Furst Draft: Destination Medical Center plan is feast for policy wonks

Like a lot of people around Rochester — and at the state Capitol — I'm becoming a policy wonk on DMC.

That's Mayo's Destination Medical Center proposal — or Destination Medical Campus, as we erroneously called it in a story this week — and it's a plan that only a wonk can truly appreciate. Though it's promoted as simple and straight-forward, there are a lot more moving parts than meet the eye.

I'm just starting to chew through the Minnesota Management and Budget workup on House File No. 409, and call me weird, but it's fascinating. Here are four items in the MMB analysis that clearly will get close attention by tax number crunchers and business people. They're also highlighted in the document, which I've linked to online, as "issues that may arise during the implementation of the proposed legislation that policy-makers may wish to consider." These are excerpts:

• Defining designated corporate tax:It is not clear how corporate franchise tax paid by "businesses located in the city" would be determined. Some rules for apportioning the total corporate tax paid by a business with less than 100 percent of its business operations located in Rochester.

• Defining designated personal income tax:"Personal income taxes attributed to payroll for employees of all facilities in the city of any business entity located in the city" would presumably be estimated based on withholding for income tax rather than actual income tax liability from tax returns. Because withholding generally exceeds tax liability (resulting in refunds), this will tend to overstate actual income tax liability.


The personal income tax component of the state funding for DMC is one of the more novel aspects of the plan, and this is one reason — how do you accurately calculate it? Not by withholding, which certainly overstates actual taxes paid, though in my personal case, it seems like my withholding is never enough

• Timeline for calculating baseline revenues: The July 15, 2013, deadline is probably too quick (and perhaps not necessary because the first payment is not made until two full years later).

This gets at a point we tried to pin down last week at the Post-Bulletin Dialogues event: When will we see bricks-and-mortar if DMC is approved this year? According to the fine print, the baseline calculations would be worked out by July, and the first payout of state tax revenue to the DMC Authority would occur in 2015.

Mayo's own projects, whatever they are, presumably would be under way by then.

Here's one more point from the report, and I'll wrap up with a question and a comment.

• "It may not be appropriate to include revenue from the 3/8 percent sales and use tax that is constitutionally dedicated by the Legacy Funds, even though only 2/3 of any increase in the total sales tax collections would be included in the transfer."

This seems like a no-brainer to me. I'm not a constitutional attorney, but it seems "inappropriate" to factor in money for DMC that's based on Legacy Fund revenue.

More to follow, as I continue chewing … you're welcome to read the report and digest it with me.


Here's the question that occurred to me in reading this analysis. Does the Development Authority ever "sunset"? Does it expire after 20 years, the timeframe that Mayo has referred to, or does it go on into perpetuity? I have a call into Mayo on this one. I don't see a reference to a "Best Used By" date in the legislation, though the Authority's bonding authority expires after 20 years.

And a comment: I was left with the impression, after our Dialogues meeting and from other reading, that the Rochester City Council has the final word on decisions made by the DMC Authority.

Well, it does and it doesn't. Gary Neumann, the assistant city administrator, said the legislation calls for the city to "assist them in developing the development plan … it's reviewed by the city for consistency" with master plans and zoning, for example, but the council doesn't approve individual projects.

"Our review relates to whether it meets all city codes and ordinances," he said, and then to deal with the building permits and other paperwork.

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