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Big State and Federal Taxpayer Bailouts on DECC in Duluth

The Duluth Entertainment Convention Center already stands to collect a probable $500,000 in federal pandemic aid, as well as an undetermined amount of additional federal financial help under a catch-all bailout bill for arenas nationwide.

But now the management of the heavily subsidized arena and convention center wants a big state taxpayer handout to cover its share of bond payments for the arena’s $80 million renovation a decade ago to boot.

Other tax subsidies normally used to cover the debt payments largely dried up during the arena’s Covid-related closure. So now DECC officials expect Minnesota taxpayers struggling to financially to survive the pandemic themselves to cough up $6 million, according to the Star Tribune.

In 2019, the DECC’s annual debt payment for the arena was $2.7 million. A lodging tax covered $1 million of that, and the remaining $1.7 million came from a food and beverage tax.

The DECC received $800,000 in additional lodging tax revenue that year to help cover operations. The University of Minnesota Duluth also paid the convention center an annual leasing fee of $576,565.

In 2020, the pandemic threw the debt financing plan for the Amsoil Arena into crisis.

The DECC raided a special reserve fund for the bond payments, and it won’t receive any additional tourism tax revenue — paid each February to settle for the previous year — to put toward operations at a time when the dollars are sorely needed.

It turns out coronavirus-related public funding over the past year has already played a big part in keeping the lights and heat remain on at the venue, including as a back-up morgue.

[DECC interim executive director Roger] Reinert calls the convention center “a modern-day armory,” ready to serve whatever civic needs emerge. Last week the state opened one of its three mass vaccination sites at the DECC. The facility also houses a COVID-19 saliva testing site. And county officials toured it in March as a possible morgue facility when it was unclear what the virus’ toll would be, public records show.

The revenue earned from leasing out space for those purposes has been crucial to the DECC’s financial survival, Reinert said.

At the same time, the DECC’s quandary provides a window into the practical impact of Gov. Tim Walz’s continuing clampdown as public and private businesses look to ramp up operations post-pandemic.

The space is slowly starting to bustle again as visitors arrive for sold-out hockey games and orchestra concerts, though the state limits attendance at events to 250 people.

Fully reopening remains a daunting task, Reinert said. The DECC laid off 400 employees over the course of the pandemic, and some parts of the large facility will likely require maintenance after being mostly closed for months. Already the DECC has lost some bookings for 2021 as organizers move events to states that have fewer restrictions on gatherings or a more definitive timeline for when larger events will be allowed.

The DECC has always depended on taxpayers to guarantee its existence. But the pandemic has exposed just how financially risky and shaky the operation truly is once and for all.

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