Duluth Mayor Emily Larson unveiled an ambitious plan for improvements to the Spirit Mountain Recreation Area at a Thursday afternoon news conference below the Skyline Chalet.
"For years, the main community narrative of Spirit Mountain has really been one of exhaustion and frustration. To be honest, I really get that. It has felt like our entire financial strategy for this incredible regional asset has been based on Band-Aids of emergency cash infusion," she said.
"As currently positioned, Spirit Mountain is caught in what feels truly to be kind of a continual lose-lose loop of financial calamity, of facility maintenance crisis, of continual operational challenges. We can do and be better," Larson said.
Larson went on to outline her plan to launch a $24 million capital improvement campaign. She aims to seek half the necessary funding in the form of state bonding support. Larson aims for the city to bond for the remainder, paying off half the debt with future tourism tax collections and asking Spirit Mountain to chip in the remaining $6 million.
Larson said the community under her leadership has a history of "acknowledging where we are stuck and of working the problem until we find the best right solution."
"We did this with street funding, and we are now one of the few cities in the state that has a reliable ongoing funding strategy and coordinated infrastructure plan to support our community. We did it with the Lakewalk. Next week, we'll reopen this regional gem back up for public use, and it's ready to withstand all that Mother Nature will continue to throw at us. We're doing this now with housing. Later this year we'll launch our Housing Trust Fund and announce several other housing innovations," she said.
Larson said now is the time to meet the challenge of updating and revitalizing Spirit Mountain, after years of neglect. If Duluth is successful in its bonding request next year, Larson said work could begin in 2023.
She rattled through a likely list of capital projects that included updating alpine ski and snowboard infrastructure, completing the Nordic ski and mountain bike trail system, adding a high ropes course to Spirit Mountain's summer Adventure Park, replacing the mini-golf course, renewing the coaster, and renovating the Skyline Chalet and campground.
Larson pointed to a recent economic impact study that indicated Spirit Mountain already contributes $22 million to the local economy, attracting 250,000 guests annually and providing more than 300 direct and indirect full-time jobs.
She said the capital improvement plan could boost those numbers, with a task force report estimating an even greater annual economic impact of $39.5 million, an increased draw of an additional 50,000 guests and the creation of another 205 jobs on top of the employment the recreational area already provides.
To support Spirit Mountain as it begins its journey toward recovery, the Duluth City Council is expected to take up a resolution Monday that could authorize the city to forgive $900,000 in debt related to a fully utilized $1.2 million line of credit extended to the troubled ski hill.
"I want to be clear about the benefits of supporting this action. So, here is why we're bringing this forward as the very first example of our faith and confidence in this facility and a strong vision for its future," Larson said.
"Eliminating the line of credit is simply an honest approach," she said. "The line of credit has been maxed out for years, and despite good intent and best effort, we are just not going to see this money in the current configuration of Spirit Mountain. It's just not going to happen. And it is a literal kind of thundercloud hanging over everybody."
Larson said relieving Spirit Mountain of its debt could also open the door to leasing out Spirit Mountain for operation by a private management operator, who would bear the risk of losses and reap all the benefits of profitability.
"This is something I really think we should explore. But in order for us to have a realistic conversation about any possibility of long-term lease arrangements, we absolutely need to take this step, because no reasonable operator would demonstrate even a passing interest to take on the financial debt for an asset they don't own," she said.
Larson said an outright sale of Spirit Mountain to a private operator has been deemed impractical because of the covenants and federal dollars that were involved in putting the recreational area together 47 years ago.
"At present, this is a distressed asset," said Jim Filby Williams, Duluth's director of parks, libraries and properties. "It is not ready to bring to the ski industry firms. So, the first step in further exploring that possibility is just to prepare the asset for market, to get our managerial and organizational house in order."
The mayor's plan should enable the city "to shift meaningfully the way in which our support is used from reactive/keep the lights on operational subsidies to strategic infrastructure renewal," he said.
So, while there would be an increase in the amount of taxes directed to cover improvements at Spirit Mountain, Filby Williams said: "It will not be as great as you might think, because to some extent our operating subsidies will go significantly down."
He also expressed confidence that tourism tax proceeds will be sufficient to service the proposed Spirit Mountain improvements without significant detriment to other current recipients of the funds. He also pointed to the increased tourist activity a renewed Spirit Mountain is expected to bring to the city.
"We view that as a strong and exciting return on investment," Filby Williams said.