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Destination Medical Center EDA lobbying bill: $72,000

Concerned about a slowdown in development, Destination Medical Center's Economic Development Agency shelled out $72,000 between November and February on lobbying and legal expenses to push for a quick fix to DMC's funding formula.

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Concerned about slowing progress, Destination Medical Center's Economic Development Agency shelled out $72,000 between November and February on lobbying and legal expenses to push for a quick fix to DMC's funding formula.

"This uncertainty was producing a chilling effect on the progress of the DMC process, creating an urgent need to see relief as early as possible in the legislative session," EDA's spokeswoman Paige Calhoun said in an emailed statement.

Those lobbying and legal costs are paid for by Rochester taxpayers, who fund the EDA's budget. The Rochester City Council approved a budget of $2.8 million for the private nonprofit organization in 2015. The expense information was provided to the Post-Bulletin by the EDA following a request. The newspaper initially requested lobbying expenditure information in mid-February but was told at that time it was not available because it had not yet been processed.

The EDA hired seven lobbyists from three Minneapolis-based firms in January to push for the DMC funding fix. Preston Republican Rep. Greg Davids, who authored the bill, said at the time he had no idea the magnitude of the behind-the-scenes work. While he said the amount of money spent seems "a bit excessive," he said he also realizes the critical need to make sure the legislation passed.

"It's a tough call because had they spent nothing and it failed, then they are criticized because they didn't get it passed," Davids said.

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A 'pressing need' to pass fix

Destination Medical Center is a multibillion dollar initiative to transform Mayo Clinic and Rochester into a more attractive destination for medical patients and providers. In 2013, the Minnesota Legislature approved $585 million funding package to help pay for public infrastructure to support Mayo Clinic's planned $3.5 billion expansion in downtown Rochester, which is expected to spur an additional $2 billion in private investment.

The initiative was moving ahead as expected until last September when the Minnesota Attorney General's office issued an opinion that the DMC law as written would require $12 billion in private investments before all those state dollars could be tapped — double the amount lawmakers had intended.

Calhoun said the city of Rochester and the Destination Medical Center Corp. agreed the EDA should take the lead on the lobbying effort.

"The increasing need for clarity created a significant time pressure. As a result, a team of lobbyists was assembled to both swiftly update the legislature on the DMC progress and inform them of the pressing need for the technical fix to the statute," Calhoun said.

Three weeks after the Minnesota Legislative session started, DFL Gov. Mark Dayton signed a bill into law ensuring that only $6 billion in private investment would be required for the DMC plan. That bill also clarified that any dollars spent by the city of Rochester on the DMC development would count toward the city's required $128 million match.

According to the Minnesota Campaign Finance and Public Disclosure Board , the EDA began terminating contracts with lobbyists at the end of January. On March 9, the EDA ended its contracts with its two remaining lobbyists — Richard Forschler and Tom Freeman with Faegre Baker Daniels LLP.

Rep. Kim Norton, DFL-Rochester, said she talked with representatives of the EDA to express her concern that lawmakers were confused as to whether the EDA lobbyists were representing the interests of the DMC, the city of Rochester or Mayo Clinic. A primary concern was Rochester taxpayers could be paying for lobbyists who may not be representing the city's interests.

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"I didn't like the idea that we had this confusion, that the city could be paying for someone that might be lobbying against them, so I wanted to make sure that didn't happen," Norton said.

She added that EDA officials took her concerns seriously and began scaling back the number of lobbyists at the Capitol.

Who should pay for what?

The big debate at the Minnesota Capitol now is what EDA expenses the city should fund and which should be funded by Mayo Clinic, which runs the EDA. Over the next five years, the EDA's administrative costs are expected to total $14.6 million.

Rochester officials and Mayo Clinic representatives are expected to meet with Senate Taxes Committee Chairman Rod Skoe on Wednesday to try to reach an agreement, according to Rochester Mayor Ardell Brede. Skoe is sponsoring a bill that would prohibit the EDA from requiring the city to pay for any costs not related to public infrastructure. Skoe has said he is hoping local officials can reach a deal so the legislation is not needed.

The Rochester mayor said an agreement still needs to be hammered out but one area under discussion is marketing expenditures. Brede said it probably makes more sense for Mayo Clinic to fund those activities.

Meanwhile, Norton and Sen. Dave Senjem, R-Rochester, are both sponsoring legislation that would make sure any dollars spent by the city of Rochester on DMC administrative costs would count towards the city's $128 million match. The goal is to make sure property taxpayers aren't stuck footing the bill for these costs. It would enable city leaders to tap into funding options authorized under the DMC law to pay for those costs, including extending the city's half-cent sales tax or raising the sales tax by a quarter of a cent. Otherwise, those costs would likely have to be paid for with city property tax money.

Davids said he remains concerned about the amount of money Rochester spends on EDA costs. He is sponsoring Skoe's bill in the House and said he is seriously considering including it in a larger tax bill. The city of Rochester must approve the EDA's overall budget but does not have the authority to cut specific expenditures.

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Davids added, "The taxpayers of the city of Rochester are kind of on the hook for things they really don't control."

Related Topics: GREG DAVIDSFINANCE
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