News & Articles

Ever since The Reader exposed the city administration’s desire to build a new library across the street from the casino, public conversation about the library seems to have ground to a halt. It’s as if citizens, having decided that a new library is unnecessary, have concluded that nothing needs to be done with the current library. This is a mistake. The library’s major support systems—ventilation, air conditioning and electrical—are old and need to be replaced. The price tag for such a project, according to the last available report, is $10 million; let’s say $15 million to avoid surprises. So how will we pay for it?
Undoubtedly, through bonding. Bonding is the city’s usual strategy for funding big expenditures, and citizens never seem to mind too much. The downside is that bonding adds debt and interest payments to the city’s balance sheet, which takes money away from other priorities for years into the future. This is something that citizens do mind, when they want something that the city can’t afford to give them. But, given that the city doesn’t have an extra $15 million lying around, bonding will probably be necessary for the library.
Ideally, of course, we would have planned ahead. If the city had established a capital repair fund when the library was built 35 years ago, and made regular deposits into the fund every year, today we could snap our fingers and the repairs would be done. Unfortunately, the city hardly ever sets aside money for capital maintenance ahead of time. But we can start, even this late in the game.
My suggestion is that we establish a capital repair account, then cross our fingers that the library can limp along in its current state for another two years. If we contribute $500,000 per year to the account, we’ll have a million dollars in two years. We can then bond for the repairs and use the money in the account to make the initial bond payments, even as we continue to contribute to the account. For this example, let us assume that the bond payment is the same as the annual contribution to the account—$500,000. If the money going in and the money flowing out of the account each year are equal, the balance of the account will remain steady at $1 million. This will give us several advantages.  
For one thing, if the money in the account is invested in low-risk ways, it will grow modestly; a 2 percent return on $1 million would earn $20,000 a year. More importantly, having the account in place will give the library a $1 million emergency cushion that it doesn’t currently have. Best of all, when the bonds are fully paid off, the annual contributions to the account will continue and the balance will grow rapidly. This will make things much easier on the city the next time the library needs to make capital repairs.
The difficult part of this scenario, of course, is finding the $500,000 each year to fund the account. But we’re going to have to find that money anyway, when we do bond for the repairs. Why not start now? Let’s consider our options.

Option 1: Raise property taxes
This is how the city usually pays off bonds. In 2015, the amount raised by property taxes was $22.5 million; of that, $6.6 million was used to pay off bonds. To fund the proposed library account, the levy would have to be increased by about 2.2 percent. Of course, property tax increases are almost always politically unpopular; passing such an increase might be a hard sell for city councilors.

Option 2: Use money from the CIT
The Community Investment Trust Fund was originally set up to collect the city’s payments from the casino; at one time, the CIT at contained $80 million. Since the casino stopped paying the city in 2010, however, the CIT has dropped precipitously. The Ness administration used it to pay for two years’ of street repairs up front, and continues to use it to pay off old street debt. Currently, the CIT stands at less than $19 million, and this money is in jeopardy. The city was counting on winning its ongoing litigation with the casino and using the $12 million award to pay off street debt. This possibility is looking more and more remote, as repeated court rulings have gone against the city. If the city ultimately loses in court, the $12 million will probably have to come from the CIT, leaving a balance of only $6- or $7 million. It is possible that the library could get $500,000 from the CIT for a few years, but it wouldn’t be a permanent solution.

Option 3: Use tourism taxes to free up money in the general fund
The third, and best, option would be to use tourism taxes. It would also be the most difficult option to implement. Duluth’s tourism leaders are very protective of the tourism tax, having decided at their cocktail parties that shoveling it into giant money-losing projects like the aquarium and Spirit Mountain is the best way to go. It you want to see indignant bigwigs swarming into City Hall with their briefcases, just suggest doing something with the tourism tax that hasn’t received the official tourism mogul stamp of approval.  Overcoming this resistance would take some doing. But it wouldn’t be impossible.
The main objection we would hear is that the library is not tourism-related. The tourism tax is only supposed to be spent on tourism-related projects. Therefore, I suggest that the city form a special committee to analyze all aspects of city operations and determine every last thing that is related to tourism that the city spends money on. Currently, the city does get some tourism tax for tourism-related expenses, such as staffing and security at special events, clearing snow from certain walkways, mowing certain lawns and the like. In 2015, the city got $827,900 for such services, or about 8 percent of tourism taxes collected. This is a good start. But the true cost of tourism is much higher.
We can start by looking at the countless staff hours that go into building tourism projects in Duluth—the planning hours, engineering hours, legal hours, clerical hours, lobbying hours, the press conferences, the committee meetings, the mayoral ribbon-cutting itself—all of which the general fund pays for.  Next, we’ll look at consultants—most big projects need a consultant, and sometimes they need two or three before the city gets the recommendation it wants, which the city happily pays for. Next, we’ll look at how much it takes to keep Enger Park, Bayfront Park, Leif Erikson Park, the Park Point beach house, and Skyline Parkway neat and operational. After that, we can move on to the other parks. When we have identified all of the many ways that the city assists the tourism industry, we can calculate a total dollar value for these services and reimburse ourselves by taking the money from the tourism tax fund. This will free up money in the general fund, which we can then apply to the library.
This is more than a good plan. It’s a GREAT plan. And one of the most important side benefits of this plan is that it will prevent the tourism industry from using the library money to build another giant money-losing project. We have enough of those. We don’t need a Human Slingshot, or a big ramp that lets us jump our cars from Park Point to Wisconsin. We don’t need roller coasters running down Lake Avenue or water slides winding around the Point of Rocks. We don’t need a self-contained artisanal microbrewery bobbing in a glass bubble in the harbor. All of these ideas are cool, yes—way cool. But we don’t need them. And with this plan, we won’t get them.
The city has proven its commitment to tourism for many years; now the tourism industry can prove its commitment to the city. The library is an excellent place to start.

Park maintenance

I am not the only person concerned about the city’s maintenance problems. On September 9, 2015, the Parks Commission passed a resolution calling on the city to “significantly enhance maintenance of…public gardens, parks, parks buildings and structures, recreation areas, recreation facilities and trails.” The resolution requests that the city conduct a comprehensive inventory of all deferred parks maintenance and establish budgets and timetables to make the necessary repairs—all of which sounds great, but when one looks at the magnitude of the problem, solving it any time soon seems next to impossible.
On September 11, I accompanied several members of the Parks Commission on a tour of city park buildings, led by facilities manager Erik Birkeland and facilities operation supervisor Joe Miller. Dale Sellner, the city’s building and grounds supervisor, served as chauffeur. As everybody took their seats in the van, Sellner held up a piece of molding that had fallen off the door. “This is an example of some of our capital issues that we have to deal with,” he quipped.
The Morgan Park Community Center, our first stop, appeared to be in fairly good shape. “Structurally, it’s a good building,” Miller said, but went on to say that it needed a new roof, new windows, new doors, new fascia and other repairs, which he estimated would cost $300,000. “If we had the money to take care of it, right now would be a really good time to spend it. I’m going to say we’re four or five years out from having some real problems if we don’t stick some money into this pretty soon.”
Unfortunately, there are so many worse problems in the city that Miller does not expect they will be able to spend money on the Morgan Park Community Center until emergencies develop. “From our perspective, [compared to] a lot of our buildings, this one really doesn’t need that much….Our problem is we get so reactive instead of proactive, because we’re under budget, we’re understaffed, and all of our buildings are at an age where…we’re constantly scrambling, constantly changing direction, trying to handle all these emergencies, that after a while you have no time to look at preventative maintenance….We’re just so far behind the curve, it’s frustrating….You look at a building and you know what we should be doing. But we know we don’t have the money. We know we’re not going to do that. And we know we’ll be back when that thing is leaking through the roof, and patching, because that’s what we do.”
As might be expected, a job that consists of endlessly reacting to emergencies takes a toll on morale. “It’s hard to come to work every day and get beat up that way all day,” said Miller.
Because the city has no money to staff its community centers, some of them are being staffed by volunteer groups. At least half of the centers we visited could have been mistaken for hockey clubs. Others have been totally abandoned. Many have suffered from vandalism and never been repaired. The clubhouse at Hillside Sport Court Park has peeling paint on the walls, broken furniture piled in the corners, and the musty stench of desolation in the air. “This is one that we need to demo,” Miller said disgustedly. “This building needs to go away.”
The Lincoln Park Pavilion had its roof burned by arson a few months ago, and is permanently locked. A rectangle of cement on the exterior of the pavilion marks the location where a plaque of Samuel Snively once hung. Snively, who was mayor of Duluth from 1921 to 1937, was a huge booster of parks and public spaces. It is thanks to Snively’s efforts that many of Duluth’s parks (and Skyline Parkway) exist today. Snively’s projects often provided employment for out-of-work laborers during the Great Depression. The Lincoln Park Pavilion was one such project; it was completed in 1934. The vague outline of Snively’s face that remains visible in the cracked cement today is perhaps emblematic of the changes that have been wrought by the decades.
In Mayor Ness’s proposed 2016 budget, he has included an additional $500,000 for parks maintenance. This is certainly better than nothing, and it helps people feel more optimistic about our parks, but it will scarcely make a dent in what is needed. And it’s not only parks that are suffering from lack of maintenance. It’s the whole city.