The email to the City Council was like so many other comments and reactions on social media and elsewhere last week after Mayor Emily Larson proposed investing $24 million into long-troubled Spirit Mountain.
“After year upon year of having to bail Spirit Mountain out, it seems way more fiscally responsible to sell it now to a private entity. We will still reap all the benefits of the tourism it brings with hotel usage and shopping and restaurant usage,” urged the note from a Duluth resident. The email also pointed out “the dumpiness Spirit Mountain represents” and concluded with: “We strongly urge you not to bother with this newest and latest scheme.”
But the “dumpiness of Spirit Mountain” is precisely the point of the ambitious proposal. And it’s hardly a “scheme.” Or a bailout.
While skepticism can be expected following years of financial losses, public subsidies, and poor-at-times management of the recreation area, the proposal made by Larson follows — and is in line with — an exhaustive, seven-month, experts-involved deep dive into Spirit Mountain’s finances and operations. A 16-member task force was challenged last summer by the mayor to determine what to do, once and for all, about the ski hill, to turn it around. More than 20 committee and subcommittee meetings were held. An estimated 900 hours of presentations, information, and deliberation were carefully considered. And independent reviews of successful ski operations elsewhere were completed. The result was an expertly informed and thoroughly researched strategy, detailed in a 243-page report. One to be followed. Not left on a shelf.
Among its findings is that selling Spirit Mountain would be prohibitively difficult and impractical. The task force exhaustively studied selling and found that, because of covenants and federal dollars involved with its creation nearly 50 years ago, “A sale of the entire recreation authority is just not in the cards,” as City Councilor Arik Forsman, a co-chair of the Spirit Mountain Task Force, said in an interview, held virtually, with News Tribune Editorial Board members in March. “It is so tied up in how the legislation that enabled it was written that it’s just not achievable. The way that you would get private-sector investment in the ski hill itself would be through a leasing model.”
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, as the News Tribune reported last week — is a potentially winning possibility. The plan details a path toward it.
Right now, though, Spirit Mountain is “a distressed asset,” as city parks director Jim Filby Williams said last week. “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."
That’s where the $24 million investment proposal comes in, to update alpine ski and snowboard infrastructure, complete the Nordic ski and mountain bike trail system, add a high-ropes course to the open-in-summer Adventure Park, replace the mini-golf course, renew the coaster, and renovate the Skyline Chalet and campground.
No matter what happens with leasing to professional operators, Spirit Mountain is a proven good investment, the task force also found. Its annual economic impact on Duluth is estimated at $22.4 million. Its return is $18.72 for every $1 spent on improving and running it.
"It's 100% an asset worth investing in," as Forsman said. "There's a pathway to profitability, or at least to breaking even. … We've got some leadership stuff to fix, but with the right strategic plan and more accountability between the partners … I don't see any reason that this couldn't be a success in the next five to 10 years."
One gigantic reason, as a News Tribune editorial also pointed out when the task force report was first released, is the enormity of the needed proposed investment. Where would so much money come from? Spirit Mountain right now receives only about $1.1 million per year in tourism taxes, its share of revenues generated by hotel stays, restaurant meals, and other spending in Duluth mostly by visitors. The report recommends an "adjustment" to this annual amount: "To have the greatest impact on the future sustainability of Spirit Mountain, ensure predictability and minimize political/public negativity, the City of Duluth consistently should appropriate a dedicated and sustained amount of tourism tax proceeds commensurate both with Spirit Mountain's identified needs and the benefits it generates for residents, guests and the local economy."
The report also recommends seeking funding from the Minnesota Legislature, with “the political signs at the state” right now “all positive” for winning such funding.
Larson’s proposal last week reflected that approach. She aims to seek half the money from state bonding with city bonding and Spirit Mountain splitting the other half. It’s a bold but, the mayor argues, necessary plan.
The question remains, however, whether in the minds of email-writing, social media-posting critics or others: How much are Duluth and Minnesota taxpayers willing to provide to prop up a ski hill that was never intended to turn a profit and maybe never will so that it can continue to be a year-round economic engine for our region? The deep-dive report, backed by hundreds of hours of scrutiny and expert insights, offers a plan steeped in fact and not in emotion.