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City, business officials: Mayo Clinic proposal good for Rochester

With $5.5 billion in private sector investment over the next 20 years, including Mayo Clinic's $3.5 billion to expand its Rochester campus, the proposed Destination Medical Center legislation calls for another $585 million in public investment from the state and local governments.

"It's nothing short of phenomenal," said Rochester City Council Interim President Randy Staver, who is a unit head in information technology at the clinic. "I think this is an economic model that the state has really never seen, so it will take a little bit of time for people to absorb."

Indeed, Gov. Mark Dayton's announcement of the initiative Wednesday led to questions about what kinds of development the public infrastructure portion of DMC will support. Those details are yet to be determined.

"I'm sure they have some ideas, but it's based at little bit on whether the public and private industry are willing to step up and be a partner on this," said Staver, who was among the officials standing behind Dayton during the Capitol announcement. "I'm sure there are some details, but we just have not heard a great number of them yet."

Long road ahead


As Staver pointed out during a phone interview Wednesday, as he was on his way back from the Capitol for the announcement, the proposed legislation is a start, with 11 legislative committees to get through before it ever hits the House and Senate floors.

"I'm sure that there will be a fair amount of scrutiny and questions, and some of the details worked out as we get through the next few weeks," he said.

Staver, along with other city council members and staff, local legislators and members of the business community have been involved in discussions with Mayo Clinic about the DMC initiative.

Jon Eckhoff, executive director of the Rochester Downtown Alliance, said he's been involved with the project for two years. He was also at the Capitol Wednesday for the governor's announcement.

"It's very exciting that Mayo Clinic understands the unique qualities of Rochester that makes them want to make these investments here," Eckhoff said, adding that he's excited for the downtown.

"Because a lot of it will happen downtown, but the benefit will be felt in every community surrounding Rochester," he said

Plan's details

Under the proposed legislation, a nine-member public authority — made up of city and county officials, Mayo Clinic employees and state legislators — would be established to review and approve DMC infrastructure projects such as: parking and transportation facilities; land acquisitions; site preparation; remediation of land and buildings for redevelopment; and demolition or rehabilitation of buildings.


Financing for the city's portion of the public investment would use tools such as revenue bonding, tax abatement districts and tax increment financing districts. In addition, Rochester's half-cent, local-option sales tax, reauthorized by voters in November, includes $20 million for the DMC.

The state's portion of the financing would come through the incremental use of a state appropriation bond as projects come up over the 20-year period, according to DMC materials produced by Mayo Clinic.

What is unusual about the DMC financing model is that the state funding could not be allocated until there is proof of new tax growth resulting from prior DMC projects.

"So, this is not like a bonding situation where we're looking for the entire amount. It's incremental and the next increment is only received if there's proof that prior investments have paid off," Staver said.

It's innovative, Eckhoff said.

"In most states they will write huge checks to keep businesses there or to have them grow, without a guarantee of success. In this case, it's the growth that will pay for the economic development itself," he said.

"And all (Mayo) is asking is 'if we commit to adding these 20,000 jobs and causing this $5 billion to $6 billion in private investment, can a portion of the benefit that went to the state come back to the community and help the city build the infrastructure to support that investment?'" Eckhoff said.

As for the authority of the new nine-member group, Staver said those details are still to be determined. It would act somewhat like an economic development authority, however the city council would continue to have the final say in approving development projects, he said.


"In the legislation is a development plan, and it needs to comply with our comprehensive plans for the city. So the city will still have the same authority in terms of approving streets and infrastructure like sewer, water, those kinds of things," he said.

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