Layoffs hit Duluth convention center, despite emergency city credit line

Days after securing a surprise $1 million dollar emergency taxpayer-guaranteed line of credit from the city, the urgency behind the bailout of the Duluth Entertainment Convention Center has become even more apparent. The city-owned facility announced the need for extensive layoffs from a staff of 50 full-time and roughly 400 part-time employees in an urgent effort to cut expenses.

The abrupt cutbacks unveiled at the latest DECC board meeting carried in the Duluth Monitor led to a tense back and forth with board members.

“We need to move now,” [Executive Director Dan] Hartman said. “Some of the immediate actions that will be happening very soon is we need to find a way to do a million-dollar reduction in payroll. There’ll be some immediate things we can do here in the very near future, and then there’s going to be other ones that are more complicated.”

“When you say ‘we,’ are you expecting…does the board do that?” Board Member Pat Mullen asked. “Are you doing that? Who’s ‘we’ when you talk about ‘we’ need to reduce…”

“I guess it would be ‘I,’ said Director Hartman.

The convention and entertainment venue will receive $120,00 from the Duluth tourism tax in 2023, but that amount will jump to $4.5 million for debt service in 2024. The facility also scored $200,000 in leftover pandemic funds this year. In an email to staff, Hartman elaborated on the grim cash flow shortfall facing the facility.

Due to several factors … the current business model of the DECC is no longer working. Changes are being made in the areas of staff and expenses. There will be a decrease in both full-time and part-time staff hours to bridge this gap. We are analyzing our staffing models and making difficult decisions. You will hear that this equates roughly to a million-dollar reduction in payroll. This is a big, scary number; however, it represents a limited number of employees … Layoffs are what I’ve been trying to avoid by creating more events and increasing attendance at existing events. I’m sorry that it wasn’t enough …

I know this is where I’m supposed to say something positive, but the next couple of weeks will be hard. We’re going into a different chapter. However, the DECC will be a more sustainable operation in the future because of these changes.

It’s not going to get any easier, given the aging facility’s persistent maintenance and replacement costs broken down on WDIO.

Dan Hartman, the DECC Executive Director said the reason for the DECC employee layoffs are due to maintenance costs of the building. The costs to keep the building running are overwhelming, which prompted employee resignations and layoffs.

Dan Hartman said within the last two years that several repair projects have taken place.

“I’ve only been here two years. I can’t believe the number of things that we’ve had to replace,” Hartman said. “The bigger surprise for us this year was the facility cost. We had a light computer process that we had to fix. Well, that was 15 grand and it’s just part of an aging facility and that’s why I’m going for a bonding bill now.”

Hartman has pledged to provide monthly financial updates in response to criticism over the lack of transparency of the public facility’s books. Until then, it’s difficult to gauge how deep cutbacks and layoffs will need to go.

The Monitor has been unable to determine the total amount that the DECC spends on payroll each year, which would provide greater context for the impact of a $1 million cut. The best information we have comes from the July financial statements (the most recent ones available), which indicate that the DECC had spent $3,409,458 on full-time, part-time, and overtime pay through July of 2023.