Struggling Duluth Entertainment Convention Center gets $1 million line of credit

DULUTH — With coffers running low, Duluth's tourism and entertainment hub was granted a $1 million line of credit from the city Monday.

Blaming post-pandemic increases to part-time wages and the breakdown of major equipment, Duluth Entertainment Convention Center (DECC) Executive Director Dan Hartman told the City Council that the publicly funded complex, the city's "largest driver of tourism economic activity," needed a cash infusion to get through its leanest months.

The DECC has struggled financially since it was shut down during the COVID-19 pandemic, hampered further by an ammonia leak shortly after Hartman took over in 2021, and the failure of big-ticket items, like a convention room air conditioner.

"We've had a lot of really significant stuff break over the last two years," Hartman said in a separate interview, noting there hasn't been money for major updates in more than two decades.

About 450 of the DECC's 500 employees are part time, and most went from earning $10 an hour pre-pandemic to $16 an hour — an effort to retain employees. That has strained the budget, he said.

On Monday, the City Council approved a yearlong revolving loan with a 5.25% interest rate. Most councilors expressed reservations. Councilor Noah Hobbs was troubled that they weren't notified months ago, and they complained of a scarcity of recent financial data.

"A million to sustain the DECC is easy to support — convention centers are such a lifeblood to the city," he said. "I think there are certainly some very concerning items. … It's very frustrating to be put over a barrel and having to make this decision four or five days after it's on our agenda without any dialogue prior to that."

Councilors said that they expect regular updates on finances and reductions in spending.

The DECC is operating with about $900,000 in reserves, and it tries to keep that level above $1 million, Hartman said, noting that revenue would grow after October, a busy month for events, such as the William A. Irvin's Haunted Ship tour. He said he expects to turn Amsoil Arena into a cashless facility so that volunteers can handle more transactions. Layoffs are another possibility, he said last week.

The city-owned Spirit Mountain also relied on cash infusions from the city in 2019 and 2020, which have since been repaid.

Hartman, who came to the DECC from Glensheen Mansion, has bulked up marketing and social media and said that's been profitable.

The 800,000-square-foot complex houses an auditorium, ballrooms, two arenas with ice sheets and one hall with an ice sheet. Its Amsoil Arena is the 6,600-seat home of the University of Minnesota Duluth's hockey teams. The DECC also manages Bayfront Festival Park, the adjacent Marcus Theatres cinema and the William A. Irvin.

The council on Monday approved increasing the city's proposed property tax levy by a little over 1%, adding to Mayor Emily Larson's request of 2%. Because of growth in the city's tax base, the latest addition would amount to a total 1% increase for most, or about $8 annually for the owner of a $213,000 home. Councilors wanted extra spending to go toward an increase in firefighters' pay and library materials.

The Duluth Fire Department has said it's among the lowest-paid in the state, despite being the third-busiest by call volume.

Councilors also approved the use of $3.5 million in proceeds from a building sale to Cirrus Aircraft to pay for a host of city needs, including money for homelessness programs, economic development, snow removal and parks projects.

The final levy amount will be approved in December.