Housing, utilities top Duluth spending list for $58 million in federal virus relief

DULUTH – Affordable housing and infrastructure investments top Duluth Mayor Emily Larson's list for spending the $58.1 million the city is receiving through the federal American Rescue Plan.

"We have done the work, we know the pulse of this community, we know the city and we know the need," Larson said at a news conference Tuesday, saying the plan is "inclusive, resilient and equitable."

Faced with glaring budget deficits last year as the pandemic tanked city revenue, Duluth now has a chance to make massive one-time investments to help recover from the COVID-19 pandemic and take on other city priorities.

Among Larson's biggest proposed spending initiatives:

• $20.6 million for affordable housing, which includes subsidies to develop more units and money for new approaches to address homelessness.

• $13.8 million for utility infrastructure, including new water meters, lead pipe replacement and broadband.

• $12 million for Duluth City Hall ventilation, which does not currently meet state guidelines for air quality.

• $5 million to offset lost city revenue.

The Duluth City Council will take a first look at the mayor's recommendations on Thursday evening. The mayor's proposals could change in scope as council members fine-tune the details, but Larson said her outline will likely line up with City Council priorities.

"We want to hear from the City Council: Are we on the right track?" she said. "Fifty-eight million dollars sounds like a lot, and it is, and it's not nearly enough."

Duluth received the third-largest share of relief funds among Minnesota cities, after Minneapolis and St. Paul, and will have more to spend than Rochester, St. Cloud, Bloomington and Mankato combined, according to a National League of Cities (NLC) database.

The American Rescue Plan looked at "several objective measures of community needs, including the extent of poverty, population, housing overcrowding and age of housing" when determining how much cities received, according to the NLC. Duluth's poverty rate is about 17%, nearly twice the rate of the state as a whole, according to census figures.

Other recommendations include $2.2 million for small business assistance and $2 million for outdoor space improvements in neighborhoods disproportionately impacted by the pandemic.

The city will also launch a three-year, $1.5 million pilot program to respond to mental and behavioral health needs with more social workers. The details of that initiative are still being worked out, but Larson said if residents see a benefit in the program "then we can talk about how to continue that."

An additional $300,000 will be spent on community violence and crisis intervention training, and $550,000 is slated for job training and workforce services.

City staff submitted 150 different ideas totaling $280 million in requests. Some of the proposals did not meet guidelines for spending the money, which either needs to be tied to a direct effect of the pandemic or be explicitly allowed in the American Rescue Plan Act. Those uses include infrastructure, housing and shoring up lost city revenue (though not reserve funds).

The city has received the first half of the money, and the second half will arrive next May. The money needs to be spent by the end of 2026. More details of the mayor's proposal for the City Council can be found at bit.ly/ARPAdlh.

Brooks Johnson • 218-491-6496