Said Hartman: "You may have heard that the DECC has a bonding request at the State Legislature. My hope is to explain why we are making the request, but also to explain the bonding process as well (it always confuses people, because it is confusing).
Governmental explanation part: Every couple of years, the State of Minnesota the state produces a bonding bill which typically spends about a billion on projects all over the State of Minnesota. This is a typical thing states do all over the country. Many of the state’s landmarks are here because of this process. In Duluth, this has covered everything from a new UMD Sports & Health building on campus to repainting the Aerial Lift Bridge. Many parts of the DECC are here today because of past bonding support for AMSOIL Arena & the City Side Convention Center. It should be noted, this money will be spent whether we get funding or not. It is really a matter of just what will be funded. This is my pitch why we should get the funding.
Why the DECC? The DECC is the primary attraction in Duluth outside of Lake Superior and other natural features. Last year alone we served over 602,000 visitors – our nine venues produced a $53.2 million in economic impact. This doesn’t mean we made $53.2 million, it means we helped bring $53.2 million of economic activity from the events we held. We are a destination attraction.
But, with that said, we have a lot of deferred maintenance across our campus of nine venues. Last year, the state was kind enough to award $5 million for some very needed parts of our operation, such as HVAC and roof repairs. We originally started this session with a $7 million request, but it looks like there will be a smaller pot of bonding dollars, so we have dropped our request down to $2 million. What is it for?
Many years back we installed steam lines throughout 8 of the 9 venues and many of the lines have Victualic rings. Unfortunately, over time, these rings have worn out and spring leaks regularly. Last summer we had to spend a surprise $20,000 for a tenant because of a water leakage in their space. But the bigger problem is when these valves were installed they did not include shut-off valves. This means that year round we are running 190-degree water through our lines even when it is hot out.
In many times of the year, we must produce air conditioning to cool down spaces that are heated by the pipes. It is crazy inefficient. One estimate has us saving almost 40% on our heating bill. So not only is this a bad use of financial resources, but also means we are wasting a significant amount energy. This is the opposite of being environmentally friendly and a good fiscal steward.
So our bonding bill is for $2 million to replace these Victaulic rings and to build shut-off valves throughout the system. This is not an exciting project, but a necessary one. Why is it needed now?
Even though the DECC has significantly increased its business from 2019, (19% overall revenue growth), its operational expenses have grown even more significantly. Since 2019, the DECC’s utility costs have increased by 32% adding $800,000+ of new annual costs. Just the electric bill alone has gone from $750,000 to $1.1 million. For the DECC to survive these significant cost increases, we will need to find ways to reduce our utility costs, while also finding more new business. If we get this bonding bill, this could help us dramatically take a chunk out of those utility costs. Believe it or not, this is my shortened attempt to explain it. But hopefully folks still find it useful to read."
