A consultant has advised the city of Duluth to double down on its investments in the Spirit Mountain Recreation Area, recommending an additional expenditure of about $23 million to install a new lift, upgrade beginner ski terrain, update the Skyline Chalet and expand its summer offerings, among other projects.
The consultant’s report, prepared by SE Group, suggests that such a reinvestment would put struggling Spirit Mountain back on a firm financial footing and would yield $39 million in annual economic benefits for Duluth and its environs.
Spirit Mountain is already estimated to contribute $22.4 million to the local economy each year.
That equates to a return of $18.72 for every dollar of tourism tax the recreation area receives on an annual basis.
But if Spirit Mountain continues down its current underfunded path, the SE Group predicts it will face a “slow, inevitable death.”
A 16-member task force appointed by Mayor Emily Larson in July presented SE Group’s findings along with its own recommendations to the Duluth City Council Monday night, after 20 meetings as a body, many more subcommittee discussions and more than 900 hours of collective deliberation.
Larson said interest in the future of Spirit Mountain was so great that 116 people applied to serve on the task force.
The task force explored a number of options, including the possibility of selling the recreation area to a private party operator.
But that prospect was quickly ruled out, said Ann Glumac, Spirit Mountain’s interim executive director and facilitator of the task force.
She said a sale was not deemed a viable option “because some of the federal dollars that initially were invested in Spirit Mountain when it was established in the ‘70s come with some pretty significant restrictions that would have made a sale — I don’t know if ‘impossible’ is the right word — but wildly complicated.”
The task force recommended Duluth consider maintaining Spirit Mountain’s current structure as a government-owned, government-run operation, as well as two other options: handing its management over to a nonprofit or leasing the operation to a private, for-profit entity.
The latter prospect deserves serious consideration, said at large City Councilor Arik Forsman, who co-chaired the task force with Councilor Janet Kennedy.
Speaking in support of issuing a request for proposals, Forsman said: “If you wanted to bring in private investment, the lease option is what is actually possible. And it would be really interesting, I think, to find out what’s available, who would be interested, and what would they be willing to offer?”
“The big question for me would be: Can we retain the community feeling of ownership and what we really want the vision of Spirit Mountain to be with a leased model?" Forsman said. "And we won’t know until we go see who may be interested and what they might be willing to do with us. But if you were willing to shrink your financial risk as a city, I think that would be a pretty practical thing to do."
Larson said she would pursue requests for proposals only if she and the City Council agree that option is one they wish to seriously pursue.
“If we aren’t explicitly clear about exactly what we’re looking for, it is really hard to just shop an RFP,” she said. “We just don’t get tangible, really helpful feedback in that way.”
Since 1978, the city of Duluth has provided nearly $19.85 million in tourism tax proceeds to Spirit Mountain, but the allocations have sometimes varied wildly.
Glumac stressed the importance of providing a consistent financial commitment to the recreation area but that it be held accountable for using those funds to make specific strategic investments. But she acknowledged the city’s consistency will depend upon the will of current and future elected city officials.
Kennedy noted that when Duluth began charging a tourist tax on hotel, restaurant and bar spending, Spirit Mountain and the Duluth Entertainment Convention Center were singled out as original recipients, in recognition of the ongoing support they required.
“If Spirit Mountain was to go away, we wouldn’t have much tourism tax in the winter," she said. "We would pretty much be shut down. That’s an important fact that I don’t believe we’ve been able to educate people on."
Larson said having good information about the economic impact of Spirit Mountain and the equivalent of 300 full-time jobs it provides should help quell some of the criticism it has endured, especially as improved management takes hold there.
“That’s exactly why I wanted to do the task force, because I’ve been elected now for 10 years, and every single one of those 10 years, there is a collective beating up on Spirit Mountain," she said. "And I do think that we just haven’t been forthright about what this is as an asset and understanding it as an economic driver, in truly uncovering all the layers that make it complicated, and then finally talking about it with some kind of comprehensive plan."
In addition to city support, the task force suggested Duluth seek state bonding funds to invest in improvements at Spirit Mountain.
The task force leaves unanswered many questions about the future structure and funding of Spirit Mountain.
“At least we’ve got a shared grounding now on some key facts that are going to be critical to help figure out this mess," Forsman noted. "And it’s not as bad a mess as some people might have thought.”