Duluth mayor proposes $24 million investment in Spirit Mountain

A chalet at the bottom of a hill
The Grand Avenue Chalet is visible from just below the main chalet at Spirit Mountain as skiers and snowboarders make their way up and down one of the destination's hills in January at Spirit Mountain in Duluth, Minn.
Derek Montgomery for MPR News file

Duluth Mayor Emily Larson is recommending a $24 million investment into Spirit Mountain— in addition to forgiving nearly $1 million in debt— to help put the struggling city-owned ski area on more sustainable financial footing.

The announcement closely mirrors a report issued by a city task force two months ago, which Larson created to give guidance on how to proceed with the increasingly thorny issue of Spirit Mountain. It’s a major tourist draw and recreational asset for locals, but has required substantial subsidies in recent years to stay afloat.

“I really don’t want to do anymore Band-Aids, it is time for a good fix,” Larson said in laying out her plan for the 47-year old facility. Her recommendations include:

  • Renewing skiing infrastructure

  • Completing cross-country skiing and mountain bike trail systems

  • Adding a high ropes course to the summer adventure park

  • Renewing the deteriorating Skyline Chalet and campground at the top of the hill

City officials and Spirit Mountain staff believe that those investments, in addition to other operational improvements, could lure an additional 50,000 visitors annually to Spirit Mountain. One of the key findings of the task force report was that the facility underperforms compared to similar ski areas around the country.

To cover the cost of the capital investment, the city plans to ask the state Legislature for $12 million in state bonding funds. The city proposes covering $6 million with revenue from it’s tourism tax, which is applied to hotel rooms and bar and restaurant tabs. Spirit Mountain would cover the remaining $6 million.

Jim Filby Williams, who directs parks, properties and libraries for the city of Duluth, concedes that would increase the amount of tourism tax payments Spirit Mountain receives, at least in the short term.

Over the past several years, the ski area has relied on more than $1 million annually in revenue from the city’s tourism tax to pay its bills. It’s needed that funding to cover operating costs and pay down debt on past investments, including a second chalet at the bottom of the hill.

But city officials expect those capital investments to increase revenue earned at the ski area to the point that Spirit Mountain won’t require annual operating support. Filby Williams said the city’s support would shift “from reactive keep-the-lights-on operational subsidies to strategic capital infrastructure renewal.”

Over the years, some in Duluth have suggested that the city should get out of the skiing business and sell Spirit Mountain. Larson said federal land covenants that exist from the time the ski area was created make a sale impossible.

"This is not just a piece of land we can put up for sale,” she said. “We cannot get out of this, so we are going to get into it."

Larson says she does eventually want to solicit bids from ski area operators across the country to lease and manage the city-owned facility.

But before that could happen, she’s recommending that the city forgive $900,000 in debt that Spirit Mountain owes the city — part of a $1.2 million maxed-out line of credit.

“No reasonable operator would demonstrate even a passing interest to take on the financial debt for an asset they don’t own,” she said.

The Duluth City Council plans to take up a resolution on the debt forgiveness next Monday.

“I recognize it's a massive lift,” said Spirit Mountain board chair Aaron Stolp. “But what a great opportunity for all for all of us to take that next step in the right direction for Spirit Mountain.”

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