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Spirit Mountain to ask Duluth for more financial help

Representatives of the Spirit Mountain Recreation Area will ask the Duluth City Council for $300,000 in aid Monday to meet operating expenses. (File photo / News Tribune)

After burning through the $1.2 million line of credit Spirit Mountain Recreation Area already received from the city of Duluth, representatives of the operation will ask the Duluth City Council for another $300,000 in aid on Monday.

The council was forewarned of the ask at a Thursday evening agenda session.

Spirit Mountain Executive Director Brandy Ream broke the news with a personal disclaimer.

"To sum it up, this is the last thing I want to be doing is standing here in front of you all, having to ask for additional funding," she said.

But Ream explained that Spirit Mountain has not been able to bounce back financially from a challenging winter ski season, marred by warm, rainy weather. She noted that for March alone the operation's revenues were down $300,000.

Ream said she tried to adjust accordingly.

"We made some very difficult decisions for the month of April, as well as one pay cycle in May. We went into full layoff mode, and all salaried staff took a pay reduction. We did those things to extend the cash that we had in the bank for as long as we possibly could," she said.

For the first quarter of its fiscal year, Ream said Spirit Mountain has cut its payroll by $125,000 and trimmed another $75,000 in assorted expenses.

Nevertheless, Ream said Spirit Mountain has had to spend $50,000 to address the pressing deferred maintenance issues that allowed for summer operations, as well as to fund critical lift maintenance in anticipation of the next ski season.

Without the city's help, Ream said she will be unable to meet payroll.

Spirit Mountain has no other practical place to turn, according to David Montgomery, Duluth's chief administrative officer.

"They are in a near-term cash crunch, and we need to address it one way or another," he said.

The city could consider extending the line of credit it has provided to Spirit Mountain to $1.5 million, but Montgomery said he would prefer to make $300,000 in tourism tax revenues available to the operation.

At Large City Councilor Zack Filipovich noted that Duluth's tourism tax collections through June of this year are running more than $375,000 above anticipations.

But several councilors expressed distress with Spirit Mountain's repeated need for aid.

"I do have to ask ... what are our other options?" said 1st District Councilor Jennifer Julsrud. "Do we have other options in terms of selling it to a private company if we need to or to go to the Legislature and ask for permission to do that?"

"Can we somehow relinquish our responsibility fiscally from this entity, because it's not really what we're in the business of doing here as a city, and it's hard to continue to watch it stumble," she said.

Montgomery said complicated legislative action would be required to make any sort of a sale possible, and such an undertaking might come with financial risks of its own, such as forced repayment for lands that were made available to create the recreation area.

Montgomery said the support being proposed for Spirit Mountain is similar to aid that has been offered to sustain other key tourist attractions, such as the Lake Superior Zoo and the Great Lakes Aquarium. He said Spirit Mountain is in a rebuilding period under the Ream's new leadership, and a financial turnaround of the operation will take time.

Julsrud asked how long it will take to financially stabilize Spirit Mountain.

Ream acknowledged she couldn't say with certainty.

"It is extremely to difficult to even see the light at the end of the tunnel right now," Ream said.