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A look back at DMC's rocky ride through the Legislature

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DMC - Minnesota Governor Mark Dayton, Rochester city officials, state legislators and Mayo staff celebrated the passage of the state budget which included money to fund the Mayo Clinic Destination Medical Center project on May 22, 2013 at Mayo Clinic. The Legislature approved $585 million in public spending to help support the clinic's proposed $6 billion DMC, a 20-year plan to expand its Rochester campus to make it a global destination for health care. The clinic has pledged to invest $3.5 billion toward the project and leverage $2 billion in private investments.
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ST. PAUL — Standing on the Senate floor, Sen. David Senjem told a group of Rochester students visiting the Capitol earlier this month emphasized just how incredible it was lawmakers passed Mayo Clinic's Destination Medical Center legislation in just one session.

"It is difficult to pass a law. That is perhaps what makes DMC so amazing," Senjem said.

Indeed, the Rochester Republican said he and House chief author Rep. Kim Norton had to do plenty of work winning over legislators during the 2013 Legislative session in order to get the bill across the finish line. It also required a team of people willing to help make it a reality.

"Destination Medical Center would never have passed if it was just Rep. Norton and I as chief authors making that happen," he said. "We had to convince a lot of legislators that was a good idea."

But while the end result was a massive legislative victory for DMC backers, the path to getting the bill passed last year was anything but easy.

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In interviews conducted after the 2013 session with key players at the Capitol, a behind-the-scenes glimpse emerged of the many potential roadblocks DMC faced in getting the project done. It meant defying Capitol skeptics who said a project this big would never pass in one legislative session.

"People would tell me that almost every day," said Lisa Clarke, DMC administrator with Mayo Clinic.

But it did happen.

Laying the groundwork

A few months before the November elections, Mayo officials began meeting with local lawmakers and key state leaders to build support for the project. Faced with increased global competition, Mayo officials said they were willing to invest $3.5 billion to expand the Rochester campus and leverage an additional $2 billion in private investments over 20 years to transform the city into a global destination for health care. In exchange, Mayo wanted to be able to use a portion of the additional state tax dollars generated by the project to fund city and county infrastructure projects to support the growth.

Among those won over by Mayo's pitch was Senate Majority Leader Tom Bakk, DFL-Cook. A big factor for him was Mayo's place as the state's largest private employer and its stellar worldwide reputation. There was a fear that if the state failed to get this deal done, Mayo would decide to expand somewhere else.

"I think many of us felt that we were at some risk this could be done someplace else. I never felt that as a threat. But it's just a reality that Minnesota is an out-of-the-way place," he said.

Norton said those early discussions offered a broad overview of Mayo's idea without any specifics. It was then when she and Rep. Tina Liebling, DFL-Rochester, urged Mayo to get the city and county on board before the session started in January.

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"Both of us pushed and said you really need to have the city and county either be there for the ask or be there holding your hand," she said.

The DFL swept into power in both houses on Nov. 6, 2012 meaning Norton would be have the duties to get the largest economic development project in state history through the Minnesota House.

Meanwhile, Mayo launched a massive lobbying effort to educate lawmakers on the complicated proposal. Clarke said lobbyists met with lawmakers 1-on-1 and in groups to explain the idea and make sure they were available around-the-clock to answer questions. As the plan unfolded in the Legislature, Mayo also hosted dozens of community meetings locally and around the state to build support for the project. Mayo representatives also visited media editorial boards across the state.

The roll out

It wasn't until three weeks into the legislative session when Norton and Senjem got a copy of the bill language. Soon after came the Capitol press conference to announce Mayo's $6 billion initiative. It featured Mayo Clinic President and CEO Dr. John Noseworthy and DFL Gov. Mark Dayton with a crowd of local officials, Mayo representatives and lawmakers in the background in the ornate governor's reception room at the Capitol. But it proved to be a somewhat awkward launch, with Dayton telling the press corps he had concerns with the funding plan and then leaving abruptly for another appointment.

Soon after, it became clear there were problems with Mayo's original plan. One issue was the idea of capturing some of the additional state income, sales and business taxes generated by the project. It had never been done by the state before and faced political opposition from key lawmakers, including House Taxes Committee Chairwoman Ann Lenczewski, who feared it would set a dangerous precedent. On top of that, there were the logistical problems poised by the idea.

"Almost instantly upon reading the bill, revenue staff said, 'It's all nice, but we don't have the ability and the wherewithal in our computer system to do this,'" Senjem said.

Then there was the issue of bonding. The proposal called for the state to issue the bonds to pay for the new parking ramps, transit and land development that were part of the plan. Trouble is, that would push the state close to its bonding limit, meaning there would be little money for other projects in the state.

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"Mayo came in with a bill that was written that they loved. That's great, but the bill that they loved was unrealistic and the biggest challenge immediately was bonding," Norton said. "The state cannot afford to give up its bonding opportunity for the future — as important as this may be."

As a result, Senjem said Mayo's bill turned to "legislative mush because it was unworkable." Adding to supporters' headaches was a March 14 press conference where the governor called the DMC funding proposal "almost unfeasible." At the same time, key legislators, including Bakk, said Rochester and Olmsted County weren't contributing enough to the project. Lawmakers needed a Plan B and they needed it fast.

Crafting a Plan B

In the end, it was one of the most outspoken critics of the original DMC proposal who proved to be instrumental in coming up with Plan B. Lenczewski would play a critical role in devising an alternative funding plan that could win enough political support to pass. In fact, Liebling would later stand on the House floor and praise the the House Taxes Committee chairwoman, saying she deserved a "golden key to the city" for all of her work.

Lawmakers and local officials, who were interviewed afterward, agreed that April 3 proved to be a key turning point for the project. It was that day when Lenczewski agreed to come to a Post-Bulletin Dialogues community discussion meeting about the project in Rochester. It gave her a chance to hear from residents directly about their interest in the project and their concerns.

"It made it real. A bill comes to you and it's on paper and you have the testimony at the table, but this was real. This was our community, hundreds of people gathered, talking about what this means for our community," Norton said.

Another key moment was Dayton's decision to appoint his Chief of Staff Tina Smith to work on the project. While visiting Rochester this past week to celebrate the DMC bill's passage, the governor credited her with being vital to the bill's success.

Dayton said, "Back when the project was in the early part of session it was said to maybe be floundering, I said, 'Well, who is the best person I have on the team?'''

Meanwhile, the House and Senate tax committee leaders had begun working together, too. They sent a joint letter to the city with a long list of questions. When detailed answers came back, that's when Skoe said he knew the project could get done in one session. The bill authors, Mayo representatives, House and Senate fiscal staff and local officials worked feverishly behind-the-scenes to hammer out a new agreement.

The final deal required the city to bond for the money. The state pledged about $400 million for the project over 20 years and dramatically increased the local share. The city's commitment more than doubled, growing to $128 million. Meanwhile, the county was on the hook for roughly $40 million for transportation costs. It also stipulates that before any state dollars can be allocated, Mayo must spend $200 million on construction.

Political ups and downs

As Norton and Senjem worked to keep the bill moving through key committees, they each had to deal with their share of political skirmishes along the way. Perhaps the toughest day in the House came after Noseworthy told a Star Tribune reporter during an interview at the National Press Club in Washington, D.C., that "there are 49 states that would like us to invest in them. That's the truth." The story ran on the newspaper's front page the same day as the all-important House Taxes Committee hearing on the bill.

"Boy that made people mad," she said. "That was tough because I am going into the big tax committee for my hearing and you find out practically the moment before that Dr. Noseworthy has said something that has really angered a lot of people on the committee."

On the Senate side, a committee hearing in the Senate Judiciary Committee turned somewhat testy with members voting to pass the bill "without recommendation" — generally a sign a proposal has weak support. Bill co-author Sen. Carla Nelson, R-Rochester, also recalls a near miss in the Senate State and Local Government Committee. A member with concerns about the project planned to ask for a roll call vote on the bill. Looking around the table, Nelson said it was clear there weren't enough votes to pass it. She quickly pulled the committee member aside during the meeting to discuss the matter. In the end, she managed to convince the member not to put the bill in jeopardy and allow for a simple voice vote to move the bill along.

The process in the DFL-led Legislature meant tough choices for local Republicans who backed the DMC bill but didn't want to vote for a tax bill with $2 billion in tax increases. Senjem and Nelson and Rep. Greg Davids, R-Preston, all called on DFL legislative leaders to move it forward as a stand-alone bill, arguing it could get enough Republican and DFL votes to pass. Other lawmakers were doubtful there would be enough votes if the bill went on its own. In the end, Senjem stood out as the only GOPer to vote for the measure in order to support the project. That decision scored him a key position on the House-Senate tax conference committee that hammered out the final legislative language.

The final push

Toward the end, the major remaining disagreement was between Mayo and the city of Rochester. Mayo wanted more control over the project and the ability to keep its donor information private. City officials argued that the Rochester City Council should get the final say on how public dollars are spent. In the end, a compromise was hatched. It allows Mayo to set up a private, nonprofit organization to focus on attracting businesses. A separate public authority was created to oversee the private group's work. Final approval for all development plans is with the city council.

But it wasn't clear whether Mayo was going to go for the compromise. On May 15, a group of 20 people huddled together in Room 500 North in the State Office Building to try to come up with a solution. Rochester's mayor was among those in the room. And just when it seemed a deal was imminent, Brede said Mayo began raising a bunch of concerns about language that had already been agreed upon.

"I have to say at that point I almost stood up and said, 'What the heck are we doing?" Brede recalled.

Late in the evening as frustration was mounting, Norton turned to Brede and told him the project may end up having to wait a year. That was a view echoed by Lenczewski the following day in the tax committee, announcing she was fine with waiting another year if a deal couldn't be reached that day.

In the end, Mayo officials gave the green light to the plan. On the night of May 17, the tax conference committee officially voted to adopt the DMC language, putting it into the final tax bill. For Senjem, this was the moment he knew the DMC bill was going to pass. He got tears in his eyes, stood up from the negotiating table and headed for Norton.

"I stood up and he just threw his arms around me and he just shook. He was so moved," Norton said. "It was a very nice moment."

Senjem said it was then when he realized just how personally invested he was in seeing that bill pass. The Rochester Republican spent 44 years working at Mayo and wears the company's ring and watch every day.

"At that moment it all came out, and I recognized on a somewhat personal basis that I didn't have to worry about whether Mayo's future was going to be in Rochester," he said. "It was a special moment."

Three days later, the tax bill cleared its final hurdle — passing the Minnesota Senate five minutes before the midnight deadline.

Key to passage

In the end, what was it that enabled this massive project to work its way through the Legislature in less than four months? Those interviewed for this story offered several reasons. Many agreed that Mayo's world-renowned reputation gave it a tremendous leg up in its quest to win over lawmakers. In addition, a number of legislators have personal connections to Mayo, whether they went their for treatment or a loved one. That was the case for Skoe, whose wife was treated at Mayo. The governor recently had back surgery there and recalled traveling to Rochester as a young boy when his sister had eye surgery.

In an interview, the governor said he also took seriously the idea Mayo could choose to expand its facilities in Phoenix or Jacksonville, Fla. if the project fell apart.

"They were foresighted to see they are facing competition from places in this country and if they wanted to remain the premier medical center in the world, they needed to take this major step forward," Dayton said.

Then there's the politics. Rochester is a swing district that Democrats and Republicans alike are eager to court. Norton said she never heard people talking about the political advantages of supporting the project, but "everything we do at the Capitol has politics behind it."

She added, "Folks understand the importance of Mayo Clinic and continuing to have a strong Democratic ability to win elections down here. I am sure somebody thought about that. Somebody with a higher pay grade and more political ambition than I have."

Related Topics: CARLA NELSON
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