Ely businesses make the case for economic relief

ELY—Since the closure of the Boundary Waters in response to several active forest fires, businesses in northern Minnesota that rely on revenue from tourism have taken a major economic hit. As the Boundary Waters remains closed, what began as uncertainty for business owners is starting to look like a disaster.
In the midst of this growing economic crisis, leaders from across the state, including state Sen. Grant Hauschild and state Rep. Roger Skraba, met with a room full of concerned Elyites to discuss the economic issues now facing the area. The group discussed potential legislative relief for the area and attempted to correct the “doom and gloom” message potential tourists are hearing about the area.
Heidi Omerza, the mayor of Ely, began the meeting with a now-common refrain: “Ely is open for business.” Omerza encouraged people to shop local and support businesses affected by the closure.
“Christmas in July,” Omerza said. “I’ve started to do all my Christmas shopping.”
Tanner Spicer, the head of the Ely Chamber of Commerce, offered more context about the economic situation.
“This is an unprecedented event in history,” Spicer said. “It’s only the third time in history the Boundary Waters have been completely closed, and it’s the longest they’ve been closed.”
“The driving force of our economy here is tourism, and pretty much just tourism,” Spicer said.
This makes the economy very fragile, and, as we’ve now seen, one event can shut it down, Spicer added.
Jason Zabokrtsky, the owner of Ely Outfitting Company, highlighted his company’s current struggles.
“If the BWCA is closed, we make no revenue, and that has been our situation going on two weeks,” Zabokrtsky said. Zabokrtsky said he will be waiving around $60,000 in cancellation fees but said the actual financial loss from canceled groups will be much greater.
“We have 17 employees and only work for two,” Zabokrtsky said. That work is mostly processing cancellations and communicating with clients about closures. His contracted guides have also been left without work. He noted that this is the earliest in the season the entire Boundary Waters has been closed and it’s already the longest closure on record. It’s also come at peak season, a time when outfitters tend to generate most of their revenue.
Zabokrtsky said there is no insurance that covers businesses affected this way. To weather the business’s financial problems, he has begun moving money from his personal savings into the company as a loan, reactivated a line of credit, and cut hours for employees, which may put some on unemployment insurance.
“We’re hoping this will create goodwill with clients. However, the financial reality of this is harsh for us,” Zabokrtsky said.
Currently, Zabokrtsky has canceled 128 groups, composed of more than 500 people. “That’s 500 people who will not be spending their money with us or any other Ely businesses.”
There are 22 outfitters in the area, so Zabokrtsky’s misery is widely shared.
Jess Edberg, the executive director of the Dorothy Molter Museum, echoed many of the same points. Sixty percent of the museum’s business happens in July and August, and during the closure it has seen a 40-percent drop in admissions.
Edberg explained that tariffs and increased packaging costs were already putting pressure on the museum, which makes a significant portion of its revenue selling root beer.
The root beer has also seen a 30-percent decrease in sales, which has been partially offset by a social media campaign encouraging people to buy local.
“Many businesses were just hitting their stride after COVID-19 and a winter with no snow,” Edberg said.
Hauschild told the crowd that he and Skraba will be advocating for economic relief in St. Paul as soon as the Legislature is back in session. Gov. Tim Walz, at a press event July 27, said a special session to discuss wildfire relief may happen earlier than that.
Hauschild said northern Minnesota benefits from being represented by both sides of the aisle.
“We can go to our caucuses, go to our groups, and say, ‘This is what’s important. This is what’s happening,’” Hauschild said.
“We need the governor, we need other legislators to hear the story as well so we can secure the economic aid we need for the region,” Hauschild said.
Skraba highlighted some of the tensions emerging among northern Minnesotans as he addressed the crowd, pointing to the difficult decision of whether to reopen the Boundary Waters while weighing the risk of the fires against the economic harm of the closure.
“There is an inherent risk to going into the wilderness, and where we are now, the people who are in charge are doing the best they can with the information they have to determine where we should be as far as letting people back in,” Skraba said.
“In this room, there’s a body that says we need these businesses open, we need to survive,” Skraba said, adding that he finds himself in the middle of this tension.
Skraba also discussed the newfound precarity of Ely’s tourism economy and said the region may need a better balance between timber, taconite, and tourism.
“It’s so important to have these three in our area. When one is down, the other two hold it up,” Skraba said. “They all need to be nurtured and worked on,” he added.
Skraba also drew attention to the widespread impact of the tourism downturn.
“This isn’t just Ely,” he said. “When I think about ‘poor me,’ there are a lot more ‘poor me’s than me.”
After remarks from lawmakers and business leaders, a host of local leaders from government, nonprofits, and other organizations fielded questions. The group included:
• Megan Wind, a representative of Ely Community Response
• Emily Roose, a member of Ely’s city council
• Chaz Johnson, a field representative for U.S. Rep. Pete Stauber
• Molly Solberg, Northland Small Business Development Center
• Tony Sertich, president and CEO of the Northland Foundation
• Katy Lofquist, United Way of Northeastern Minnesota
• Rachel Loeffler-Kemp, regional outreach director with Sen. Amy Klobuchar’s office
• Ida Rukavina, commissioner of Iron Range Resources & Rehabilitation
• Nicole Waddle, Explore Minnesota
J• oe Baltich, District 1 Lake County commissioner
One attendee asked about implementing a direct grant program to help struggling businesses. The proposal was met with support from the audience and consideration from lawmakers, who said they will pursue aid proposals once the Legislature reconvenes or a special session is called.
Another attendee framed the hardships in the context of the U.S. military budget, echoing a common populist refrain questioning why so much money is sent overseas while people in the United States struggle.
Jim Zupancich, who manages Zup’s grocery stores around the region, said his sales in Ely were down 40 to 45 percent. He suggested tax credits for affected businesses. He also proposed reopening the Boundary Waters without the permit system to encourage more tourism in the area.
Joe Weise, who owns the Laundry Room in Ely, tried to lessen the tension between U.S. Forest Service officials and area business owners, saying that everyone is almost always doing their best.
“We still have to live with each other for the next several decades,” he said.