Duluth mayor proposes $24 million investment in Spirit Mountain

DULUTH – Mayor Emily Larson wants to invest $24 million into Spirit Mountain, a significant public lift for the financially struggling city-owned ski hill.

"It has felt like our entire financial strategy for this incredible regional asset has been based on Band-Aids of emergency cash infusion," Larson said at a news conference Thursday. "Spirit Mountain is caught in a continual lose-lose loop of financial calamity, facility maintenance crisis and continual operational challenges."

Larson is seeking $12 million from next year's state bonding bill and another $12 million city-issued bond. Spirit Mountain would be asked to cover half of the city's debt, and tourism taxes would cover the other half.

The investment would be the mountain's largest since the recreation area was formed in 1973. The city has spent a total of $19.8 million in tourism taxes and issued $19.3 million in bonds to support operations and infrastructure in the years since.

Larson's plan to upgrade the mountain's facilities largely follows recommendations a task force and consultant issued earlier this year to put the city-owned ski hill on better financial footing, attract more visitors and increase the mountain's economic impact for the city.

"Recommended investments include a new lift, upgrades to the beginner terrain and lighting, improvements to summer offerings and significant investment [in] the Skyline Chalet and other aging infrastructure," ski industry consultants SE Group wrote in a study of the mountain released in March. The proposed upgrades would see Spirit "achieving healthy operating margins that would allow it to weather weaker seasons, reinvest in maintenance, and service its debt toward being a self-sustaining operation."

Spirit Mountain has fallen badly behind on infrastructure improvements as its current financial arrangement typically allows it to cover operations but not put money toward capital needs. Duluth has spent an average $1.2 million annually over the past five years to subsidize the mountain through tourism tax collections — which includes an emergency bailout in December 2019 and another cash infusion last fall to reopen the mountain after a summer closure.

A profit is expected for the season that recently ended, and interim Executive Director Ann Glumac said a number of upgrades are already planned using city and mountain funds.

Larson said "modest" price increases will be expected at the mountain, and added the board of directors and the city would enter a 10-year agreement that clearly defines roles and expectations. A City Council member and a city staffer could be added to the board to provide added oversight.

Should the $24 million investment move forward, increased tourism tax support for Spirit could mean less money for other area attractions that depend on city support for operations. Jim Filby Williams, the city's director of parks, properties and libraries, said the tourism tax spending will be less "reactive" and added that Spirit Mountain is specifically identified in state law as an organization that should benefit from the tax.

Ultimately, the scope of the work will depend on the Legislature's willingness to support the project, he said.

If approved, work would begin in 2023 at the earliest and likely take several years.

On Monday the Duluth City Council will also consider forgiving $900,000 of Spirit Mountain's $1.2 million debt from a line of credit that has been maxed out for years.

Brooks Johnson • 218-491-6496