WHEREAS, as part of the funding for the construction of the Spirit Mountain recreation area (the area), the city of Duluth applied for and accepted Land and Water Conservation Fund Act (LAWCON) funds to assist in constructing various elements of the facility, which funds are currently administered by the Minnesota state department of natural resources (DNR) on behalf of the national park service (the NPS); and

        WHEREAS, as a condition of accepting LAWCON funds for the area, the city agreed that all of the lands in the area would be used exclusively for outdoor recreational purposes consistent with LAWCON program requirements; and

        WHEREAS, pursuant to Laws, Minnesota, 1973, Chapter 327 (the act), the Minnesota State Legislature created the Spirit Mountain recreation area authority (the authority) to which it gave jurisdiction to operate the area under the terms, conditions an limitations set forth in said statute; and

        WHEREAS, the second unnumbered paragraph of Paragraph (e) of Section 5 of the act provides as follows:
                Prior to construction of any building or facility or any other use of the area by the authority or others, the city council, upon recommendation of the city planning commission and the city park and recreation board shall review and approve a master plan for the development of the area and any subsequent changes to said master plan. Further, prior to the construction of any buildings or facility or prior to any site preparation or removal of vegetation or initiation of any use within the area, the authority or any other person or firm shall obtain a permit from the city council after the city planning commission and city park and recreations board have held a public hearing and given their recommendations to the council. The planning commission, working jointly with the park and recreation board, shall adopt necessary and reasonable requirements for such review to insure that the proposed use is within the purposes of this act and shall attach appropriate condition and safeguards to insure compliance. The construction and maintenance codes of the city of Duluth shall apply to construction and maintenance of the area; and

        WHEREAS, the authority has entered into a development agreement and, with the approval of the city, a lease agreement for the leasing of land in the area to Spirit Ridge, LLC, and the development thereon of a hotel and golf course development (the project); and

        WHEREAS, on May 15, 2001, Spirit Ridge, LLC, has applied for a permit to construct the project on area lands; and

        WHEREAS, Pursuant to Minnesota Statutes Section 15.99, the city council must either approve or deny the aforesaid permit application on or before September 12, 2001 February 28, 2002, or said permit will be granted by action of said statute; and

        WHEREAS, representatives of the DNR have informed the city and the authority that construction and operation of the proposed hotel portion of the project would constitute an unauthorized "conversion" of property covered by the city's LAWCON commitments under 36 CFR59.6(f)3, which conversion cannot be approved under NPS rules and guidelines; and

        WHEREAS, a representative of the NPS has indicated that they do not see, in the existing lease between the authority and the developer, necessary provisions to insure the reasonableness of the fee structure for use of the golf course and to insure the continuing public nature of its use and that these provisions include the following:
        (a)     Lease must insure that the leased area will be operated by the lessee for public outdoor recreation purposes;
        (b)     Control must be retained by the project sponsor over charges to the public for use of facilities to assure that they are fair;
        (c)     The area must be identified as being publicly owned; and
        (d)     Provision must be made for adequate standards of maintenance; and

        WHEREAS, officials of the DNR have informed the city that the unauthorized conversion of land for the construction and operation of the project could jeopardize the availability of LAWCON funding for future city recreational projects; and

        WHEREAS, the city will not have sufficient time before September 12, 2001 to take any steps which might allow the project to be constructed in compliance with LAWCON requirements.

        WHEREAS, on the matter of the work permits requested by Hovland Spirit Ridge, LLC, to construct a golf course, hotel and residential housing at Spirit Mountain, the city council hereby denies the application based upon the findings enumerated below:
        (a)     State law requires that the application be approved provided that the application was in compliance with all required standards. These standards include federal, state and municipal laws and accompanying regulations;
        (b)     These standards include compliance with the Land and Water Conservation Act. The department of natural resources (DNR) has advised the council that the project's hotel and residential areas as defined in current master plan is inconsistent with the act;
        (c)     The department of natural resources (DNR) has also advised the council that the project's golf course as defined in current lease agreement is inconsistent with the act;
        (d)     The council authorized the lease agreement in a 1997 resolution. In that resolution, the council stated that the project's work permits would be subject to the approval of the park board, the planning board and the city council;
        (e) No limitation was placed upon the council's authority to approve or deny the project's work permit in the 1997 resolution authorizing the lease;
        (f)      The council may consider all applicable and relevant information in determining whether to approve or deny the work permit;
        (g)     This information includes, but is not limited to, the environmental assessment worksheet, accompanying city staff reports, recommendations from city boards, commissions and advisory councils and information brought forward by American Indian people about sacred sites in the area;
        (h)     The information may also include a December 1999 DNR summary of old growth forest evaluation in Spirit Mountain recreation area, Magney-Snively Forest, Duluth, Minnesota;
        (i)      The city of Duluth's environmental advisory council has reviewed the work permit application and has recommended that the permit be denied on August 6, 2001;
        (j)      The advisory council provided the basis for their recommendation the "cumulative impact of the proposed Spirit Mountain golf course and lodge have significant costs. It is impossible at this point in time to determine the extent of these effects on key natural features impacted by the proposed project." The advisory council further recommends that "the city planning commission and council deny the work permit without prejudice;"
        (k)     Minnesota state law provides that environmental documents shall be used only "as guides in issuing, amending, and denying permits. . . to avoid or minimize adverse environmental effects and to restore and enhance environmental quality." (Minn.R. 4410.0300(3));
        (l)      The council is not bound by the recommendations of these guidance documents such as the EAW and may consider other information in evaluating applicant's work permit. The council has have the authority to overrule the planning commission and deny the applicant's work permit as the applicant has not met all applicable standards allowed under state law;
        (m)     In Judge Heather Sweetland's order of October 24, 2000, p. 10 (case C4-00-600310), the court found that the lease placed "responsibility upon Spirit Ridge to obtain all required permits, before going forward with the project. The lease also provides for Spirit Ridge to minimize environmental impact. Only after Spirit Ridge has satisfied these contingencies can the city of Duluth give final approval of the project";
        (n)     With respect to the Land and Water Conservation Act, it is the council's finding that the applicant has failed to meet the standards sufficient to satisfy these contingencies. The council therefore cannot give final approval of the project at this time.
        Based upon these findings, the council hereby denies the Hovland Spirit Ridge, LLC work permit application.

        RESOLVED, that the application of Spirit Ridge, LLC, for a permit to construct the project on area lands is hereby denied for reasons stated abovebecause to grant said permit would violate the city's commitments to the NPS under the LAWCON program.

        Editor's Note:  Resolution 01-0676 was vetoed by Mayor Doty on 12/28/2001.

STATEMENT OF PURPOSE:  This resolution denies Spirit Ridge L.L.C.'s application for a work permit to construct the Spirit Ridge hotel and golf course project on the Spirit Mountain Recreation Area and to set forth the reasons for the denial.