Duluth council approves aid for paper mill expansion
DULUTH — A local paper mill received a boost Tuesday as the City Council signed off on a package supporting the project.
Sofidel, an Italian papermaker that acquired the Duluth facility from ST Paper earlier this year, stands to receive $14.3 million in tax-increment financing over the next nine years under a resolution approved Tuesday.
Tax-increment financing is a form of subsidy that uses new tax revenues generated by a project to cover certain qualifying development costs for a period of time, after which the full value of the property lands on the tax rolls, to the tune of about $244,000 in annual payments.
In the case of Sofidel, the total investment is expected to be around $200 million. The mill employs about 80 people but expects to increase that by approximately 160 when an expansion is completed.
The revamped mill produces mammoth rolls of tissue paper that are shipped off to other locations where they can be turned into consumer products, such as toilet paper, facial tissues and paper towels.
Sofidel aims to bring conversion operations and warehousing space to Duluth so finished products leave the community, bringing more jobs to the mill.
The company pays its workers an average wage of about $32 per hour.
The city is also going to bat to seek an additional $3.1 million from the Minnesota Investment Fund forgivable loan program, $1.7 million from a state Job Creation Fund grant and $2.4 million from the Minnesota Department of Employment and Economic Development's cleanup program.
The Duluth mill opened in 1987, originally producing coated papers. But as that market dried up, the facility struggled and eventually closed under Verso Paper's ownership.
ST Paper stepped in and reopened the mill with new tissue paper capacity before turning around to sell the facility to Sofidel.
Several councilors said Sofidel's pledge to use a project labor agreement (PLA), ensuring that prevailing wages would be paid to people helping with the mill expansion, was key to their support of the aid package.
"This, to me would have been a deal-breaker," said 2nd District Councilor Mike Mayou. "I would not have voted to support this today without the PLA in place."
The resolution supporting the TIF agreement passed 8-1, with 1st District Councilor Wendy Durrwachter dissenting.
"I'm very glad that Sofidel is here, operating in our community and providing jobs," Durrwachter said. "But I do think that they are a very healthy company."
She suggested the lucrative paper maker does not need public assistance.
"So, I believe issuing a TIF to Sofidel is an act of corporate welfare," Durrwachter said.
"While I'm glad they are here, providing jobs, and I support the PLA agreement," she said. "I support the prevailing wage. I don't believe we should be approving a development agreement that uses a TIF subsidy like this."
Durrwachter said she was disappointed at Sofidel's apparent disinterest in restarting paper recycling operations at its Duluth mill.
