Duluth Mayor Don Ness reads from a proclamation declaring January as Trafficking Awareness Month on Wednesday, Jan. 9, 2013. Dan Kraker | MPR News 2013

Duluth Mayor Don Ness laid out an optimistic vision in his final state of the city speech Monday night.

"In the past Duluth has not had the luxury to look ahead," Ness said. "We were in survival mode."

Ness says the city is expanding its economy and investing in improved quality of life for residents.

When Ness took office over seven years ago, Duluth faced a deep budget deficit, environmental problems and what he called a "deeply ingrained" cynicism. He called the first two years of his first term — 2008 and 2009 — "profoundly awful years."

In 2008 the federal government sued Duluth for sending up to eight million gallons of untreated sewage a year into Lake Superior. The city was in the red, and shouldered an unfunded retiree health care liability projected to reach $400 million by 2015. And then a recession hit.

But he said the city was able to solve massive problems, including drastically reducing the retiree health care liability.

Ness says Duluth is closer to fulfilling its potential.

"We have proven our ability to solve massive problems. And we have now begun to use that same energy and passion for our community to grow a more prosperous city for us all," he said.

Ness announced last October he would not run for a third term. City council members Howie Hanson and Emily Larson are running for the position. Yvonne Prettner Solon, a former lieutenant governor and Duluth city council member, has said she's mulling a run.

Ness has not endorsed a candidate. But after City Council President Larson introduced him, he quipped, "I have to comment about how comfortable she looks up here."