Duluth City Council backs paper mill subsidy despite skeptics - Duluth News Tribune | News, weather, and sports from Duluth, Minnesota

DULUTH — Plans to provide the Sofidel Group with some help to advance their expansion of a local paper mill garnered support from city councilors Monday, with one exception.

At a time when Duluth is considering increases in its local property tax levy, 1st District Councilor Wendy Durrwachter questioned the need to provide a $3 billion multi-national company with tax relief.

She suggested the city should pump the brakes until a more compelling case could be made for a tax subsidy.

At large Councilor Arik Forsman referred to Sofidel’s pending expansion as “a fantastic investment in our community.”

He noted that a couple years ago, when the mill was temporarily idled, it had an effect on the whole community, not only due to the loss of jobs but also because of the impact it had on local utility rates, with one of the city’s previous largest customers sidelined.

Forsman said he couldn’t be happier to see Sofidel stepping up to invest $250 million in the Duluth mill, potentially bringing another 160 jobs to a facility that already employs about 80 workers.

While Durrwachter agreed that the additional jobs Sofidel promises to bring to Duluth would be welcome, she again wondered aloud if the company truly needs a tax break to proceed with its local plans.

She suggested Duluth might be selling itself short as a desirable location to do business. Durrwachter pointed to the city’s transportation system, with its port and major rail connections, affordable energy, plentiful water, talented labor pool, and rich forest product resources.

“They are here, and there is a reason they are here. It’s a desirable place for them to operate this plant,” she said.

During a public comment period, Mark Baker referred to Sofidel as "incredibly profitable" and also urged the council to delay a vote on the creation of a tax-increment financing district to support the project.

But 5th District Councilor Janet Kennedy, who represents the neighborhood where the mill is located, advised against risking the loss of a golden opportunity.

“I don’t want the perfect to get in the way of the good,” she said.

“We need this economic development. I don’t think this is the time to stand back,” Kennedy said.

The council’s action Monday allowed for the creation of a new tax-increment financing district to support the project, but an actual development agreement has yet to be finalized. Tax-increment financing is a form of government subsidy that uses new property taxes generated by a project to cover certain qualified development costs for a defined period of time — nine years in this case.

The city is considering a proposal that could provide Sofidel with up to $18.425 million in TIF assistance. Additionally, the city aims to serve as a conduit for $3.1 million in aid through the Minnesota Investment Fund. It also seeks $1.7 million in support from the Minnesota Job Creation Fund, plus another $200,000 in job training funds from the Minnesota Department of Employment and Economic Development.

Forsman suggested Duluth should not risk losing out on an opportunity to help Sofidel expand its Duluth operations, especially when other communities would eagerly compete for a similar investment.

“We need to step up when we have the opportunity to do so,” he said.

Council President Roz Randorf also spoke in support of the project, which would add 586,000 square feet to the mill’s footprint.

The council passed an ordinance in support of creating a new TIF district for the project by an 8-1 margin, with Durrwachter the sole dissenter.