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Could DMC money fund a tunnel?

Could a tunnel be built under Second Street Southwest to connect a planned hotel with Mayo Clinic Hospital-Saint Marys Campus?

That's the idea of a developer with plans for a Holiday Inn on Second Street Southwest. He wants to use enhanced tax-increment financing allowed by Destination Medical Center legislation, with the partnership of the city of Rochester and the DMC Corp .

Larry Brutger, developer of the planned 225-room hotel across Second Street Southwest from the Mayo Clinic Hospital-Saint Marys Campus, had planned to use $5.6 million in financing to build a subway connection between the hotel and the hospital and also to provide public parking spaces in the hotel's ramp.

Brutger first brought his hotel plans to the city Aug. 13. Four months later, the plan has yet to be approved by the Rochester City Council, and Brutger's conversations with the DMC Economic Development Agency also are continuing.

"I need a definitive timeframe at some point," Brutger told the council at a Monday committee of the whole meeting. "I'm not going to be able to hold this project together that long."


Brutger asked the council to support the project and its use of public and DMC funds by moving the request on to the DMC Corp. Board., which meets Thursday.

The city alone could not provide tax-increment financing to the project, explained city redevelopment director Terry Spaeth. The site does not fit city requirements to establish a tax-increment district.

DMC legislation provided enhanced authority to establish tax-increment districts within DMC boundaries, Spaeth said. In partnership, the Rochester City Council and DMC Corp. Board could provide the $5.6 million in financing Brutger has requested.

The DMC Economic Development Agency, which serves the DMC Corp ., also was wrapped into Monday's decision. The agency staff typically review development proposals in step with city staff and bring projects with DMC potential to the corporation board.

Brutger's project left too many questions unanswered for EDA executive director Lisa Clarke to recommend approval to the DMC Corp., she said.

"To bring a project forward for full approval in terms of dollars, and full approval in our minds from the EDA perspective, it's not fully ready for that," Clarke said at the meeting.

A key question was whether the subway connection from the proposed Holiday Inn to Saint Marys Campus would, eventually, serve other businesses.

"I think there should be a tunnel system in this corridor," Brutger said. "It's not just for me — I think this is the first step. We hope our project is the catalyst that gets this developed."


Council members had their own questions for city staff and the developer, but it was clear those queries would not be resolved Monday.

"I've heard enough that says we should let this go forward to (the DMC Corp. Board) and see what they have to say," Council Member Mark Bilderback said.

The board meets Thursday and would have the option to provide a "provisional approval," contingent on having answers to any lingering questions, said Council President Randy Staver.

Brutger estimated his development will cost about $63 million. Of the $5.6 million Brutger has requested in tax-increment financing, $3 million would go toward the parking structure, $1.7 to the subway connection and the remainder to other project costs.

The city council still will have to wrestle with the question of whether the tunnel and parking structure provide public benefit to justify the use of public funding. In addition, the city has a road redesign plan for Second Street Southwest, as well as design guidelines to follow.

"For myself, the crux is whether this serves a greater public good," Staver said. "A tunnel that serves a sole business doesn't meet the test for me."

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