Council President Ness, City Councilors, citizens and friends:

Thank you for the welcome and for the opportunity to address you this evening. Congratulations to Council President Ness, with my best wishes for the coming year. We have many challenges to face together and I am looking forward to working with you all.

One year ago almost to the day, I delivered my first state of the city address. I made several promises.

When anniversaries arrive, it’s natural to make an honest appraisal of what we’ve done and remains. We’ve made great strides in just one year and we have our citizens to thank for doing so.

First, what we’ve done. One of the first promises I made was to listen. I pledged to open my door to the people of our community. Many responded, met with me, and told me their concerns. I designated Friday as my "community day". My goal was to visit the businesses and institutions that are part of the fabric of our growing community. I rode the buses of our DTA, dined with citizens and visitors – and listened.

I believe listening fosters understanding. Once understanding and trust are gained, we can move toward solutions to the challenges facing Duluth.

I also pledged to tackle the problems of affordable housing, rental housing and homelessness in Duluth. These are vital issues, and how we address them helps define who we are. Affordable housing and quality rental properties make strong neighborhoods – and strong communities.

Regarding housing, ground was broken on the Harborview HOPE-VI project. It is the largest neighborhood improvement project in the history of Duluth. A lot of good people saw their efforts succeed, and many of our low and moderate-income citizens will get new housing.

In the area of rentals, we’ve also made good progress. The vast majority of Duluth’s landlords are good, honorable people who want to provide good places for people to live at reasonable rates. But a few are not - and these people now have our full attention. Many of our landlords are doing what needs to be done to fix properties - but some are not, so we have more work to do in 2005.

We must also address the issue of those who have no homes at all. In June, we convened a Summit on Homelessness. We listened, and learned some alarming facts, but the results of this summit were real and profound.

Tonight I am announcing the formation of a Mayor’s Community Action Committee on Homelessness, to be co-chaired by Steve O’Neil and Joyce Kramer. This committee will develop a plan of action to end homelessness in Duluth within ten years. We must provide them with the tools they need to accomplish this goal. The effort will honor the memory of The Rev. Arthur Foy, a man who provided faith, love and a listening ear to all those he touched, particularly the less fortunate.

I call upon our churches to play a leading role in this effort. I believe engaging the resources of our faith community is vital to ending homelessness in Duluth.

Some might be asking why we’re spending time on these issues when we have other pressing matters before us. In response, I ask you to consider the following figures recently released by the Damiano Center:

Of the people who use Damiano’s services, nearly three-quarters have at least a high school degree. Yet, over one-half of those people make less than $500 per month - and a frightening 37 percent make less than half that. Can you imagine the issues affecting someone making less than $250 per month? That is why such a task force is needed, and why it’s a priority. We must persevere.

Tonight I’m announcing that we will work with Second Harvest Northern Lakes Food Bank to create a special endowment fund to end hunger in Duluth. That fund will be named in honor of Mike Miner, a genuine hero who dedicated thousands of hours and many resources to the cause of feeding the Northland’s hungry. Brochures and donation boxes for the fund’s capital campaign are at the exits of this room. Please consider making a gift this evening.

In addition, in 2005 I will renew the City’s commitment to address our housing needs through support for the Duluth Housing 1000 Campaign. This broad coalition, led by the Affordable Housing Coalition and Duluth LISC, is working to generate 1,000 additional housing units by 2010.

With our support, the campaign will work to identify and secure new funding and in-kind resources to accomplish these goals so that affordable, quality housing choices are available to all Duluth households.

A year ago I pledged to overhaul the Building Safety office. I formed a task force, which did its job so well that we now have 22 recommendations for action. Many have already been turned into everyday policy, while others will become policy soon.

We’ll institute a new online payment policy that will allow credit card payments for permits and reduce the time contractors and citizens need to be away from their projects. Employees are adopting a more streamlined approach to their work, to help them better serve their customers. We’ll use the Internet to help citizens and contractors find the forms and documents they need from their desktops. These are solid accomplishments and they came from a citizen-driven effort.

We worked to make Duluth the "e-City of the North". A cooperative effort headed by Soft Center Duluth resulted in free wireless access in Canal Park, and we’ll have more to announce in 2005. Approximately 1,400 visitors and citizens got access to e-mail and local information in exchange for their e-mail addresses, which can be used for marketing purposes.

In partnership with Microsoft, our technological edge was also sharpened with the addition of the Fraudtracks system. To date, over 300 individuals and businesses have signed up to receive bulletins through the system and Twin Ports law enforcement officials now have a way to network to stop crimes such as fraud, abuse of our senior citizens and especially electronic crime, such as identity theft.

A year ago, I pledged a different look to our efforts at Spirit Mountain. Native American influence there is greater than ever, and I expect that to continue. We are examining ways to make Spirit Mountain a true four-season facility, while work continues on a new master plan. Our new Authority is diverse and reflects a knowledge base from many different fields. Spirit Mountain needs to be self-sustaining and I have high hopes that the right steps will be taken to get it there.

I also pledged to review the pollution of Miller Creek in the Miller Hill Mall area. The Simon Corporation did the right thing this past year when they began to install retaining ponds into the area near Miller Creek. This will result in a dramatic reduction of future runoff into the creek and Lake Superior. I thank the Simon Corporation for its cooperation and all the citizens who have been so concerned about the health of the waterway.

Last year, I spoke of the need to make Duluth a center for eco-industry. Ralph Loomis of the College of St. Scholastica and Tim Nolan of the Minnesota Office of Environmental Assistance are spearheading our effort. Their group has received $50,000 in grants, and will start their work soon. Projects will include eco-industrial networking and attraction efforts, direct assistance to eco-industrial projects and creating a "Sustainable Industrial Development" internship through the College of St. Scholastica.

These are real achievements. We can, and should, be proud of them all.

But while we celebrate our successes, we know there’s a vital need to resolve an extremely important matter - the massive unfunded liability of our retiree healthcare system.

Everyone knows about this issue, but before I talk about it, let me come right out and say that this situation isn’t the fault of our employees. The benefit was negotiated in good faith and our employees and unions shouldn’t be blamed for using it.

The problem is serious - but we can fix it. It took more than twenty years for this problem to grow into what we currently face, but I pledge to you that I will work tirelessly to solve the problem in far less time. This is not a pledge I take lightly, and it’s not a pledge I am willing to break. There’s just too much at stake.

There are those who criticize us because the benefit is still allowed. But I want to make this clear – it would be illegal for the city to take away a benefit gained through collective bargaining. We cannot wave a magic wand and simply take it away.

On the positive side, our hiring freeze has prevented that liability from growing and our new contracts have greatly reduced the liability. I want to publicly thank the leaders of the city’s employee unions for their willingness to discuss this vitally important issue. We must work together - administrators and employees alike.

Like many cities, our finances are under strain from more than one direction. But I’m happy to report that one year along, we are doing well enough at meeting these challenges that Moody’s Investment Services of New York, one of America’s two major bond rating agencies, has raised the City’s bond rating from A1 to Aa3.

In doing this, Moody’s analyzed a number of positive factors – our growing property tax base, our growing work force and our unemployment rate that’s below both national and state averages. I feel their optimism is well placed.

To stabilize city services, we’ll look for more revenue. We’re seeing growth in sales taxes, and food and beverage tax collections. This tells me people liked the new and expanded events we held this past year. So, we’ll expand even more in 2005, as I will explain later.

If I recognize a way to save money and offer a better product, I’m going to propose it, just as I did with our public golf courses. Significant changes are on the way at Enger and Lester Park.

We’ve restructured the debt on our courses, and we’ve made changes to the management structure. We’re considering ways to put good quality housing next to both courses. Traditional golf course perimeter housing is in the luxury bracket, so significant property taxes will be generated, as will jobs in the construction industry and sales in the building supply industries.

Next year, we expect our public golf operation to be profitable for the first time ever. Stabilizing our revenue is vitally important with all the other challenges we face, and this is a first, solid step. Because of these changes, we are also able to reduce the cost of an adult season pass by nearly ten percent.

We’ve taken steps on the operational level as well. We’ve switched to AMSOIL products in our city vehicles, both to support a local company and to enjoy the benefits of their products. AMSOIL continues to receive rave reviews from city staff. I applaud the Chamber’s "Look North First" effort and I encourage everyone to look locally first for the products they buy.

We’re also using more traditional methods, most notably the significant growth coming to our tax base through projects like the SMDC expansion, the SMDC West Duluth Clinic, Lakeshore Lutheran Home, the new Duluth 10 movie theatre, three motel expansions and other projects.

Now, let’s talk about our work ahead. Our legislative priorities for 2005 are in place. First, we need to see the passage of a state bonding bill that will help Duluth fund all its physical priorities.

We need to fight to stop the slide in State funding caused by additional cuts in Local Government Aid. The City of Duluth has absorbed major cuts in aid that have not been balanced by any other means. In the interest of fairness, it’s high time the State of Minnesota looked for different ways to trim its deficit. I intend to make sure that St. Paul hears Duluth’s voice.

We need to work to stimulate additional economic development and retain our existing job base. That’s why I’m so pleased that Northwest Airlines will return over 100 high-paying jobs to Duluth during 2005. I’m happy that Northwest is doing the right thing by the City of Duluth and its taxpayers. This was a top priority, and with the help of our friend, Congressman Jim Oberstar, we succeeded. We will continue to urge Northwest to employ more people at the Duluth Maintenance Facility.

Much of our job growth isn’t seen on the front page of the paper. Small, local firms create most jobs, one job at a time. The Minnesota Department of Employment and Economic Development recently detailed our growth. From September 2003 to September 2004, Duluth’s unemployment rate dropped from 4.8 to 4.2 percent, while Twin Ports payrolls increased by 1,100 paychecks. DEED calls that "an impressive improvement." Their report was made before any new employees were called back by Northwest, and before True Ride moved here with even more new jobs.

We’re working on other projects that will help our downtown and our entire city. We’re planning Skywalk expansions to the Technology Village and with True Ride on an exciting new project. We’re also working to develop the former Universal Atlas cement plant site.

We’re also working on two major downtown projects with potential for hundreds of new jobs. Look for announcements in the coming weeks.

Our new consultant for the Comprehensive Plan will be on staff by February 1. We need to drive this process to conclusion. When we’re done, we’ll have a document that will guide us for years. Our process will encourage everyone to participate.

We are upgrading our citywide computer network, which will literally change the way we do business. Our payroll and financial systems are the first upgrades, but look for changes throughout the city over the next 18 months – including online crime reporting. It will become much easier for you to interact with us – and an increasing number of those transactions can be handled from your homes and GSM-enabled cell phones.

These are all high-priority work items, but we also need to take a good look at what we want to become. There’s still room to grow, there’s still time to plan and none of the difficulties we face should stop us from that. Here’s what I’d like to see in the Duluth of the future:

I want to see a city that hosts major events each and every week. This is part of my "52-pickup" plan I mentioned last year. We’re working on several new annual events at Bayfront Park, for weekends when hotel/motel occupancy is lower. I will not stop until we have filled the 52 slots.

I’d like to see Fourthfest get even bigger, so we’ll expand it again – this year to six days, starting with an antique car show on July 1^st. We’ll have free music on July 4^th, 5^th, and 6^th, with headliner Chuck Berry playing on Sunday, July 3.

Along the way, I will re-examine how we fund the Duluth Convention and Visitors Bureau. I will pursue a long-term contract that includes a ceiling, so some of the money will pay for costs accrued when city employees are needed for tourist-related events.

I’d like to see the lake that we all treasure protected forever. Over the last twelve months, I have taken part in the Great Lakes Initiative, and at the request of Chicago Mayor Richard Daley, I was honored to accept a seat on the advisory board. We will soon have a solid program in place to preserve the world’s largest freshwater lakes.

It’s also a big year for our Aerial Lift Bridge. This grand structure turns 100 years old this year, so we’re putting together a special task force of citizens and businesspeople to help us celebrate the centennial of Duluth’s most visible landmark.

I’d like to see Duluth’s Ethnic Festival expanded to become an even bigger part of our community. For several months, a steering committee has worked to bring all our diverse ethnic groups to the table so we can celebrate what makes us a great community. The festival will be held the first weekend in August and I hope it will continue to grow.

I believe Duluth can become much more public in the way we thank citizens who contribute to our community’s vitality. Every day I see caring, compassionate citizens who work hard to make a positive difference.

I’d like to be the first to say "thank you." Clear Channel Radio will sponsor new "Citizen of the Month" and "Citizen of the Year" awards, which we’ll present for the first time tonight.

I also want to thank two local companies who are making a difference. Cirrus Design Corporation has generously helped us repair the lighting on the Lester Park Ski Trail, and Minnesota Power has increased its contribution to the Salvation Army’s HeatShare Fund for this winter, to $20,000. On behalf of our citizens, thank you.

I close with a call to leadership. I’m pleased to announce that the City of Duluth has been selected for participation in the Blandin Community Leadership Training Program. In the coming months we will be recruiting citizens to make a commitment – to make a lifetime of difference for Duluth. Our future is in the hands of those willing to step up and create that future right now.

Representative government works best when we listen to each other. Tonight I renew my promise to listen to you, the good citizens of Duluth.

Great things happen when we listen to each other – as it did when a ten-member citizen committee took part in the hiring process for our Planning Director, Bob Bruce. They represented diverse interests but worked together to do a terrific job. I thank them for their efforts.

Together, neighborhood by neighborhood, we absolutely can move forward and overcome the adversity of our challenging times. The vision for Duluth that we all foresee is within our grasp, and we’ll be prouder than ever to call Duluth our home.

Thank you.