Council hears proposal to give Visit Duluth $695,000 discretionary tourism funds for 2026

The City of Duluth reviewed a proposed distribution of 2026 hotel, motel and food & beverage tourism taxes that would leave $695,000 in discretionary funds to be administered by Visit Duluth under a contractual agreement.

Haley Hedstrom of Visit Duluth told the council the discretionary line is not currently contracted or bonded and is "$695,000. It's titled discretionary." She said recipients who previously received funds will be notified, the application will be publicized on the city website and via a press release, and that the application form and scoring rubric will closely follow prior practice while emphasizing tourism‑focused projects.

Administration and finance staff said many line items in the proposed tourism budget are contractual or debt‑service obligations, including funds for Spirit Mountain (a state capital grant requires a city match), Harbor Plaza, and an estimated $500,000 preliminary allocation for cruise‑ship baggage facility upgrades that the port (the 'deck') would study and ultimately reimburse. City staff characterized the Spirit Mountain debt service as a multi‑year obligation and said the preliminary cruise‑ship figure is a one‑time cost subject to reimbursement and later agreement amendments.

Councilors pressed for specifics: how the Visit Duluth allocation would be distributed, whether board members who sit on Visit Duluth could apply for funds, and whether payments could be made more frequently than quarterly to help small nonprofits. Hedstrom said past recipients would be notified and that payment schedule details would be discussed with city administration; staff said the agreement intends for Visit Duluth to distribute the $695,000 and that the council historically reviewed individual allocations when the city itself handled discretionary awards.

Timeline and transparency questions were prominent: Hedstrom said Visit Duluth plans to launch the application mid‑October and aim to award by November, while staff said councilors would likely not see a subsequent item unless the city changes the distribution approach. Councilors requested an end‑of‑year report or summary from Visit Duluth showing how discretionary funds were spent for transparency.

No final allocation votes were taken during the meeting; councilors said they expected additional materials and a committee presentation on the subject at an upcoming Committee of the Whole meeting.