A proposal for maintaining and operating updated public spaces in downtown Rochester won’t blow the current budget.
“We could cover it for a while out of existing procedures,” Deputy City Administrator Aaron Parrish said.
The proposal would tap a portion of the current $6.9 million in the city’s fund for maintaining downtown infrastructure.
The fund would cover the approximately $1.5 million in estimated expenses related to the Heart of the City and Discovery Walk projects between 2023 and 2025 as the two Destination Medical Center projects begin attracting new uses.
Additionally, Josh Johnsen, the city’s interim community development director, said it will give the city time to determine the actual costs related to operating snow-melt infrastructure at both sites. Water and electricity costs for the two projects are currently estimated to be 45 percent of the annual budget for maintenance and operations.
Rochester City Council members, however, voiced concern about the potential long-term expenses.
“I believe we need to pull back,” said council member Kelly Rae Kirkpatrick, who represents a portion of the DMC district.
Council member Mark Bransford, who also represents a portion of the district, agreed that the pace of work might need to slow to make sure operating costs are under control.
“I don’t think we should put this on the back of our taxpayers,” he said.
Potential funding options proposed for long-term expenses wouldn’t necessarily add costs for most taxpayers.
While the potential for adding to the city’s property tax levy or using sales tax funds was discussed, Johnsen pointed to a pair of options that would use neither.
One would expand on the existing Special Service District that assesses a fee to downtown businesses for maintenance and programming efforts.
The other option would create a local-improvement district to assess downtown property owners to help cover the added expense.
Neither option is in the works, but council members voiced support for finding a way to ensure businesses that benefit from the enhanced public spaces help support the added costs.
“I don’t want to see this hoisted into the general (property tax) levy,” council member Patrick Keane said, adding that Mayo Clinic, along with hospitality businesses, would likely benefit most from the improvements.
Council member Nick Campion agreed that efforts should be made to ensure the added costs are covered by revenue generated through the efforts to attract more people and businesses, but he also cited merit in tying a portion of the expense to the citywide property tax.
“When you put something on the property tax levy and something changes, everyone notices,” he said, adding that it’s too easy for special funds to be overlooked in the overall budget process.
Additionally, he noted daily maintenance of the two areas has always been part of the city’s general expense.
City Council President Brooke Carlson said she sees potential in the proposals and appreciated the plan would provide time for downtown businesses to recover from financial stress related to the COVID-19 pandemic.
“We are trying to delay the increased costs,” said Carlson, whose city role gives her a seat on the state’s DMC Corp. board.
Mayor Kim Norton, who also sits on the state board, said the discussion of options is important to highlight that future expenses continue to be part of ongoing DMC planning efforts.
Parrish said council discussions will continue before final decisions are made, and he noted each DMC project could have a different potential source, or combination of sources, for funding ongoing operations and maintenance.
“Every one of these is a little different,” he said.