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SPIRIT MOUNTAIN TASK FORCE RECOMMENDATIONS MARCH 2021 0 SPIRIT MOUNTAIN TASK FORCE MEMBERS Co-Chairs: City Councilor Arik Forsman, Parks, Libraries and Authorities Chair City Councilor Janet Kennedy, Fifth District Task Force Members: Matt Baumgartner Amy Brooks Barbara Carr Michele Dressel Mark Emmel Daniel Hartman Hansi Johnson Noah Kramer Dale Lewis Sam Luoma Chris Rubesch Scott Youngdahl Aaron Stolp, Spirit Mountain Recreation Area Authority Board Chair Wayne DuPuis, an Indigenous representative with expertise in Indigenous cultural resources Ex officio members: Gretchen Ransom, Dave Wadsworth and Jane Kaiser (retired), directors at Spirit Mountain Anna Tanski, executive director of Visit Duluth Tim Miller and Bjorn Reed, representatives of the Spirit Mountain workforce selected in consultation with the AFSCME collective bargaining unit 1 CONTENTS Spirit Mountain Task Force Members ........................................................................................................................... 1 Introduction ................................................................................................................................................................... 3 Executive Summary ....................................................................................................................................................... 4 Fulfilling the Charge ....................................................................................................................................................... 5 Business Improvement Strategies ............................................................................................................................. 5 Capital Infrastructure Right-Sizing and Renewal ....................................................................................................... 7 Adjustments to Tourism Tax Support ...................................................................................................................... 12 Strategic Partnerships .............................................................................................................................................. 14 Redefining the Leadership Structure ....................................................................................................................... 20 Appendices .................................................................................................................................................................. 27 Appendix I: Spirit Mountain Task Force Charge....................................................................................................... 27 Appendix II: History of Tourism Tax Investment in Spirit Mountain ....................................................................... 29 Appendix III: Task Force Meeting Notes .................................................................................................................. 30 2 INTRODUCTION In July 2020, Mayor Emily Larson created the Spirit Mountain Task Force (SMTF), charging its 16 members to develop a set of recommendations to put the Spirit Mountain Recreation Area on a financially sustainable, long-term trajectory. Mayor Larson directed the Task Force to examine all options to achieve this financial sustainability, including: 1. Business improvement strategies addressing pricing, scope of services, marketing, days and seasons of operation, etc. 2. Capital infrastructure right-sizing and renewal 3. Adjustments to tourism tax support 4. Strategic partnerships with nonprofits, units of government, resort management firms, and/or developers for sale, lease, contract operation, and/or redevelopment of all or portions of Spirit recreational facilities and operations. Co-chaired by Councilors Janet Kennedy and Arik Forsman, the 16 members of the task force and five ex officio members met 20 times beginning in early August 2020, in addition to participating in multiple subcommittee meetings. Their combined service amounts to more than 900 hours of presentations, discussions and deliberations. Throughout the summer and fall, Task Force members grounded themselves in the very early and more recent history of Spirit Mountain and the enabling legislation that created the recreation area. Task Force members toured the recreation area to get a first-hand look at the issues and opportunities, in addition to having in-depth presentations from City of Duluth and Spirit Mountain staff. Task Force members formed subcommittees to conduct independent research, learning more about ski resorts of different types across the country through independent online research and interviews with leaders at the resorts. To make industry expertise available to the Task Force, the City of Duluth hired the SE Group, a consulting firm with worldwide experience and expertise in working with ski resorts and other outdoor projects; it’s one of five firms in the world that specialize in consulting with ski areas. Task Force members had several opportunities to learn from and ask questions of the SE Group’s team of experts throughout the latter stages of the process and also had access to their detailed report, which is appended to this Task Force report. 3 EXECUTIVE SUMMARY The Task Force weighed in on each element of the Mayor’s charge; recommendations are detailed in the body of the report. The following is a summary of the Task Force’s work: Business improvement strategies: . Engage Broadly with the Community . Strengthen the Leadership of the SMRA . Increase Revenue from Operations . Improve Overall Guest Experience . Increase the Number of Users SMRA . Increase the Variety of Users of SMRA . Enhance Programming . Pursue Other Sources of Revenue Capital Infrastructure Right-Sizing and Renewal: The Task Force reviewed three potential levels of investment identified by the SE Group and identified the strengths and limitations of each that City decision-makers should consider when weighing the investment options. Adjustments to Tourism Tax Support: Given the $22.4 million annual economic impact Spirit Mountain has on the economy and the benefits it provides residents, visitors and the hospitality industry, the Task Force recommended continued investment of tourism tax proceeds in Spirit Mountain. The Task Force also recommended that Spirit Mountain be held accountable for strategic investment of those proceeds. The Task Force recommended the City and Spirit Mountain explore options for repaying operating debt to help ensure Spirit’s long-term financial sustainability. Strategic Partnerships The Task Force assessed five potential options for the ownership/operation of Spirit Mountain: 1. Sale of the City-owned facility; 2. Cooperative ownership/operation; 3. City ownership/ operation; 4. City ownership/non-profit operation, and 5. City ownership/operation under a long-term lease. Task Force members researched options 3, 4 and 5, and identified the strengths and limitations of each. In addition the Task Force identified elements that must be a part of any ownership/operation model. Redefining the Leadership Structure at Spirit Mountain The Task Force identified opportunities for the City of Duluth, the Spirit Mountain Recreation Area Authority Board, Spirit Mountain executive director and leadership team to work together to develop and support a community vision and ensure the governance, resources and preservation of the facility support that vision. 4 FULFILLING THE CHARGE BUSINESS IMPROVEMENT STRATEGIES The business improvement strategies outlined below emerged from the SE Group’s recommendations and Task Force members’ deliberations throughout their meetings. The strategies represent operational changes that the Task Force recommends Spirit Mountain undertake to improve its operations, as well as its standing in the community at large. Strategy A: Engage Broadly with the Community . Rebuild the relationship with the community . Form strategic partnerships including with sponsors, nonprofits, etc. Engage more broadly with volunteers . Offer entertainment and other options accessible to the local community – i.e. concerts, etc. Strategy B: Strengthen the Leadership of the SMRA . Foster top-line leadership that that supports greater team collaboration, transparency, community relations and enhanced operations . Ensure greater collaboration among the City of Duluth, board, executive director and staff Strategy C: Increase Revenue from Operations . Set prices to optimize business performance . Adjust lesson prices to generate more revenue . Adjust rental prices to generate more revenue, consistent with improvement in the rental fleet . Serve higher quality, more appealing food options and adjust operations to improve margins and generate more revenue . Ensure each guest has a valid pass or ticket . Rebrand the Spirit Mountain Recreation Area . Develop and implement a strategic marketing plan Strategy D: Improve Overall Guest Experience . Create a better guest experience by improving customer service throughout . Use technology to enhance process of selling tickets . Further engage hospitality partners in selling tickets for winter and summer activities 5 Strategy E: Increase the Number of Users SMRA . Explore increasing accessibility by adjusting prices for some local users . Create a more welcoming atmosphere Strategy F: Increase the Variety of Users of SMRA . Embrace a year ‘round culture . Continue to offer and explore additional activities with low barriers to entry that could bring a broad swath of visitors
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