State lawmakers who make up the Iron Range Resources and Rehabilitation Board on Tuesday voted 5-4 to hire a single private management company to oversee operations, sales and rentals at Giants Ridge ski and golf area in Biwabik.
The board approved a plan by IRRRB Commissioner Mark Phillips to consolidate several vendor contracts and to move all employees - including about 15 state employees at the site - under one private management company.
The facility will remain owned by the state.
Current vendor agreements expire in April and Phillips wants to move them to a single vendor for skiing, golf, food concessions and equipment rental as well as overall marketing and operations.
The agency has put out requests for proposals and Phillips expects to have the new management in place by May 1.
Phillips said a single manager of operations and employees will help the facility remain competitive for the golf, skiing, biking, disc golf and other recreation customers it serves.
Several state employees received early buyout options. Others at the site will either be offered other state positions or, if their labor unions agree, could continue to be state employees under private management at the site. Several state-owned facilities, such as the Minnesota Zoo, have similar situations, with state employees working for private contractors.
"None of the full-time employees are going to lose their job," said state Sen. Tom Bakk, DFL-Cook. "There is some real efficiency that can happen by getting under one management."
State Rep. Jason Metsa, DFL-Virginia, however, said he wanted to keep Giants Ridge management under IRRRB staff, saying the state should remain in full control of its investment at the hill.
"We already have such a big investment there, and if we are going to continue to put money there to keep it viable, I think we ought to be in control of the decisions made up there," Metsa told the News Tribune Tuesday. "I also worry that a for-profit management team is going to raise prices to the point that the average Minnesotan can't afford to go there."
The IRRRB came under heavy scrutiny last year when the Minnesota Legislative Auditor blasted the agency's spending, loan monitoring and follow-up on financial incentives and promised job creation. The auditor also was critical of the ongoing losses at Giants Ridge.
The IRRRB now is spending about $1.9 million per year to subsidize Giants Ridge, a 500 percent increase since 2006. The legislative auditor's report questioned why a government agency is running a tourist destination that requires a large subsidy each year, and it recommended that the IRRRB take a hard look at whether Giants Ridge fits into its core mission of economic development on the Iron Range.
Phillips and Iron Range lawmakers have defended IRRRB ownership of the resort complex, saying Giants Ridge has more than paid for itself in outside tourism dollars spent in the Biwabik area and with increased recreational opportunities for local residents.
A 2016 economic impact study showed Giants Ridge had a $27 million impact on the local economy. That total increases to $44 million when spinoff jobs and impact are included, Phillips said.
Giants Ridge started as a small, private ski hill in 1959. It was acquired, expanded and reopened by the IRRRB in 1983.
MDI gets development deal
The IRRRB, which met in St. Paul Tuesday also approved a major financial package for Minnesota Diversified Industries to build a new corporate headquarters near Range Regional Airport outside Hibbing. The new 35,000-square-foot facility will cost $4.7 million, with a $1 million forgivable loan and a $350,000 grant from IRRRB. The package also includes a $300,000 state grant and $100,000 Blandin Foundation grant and additional private funding and non-profit agency grants.
The company is promising to add 100 new jobs in coming years.
The operation currently employs 83 individuals, 57 of whom are permanent employees and 26 of whom are temporary contractors. More than 70 percent of employees have some form of disability - either mental, physical or developmental. All employees receive at least $9.50/hour plus benefits. Contractors receive at least $9.50/hour as well as benefits provided by the temp agency.