Iron Range agency may be in store for an overhaul

Lawmakers are proposing that the governor have the final say on spending by the state's Iron Range economic development agency, following an audit that suggested lawmakers' control of the money may be unconstitutional.

They're also on the hunt for a professional resort operator to take over Giants Ridge, the state's money-losing golf and ski resort in Biwabik while proposing enhanced retirement benefits for longtime agency employees.

Senate Majority Leader Tom Bakk, the powerful DFLer on the board of the Iron Range agency, said Friday that he's met twice with Senate lawyers to get the language right on a bill that would essentially return the agency's board to an advisory role.

The head of the Iron Range Resources and Rehabilitation Board, called the IRRRB, is appointed by the governor. But the agency's nine-member board consists of lawmakers from the heavily DFL Iron Range, and they have great authority in distributing the taconite production tax money that Iron Range mining companies pay in lieu of property taxes.

Changing the board to an advisory committee was one of several fixes the Office of the Legislative Auditor proposed in its harsh audit of the Iron Range agency last month.

The review faulted the agency for inadequate oversight and evaluation of its loans and grants, which can be as much as $80 million a year. The audit took particular aim at Giants Ridge, whose losses the IRRRB has to make up at an average $1.9 million each year.

The Star Tribune reported last year about Giants Ridge's growing losses, and the IRRRB has had an internal employee task force working on the problem. The group recently finished a report, "Reinvestment for the Future," that said Cushman & Wakefield valued Giants Ridge assets at $4.9 million but that the resort had no market value while it was losing money.

Bakk said the agency is looking for a professional resort management company to take over all of Giants Ridge, similar to how it farmed out management of the Minnesota Discovery Center (formerly Ironworld) several years ago.

A new manager should be in place one year from now, Bakk said.

Meanwhile, construction of the new $12 million chalet and event center at Giants Ridge continues. The new facility is scheduled to open in July.

In other changes, the IRRRB is laying the groundwork for early retirements.

Bakk and IRRRB board member Sen. Tom Saxhaug, DFL-Grand Rapids, have co-authored a bill authorizing the agency to offer an early-separation incentive program for employees who have worked for the state for 30 years or are at least 60 years old. The incentives would include state-paid health and dental insurance until age 65, along with certain cash incentives.

Bakk said it's similar to the early separation package offered in 2010 when the IRRRB moved the Ironworld museum to private management.

While there are no immediate plans to sell Giants Ridge or spin it off into a nonprofit, the task force study recommends moving "performance and accountability away from the agency" to an independent authority or board more distanced from the resort.

Jennifer Bjorhus • 612-673-4683