us

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