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Where was the DMC investment made?

Construction crews work at the site of the Hilton Hotel and parking ramp in downtown Rochester. More than $33.8 million was spent on constructing the hotel, restaurant and retail project in 2017. The estimated total cost of the project is $125 million.

The Hilton Hotel being constructed on the southeast corner of Broadway and Center Street was the largest contributing project to the $131.1 million in Destination Medical Center private investment last year.

More than $33.8 million was spent on constructing the hotel, restaurant and retail project in 2017. The estimated total cost of the project is $125 million.

Additionally, $2.97 million was spent to start the Mortenson project at the corner of Second Avenue and Fifth Street Southwest, in the Discovery Square subdistrict. The estimated total cost of the project is $35 million.

"Those two particular projects make up about 80 percent of that 2017 private investment," Rochester Assistant City Administrator Terry Spaeth told the DMC Corp. Board Thursday as it reviewed a report on private investment for 2017.

However, newly named Board Chairman R.T. Rybak said smaller contributors to the $131.1 million were important as well, citing The Chocolate Twist ice cream and candy shop renovations in the Paine Building, 313 S. Broadway, which totaled $70,000 last year.


"Retail on Broadway is part of the experience we want to create," he said.

Other contributing projects cited in Thursday’s report include:

• $3.7 million for work on First Avenue Flats, 400 First Ave. NW

• Nearly $1.9 million for renovation of the Rochester Towers condos at 207 Fifth St. SE.

• $550,000 for interior renovations of the Associated Bank building on the southeast corner of Broadway and Second Street.

• More than $100,000 spent on demolishing six separate houses, four of which were in the 500 block of Fourth Avenue Southwest.

In all, non-Mayo Clinic private investment in the DMC district contributed $44.7 million to the reported $131.1 million for 2017. It’s up from $38.1 million in 2016 and $20.5 million in 2015, the first year non-Mayo investment was documented..

DMC Economic Development Agency Executive Director Lisa Clarke said the numbers are a sign that local economic development efforts are working.


"The market is starting to turn and attract other private investment," she said.

Spaeth said work continues on new projects, including Residence at Discovery Square and the Urban on First project, which is expected to start construction next week at Fifth Street Southwest and First Avenue.

"I do believe 2018 should be a very robust year for private development," he said, noting the Alatus project at Second Street Southwest and 14th Avenue is also moving forward.

Doug Holtan, Mayo Clinic’s chairman of the department of facilities and support services, said Mayo investment continues to remain robust. While the amount reported for 2017 — $86.4 million — dipped from $107.2 million seen in 2016, he said it is only a portion of the $270 million spent on equipment and facility projects last year.

"This is what we very conservatively qualify and say was actually expended," he said, noting gaps often exist between the approval of projects and completion.

The funds reported Thursday accounted for actual spending in 2017, so planned projects and portions of multi-year efforts are not included in the document.

Mayo Clinic projects that were part of the report included:

• $21.2 million for the Jacobson Building expansion of surgical operating suites.


• $6.3 million for consolidation of the radiology practice on the Saint Marys Hospital campus.

• $5.97 million for the Precision Medicine Initiative.

• $2.2 million for the new Complex Intervention Unit at Saint Marys Hospital.

While other private investment must be made in the DMC footprint to be considered part of the effort that helps spur the release of state dollars, any Mayo Clinic development in Rochester can be reported.

With the report approved by the DMCC board Thursday, it will be sent to the Minnesota Department of Employment and Economic Development by April 1.

If the agency confirms the entire $131.1 million in private investment for 2017, the state would add approximately $3.6 million to its annual release of funds.

That would bring this year’s state contribution to nearly $6.3 million for DMC-related public infrastructure projects.

As part of the unique finance model created by the 2013 DMC legislation, the state’s contribution to DMC-related public infrastructure projects will grow each year, based on documented private development. The annual payments are capped at $40 million a year.

In all, the state plans to contribute up to $411 million for the DMC effort over 20 years. The annual allocations are expected to be sent to the city each fall.

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