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Duluth City Council throws financial lifeline to Spirit Mountain

Funding for the subsidy will come from the city of Duluth's tourism tax reserves.

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Four snocross racers barely visible due to snowfall
Snocross snowbike racers are lost in blizzard conditions during a practice run on the course Saturday afternoon at Spirit Mountain. Officials called off events after 2:45 p.m. for lack of visibility.
Tyler Schank | Duluth News Tribune

By Peter Passi, Duluth News Tribune

Spirit Mountain appeared to be on track to have its shortest ski season ever this year, until Monday night, when the Duluth City Council intervened, providing $235,000 in aid to the financially beleaguered ski hill.

By an 8-1 vote with 5th District Councilor Jay Fosle opposing, councilors approved the subsidy. Without the support, the Spirit Mountain Executive Director Brandy Ream warned the ski hill would have had barely enough to meet its payroll later this week and would have been forced to close its doors before even reaching the historically lucrative holiday season.

She blames the shortfall on the heavy Nov. 30 snow that prompted organizers to cut short the 2019 Amsoil Duluth National Snocross races. The expensive but abbreviated pro snowmobile event left Spirit Mountain with a $235,000 loss this year, and Ream said the ski hill lacks sufficient reserves to sustain operations.

However, if Spirit Mountain can make it to the holidays, Ream expressed confidence the recreation area will be able to regain its financial footing. She believes the financial infusion the Duluth City Council approved Monday should get the operation over the hump.

Council President Noah Hobbs said: "I do support this. However, I find it slightly inappropriate to have the council have to make a decision within four days for this amount of money."

"I think that I share frustrations with some of my colleagues and certainly the public on the ask in sort of the 11th hour," he said.

Funding for the subsidy will come from the city of Duluth's tourism tax reserves.

Wayne Parson, Duluth's chief financial officer, said the city carried forward about $500,000 in undedicated tourism tax collections from 2018. Additionally, the city's tourism tax revenues were running more than $330,000 ahead of projections as of October of this year — the most recent month for which data is available.

A number of supporters urged city councilors to sustain Spirit Mountain, citing the community benefits it offers and the economic impact it provides to local businesses of all sorts.

Anna Tanski, president of Visit Duluth, said: "This request from Spirit Mountain is critical, because it comes at a critical time for our industry. We all know winter can be fickle here in our part of the country, and we are poised for what will be hopefully a banner winter recreation season."

But Tanski said Spirit Mountain is more than a seasonal draw, calling it "a critical part of tourism throughout the year." and "an economic driver for our community."

She said Spirit Mountain is not alone as an organization reliant on tourism tax, Visit Duluth included.

"We would not exist without the subsidy we receive through the tourism tax," Tanski said. "The Duluth Entertainment Convention Center would cease to exist without the support of their subsidy. And dozens of other recipients all rely on these dollars, but these dollars are generated by visitors paying to help us attract more visitors."

But others raised concerns about the continued public subsidies Spirit Mountain has required.

A local business-oriented political action committee that calls itself BizPAC issued a statement suggesting the city should consider privatizing the operation and extricating taxpayers from the mix, claiming: "Government should not be involved in operations that can be better run by private entities."

At Large Councilor Arik Forsman said he didn't consider closing Spirit Mountain an option and called it "a cornerstone of Duluth's quality of life."

But he said: "Cornerstones must sit upon a solid foundation, and this is a short-term fix."

Forsman said Spirit Mountain currently is "operating from cash flow crisis to cash flow crisis."

"We can continue to pray for good weather on holiday weekends to meet payroll, but that doesn't seem like the right type of environment for a long-term successful endeavor. We've got by that way for 45 years, but that doesn't mean that that has to continue to be our reality," he said.

Instead, Forsman suggested the city should look at all its options to make Spirit Mountain more sustainable, including a leasing arrangement or a possible sale.

"I'm not saying we should go down that road. But we should look at it to see what the available opportunities might be, because the goal that I hope this council shares is that we need Spirit Mountain here for the long term," he said.