What are we going into debt for? Silver Bay seeks $3 million for city-owned ventures

balck beach2
Black Beach, Silver Bay

As the legislature seeks to add more debt to the state’s books during the upcoming session, Alpha News will take a closer look at some of the $3.2 billion in bonding requests for projects around the state. 

The town of Silver Bay, located 56 miles northeast of Duluth along the Lake Superior shoreline, has a population of just under 2,000 residents, but it’s asking for nearly $3 million in state bonding money to try to bring tourists to the town, which has struggled as mining jobs have dwindled over decades.

The city and the Minnesota Department of Natural Resources co-lease nearly 32 acres of land from Northshore Mining, which they now plan to develop and operate as a city-owned recreation area.  The land is worth about $1 million and it will cost another $4.6 million in various taxpayer funds to transform it into a new revenue stream for the small town. The area on Lake Superior’s shore opened to the public for the first time last summer, and “many locals and tourists have flocked to this  unique property and feel that a campground near this location is needed” according to the city. Silver Bay surveyed 276 residents last year and 151 of them said the city should “immediately develop a municipal campground” in the area, and a bonding request was made.

The proposal for state taxpayer dollars includes $1,128,000 for the design and construction of the new Silver Bay Black Beach Campground which will have 63 campsites and $1,174,000 for the new Silver Bay Municipal Campground with 42 RV-sites and a new 3,200 square foot recreational center which will incorprate “solar panels, geothermal ground source heat pump, high efficiency LED lighting, energy efficient construction using environmentally friendly materials.” The total cost of the two projects is $4.6 million with county taxpayers picking up the rest of the tab along with the Iron Range Resources and Rehabilitation Board.  The IRRRB, which is funded by taxes on mining companies, has already provided $125,000 to begin designing project, despite the fact it hasn’t been approved for bonding. The city says it will also seek funding from other private and public sources as well.

Layers of taconite tailings make the sand gray to black hence the name Black Beach.  A city administrator told WDIO News “For the first time, the community has really seen this as a true gift for us and the potential it has to grow the community’s economic development.”  There are already about a dozen campgrounds along the north shore of Lake Superior, including in a state park in Silver Bay, and the bonding request recognizes that “the costs to develop a campground solely with City funds would be too burdensome” but the project is needed “to develop a new revenue source for the city in an effort to lower taxes for parks and recreation.”

In addition to the city campground project, Silver Bay requested an additional $675,000 in bonding money to renovate a 57,000 square foot building that houses just 50 employees and rents to six tenants including a county social service office, an area church, a pharmacy, and a thrift shop.   The city’s bonding request states “The purpose of the project is retain over 50 employees who work at the Mary MacDonald Business Center including its largest tenant, Wilderness Family Naturals.” But the company, which employs 36 of  the 50 people in the building, was recently  sold to a Dallas based investment company.

Mary MacDonald building, Silver Bay, MN

The former elementary school building was constructed in the early 60’s during a mining boom and was scheduled to be torn down in 2008, but city leaders decided to update the building instead, spending tax dollars to make it ADA compliant and more energy efficient.  They received a $100,000 grant from the Minnesota Department of Commerce at the time.  Now the building needs the entire roof removed and replaced at a cost of $850,000 and exterior siding removal for $500,000. The city states, “The renovations are imperative due to the constant water leaking into the building which is starting to cause health and safety issues, especially for the organic food company. If these repairs are not completed soon, the potential for the building to close is becoming more likely. This will result in the loss of good paying jobs and services to our community since we do not have other facilities for these businesses to move in to.”

In November, Northshore Mining in Silver Bay laid off 540 workers and has idled the Silver Bay operation through at least the first quarter of 2016, due to a declining demand for U.S. Steel.

Senator Tom Bakk, (D-Cook)

The town may win the bonding lottery this year as it’s represented by one of the most powerful men in St. Paul, Senate majority leader Tom Bakk (D-Cook), who’s been at the Capitol for over twenty years representing the Iron Range district, routinely earning 70% of the vote in a DFL-heavy part of the state.  Bakk has been pushing Republican leadership to convene a special legislative session– ahead of the regular session which starts March 7– in order to extend unemployment benefits to steel workers in places like Silver Bay.  A bipartisan working group on the matter meets today.