Starting to Stabilize (1985–1995)

While its industry and population exodus continued, Duluth didn’t stand idly by. In 1986 more than two hundred jobs arrived when the New Page Paper Mill opened in the West Duluth. The previous year Duluth again had invested in efforts to revitalize its downtown, spending $7.5 million to repave ten blocks along Superior and First Streets with bricks. As the bricks went down, the city began discussions to bring a new form of entertainment to downtown, working with the Fond du Lac Band of Lake Superior Chippewa to create a gaming casino in the empty 1929 Sears Building. After extensive lobbying, the federal government authorized an off-reservation facility, a novel idea at the time. When the Fond du Lac Casino opened in 1986, the operating agreement called for dividing its net profits, giving the band 25.5 percent and the city 24.5 percent. The remaining 50 percent went to a gambling commission, which then split the money between the two parties. Initially offering little more than bingo, the casino struggled.

In the meantime, Fedo and others—including Jeno Paulucci and state senator Sam Solon—convinced a state commission to bring a convention center to Duluth, resulting in a $17.2 million expansion that turned the Duluth Arena Auditorium into the Duluth Entertainment and Convention Center (DECC), completed in 1990. (Its latest addition, the 2010 Amzoil Arena, is home to the University of Minnesota Duluth’s national champion men’s and women’s hockey teams.)

Fedo’s work on the DECC landed him in legal trouble. In March 1988 he confronted a grand jury indictment listing twenty-three counts including theft, falsifying expense records, and attempting to obstruct the state auditor. The mayor potentially faced fifteen years in prison. The theft charge involved $13,500 that Fedo had solicited from three Duluth businessmen—Jeno Paulucci, Bill Meierhoff, and Wing Ying Huie—to use in his lobbying efforts. During his 1987 re-election campaign Fedo admitted he had passed the funds to an unnamed Twin Cities businessman in exchange for information about competing proposals; Duluthians voted to retain him.

Fedo told local reporters the indictment was “a political ploy . . . motivated by multimillionaire Jeno Paulucci and [Fedo’s] other political adversaries.” Prosecutors argued Fedo “played a limited role in lobbying for a convention center he later claimed to have won almost single-handedly.” They also presented evidence that, they charged, demonstrated how Fedo falsified his travel records after dining on the city’s dime with Lory Cossi, secretary to governor Rudy Perpich. After the election, Fedo divorced his wife, Catherine, married Cossi, and was acquitted on all charges.

Fedo left office in the 1992 after losing to Democrat Gary Doty. The November 1991 mayoral race was overshadowed by the so-called Halloween Blizzard. Snow began falling on the evening of Thursday, October 31, and didn’t stop until Monday, November 3—the day before the election—blanketing the Zenith City in nearly thirty-seven inches of snow. Some believed Doty would have won by a wider margin if not for alleged shenanigans by Fedo, who was accused of sending plows to neighborhoods who supported him earlier than they were sent to Doty-friendly districts, keeping Doty supporters away from voting booths.

Doty had grown up just west of downtown and worked in education after graduating UMD. He and his brother Ralph, longtime editor of the weekly Duluth Budgeteer, both served in the state legislature in the 1970s. Gary Doty then became a St. Louis County commissioner before deciding to run for mayor after learning Duluth’s population had dropped 7.9 percent since 1980, down to 85,493. During the 1991 campaign the city’s budget reserve dipped below $1 million and its citizens were becoming much more vocal about their deteriorating streets.

Near disaster struck the Twin Ports not long after Doty first took office. In the early hours of June 30, 1992, fourteen Burlington Northern railroad cars derailed eight miles south of downtown Superior. A tanker car erupted and spilled 30,000 gallons of liquid benzene into the Nemadji River, where it evaporated and was carried off by winds, sending a cloud of toxic gas rolling down the Nemadji and into the Duluth-Superior Harbor. At 8:30 am Park Point residents were told to leave their homes; less than three hours later, the Duluth News Tribune reported, an estimated fifty thousand people “in or near Duluth along Lake Superior’s shore had been evacuated.” The spill sent dozens to hospitals with burning eyes and lungs, but by 6 pm people in both cities were able to return to their homes.

Despite the blizzard and benzene, during Doty’s first few years as mayor the city began to stabilize. Projects that began under Boo, Beaudin, and Fedo came to completion, including the I-35 expansion with the opening of the 1480-foot-long Leif Erikson Tunnel in October 1992.

With the help of some strong lobbying by Doty, a new business came to town in 1993. Cirrus Design, aviation innovators from Baraboo, Wisconsin, moved to Duluth in 1994. A few years later Cirrus developed a parachute for its SR-20 private aircraft, thanks in part to the efforts of test pilot Scott D. Anderson, a Duluth native who also who flew F-16s for the Air National Guard. Anderson, who authored several books, died following an accident while testing the SR-20. Cirrus, now one of the city’s largest employers, reports that to date the parachute has saved over 150 lives.

Meanwhile Robert “Sonny” Peacock, chair of the Fond du Lac Band, wasn’t happy about the casino agreement, later telling the Duluth News Tribune that that band members “found ourselves on the outside, looking in on the business we had built.” Since the casino had opened, the federal government had passed the Indian Gaming Regulatory Act, which Peacock viewed as an opportunity to revise the agreement. At the band’s request, the National Indian Gaming Commission reviewed the arrangement, ruling it did not comply with the new law.

Negotiations lead to a new agreement: the band would become the casino’s sole proprietor, with full responsibility over gambling and a larger share of the profits. In exchange for utility services, Duluth would receive 19 percent of gross revenues from slot machines and video games of chance. For the next fourteen years this averaged out to $6 million a year, which was fed directly to the city’s street improvement program. At the time it felt like a win for both sides, but the agreement would later Negotiations lead to a new agreement: the band would become the casino’s sole proprietor, with full responsibility over gambling and a larger share of the profits. In exchange for utility services, Duluth would receive 19 percent of gross revenues from slot machines and video games of chance. For the next fourteen years this averaged out to $6 million a year, which was fed directly to the city’s street improvement program. At the time it felt like a win for both sides, but the agreement would later be determined unconstitutional. and lead to a legal battle between Duluth and the FdL Band. When the dust settled, Duluth lost its street maintenance funding.