HomeMy WebLinkAboutDMCC Resolution No. 133-2023 (Authorizing Report to Legislature)DESTINATION MEDICAL CENTER CORPORATION
RESOLUTION NO. 133-2023
Authorizing Report to the Legislature Pursuant to Statute
The following Resolution was offered by Brooke Carlson, seconded by R.T. Rybak.
BACKGROUND RECITALS
A.Minnesota Laws, Chapter 143, Article 10 (the "Act") provides that by February
15 of each year, the Destination Medical Center Corporation ("DMCC") and the City of
Rochester (the "City") must jointly submit a report to the chairs and ranking minority members
of the legislative committees and divisions with jurisdiction over local and state government
operations, economic development, and taxes, to the Commissioners of Revenue and
Employment and Economic Development, and to Olmsted County. The DMCC and the City
must also submit the report as provided in Minnesota Statutes, Section 3.195. The report must
include the following specific elements:
(1)the development plan and any proposed chan,ges to the development plan;
(2)progress of projects identified in the development plan;
(3)actual costs and financing sources, including the amount paid with state
aid under section 469.47, and required local contributions of projects
completed in the previous two years by the corporation, city, county, and
the medical business entity;
( 4)estimated costs and financing sources for projects to be started in the next
two years by the corporation, city, county, and the medical business entity;
and
(5)debt service schedules for all outstanding obligations of the city for debt
issued for projects identified in the plan.
B.The DMCC and City staff have prepared a draft report, due on February 15, 2023,
and attached as Exhibit 1. On February 6, 2023, the City Council approved the report.
RESOLUTION
NOW, THEREFORE, BE IT RESOLVED, by the Destination Medical Center
Corporation Board of Directors that the Chair or Vice Chair of the DMCC is authorized to execute and submit the report to the Minnesota Legislature as required by the Act, in form
similar to the report attached here as Exhibit 1, as may be modified through further discussions
with the City, and to take such other actions as are necessary and appropriate to effectuate the
timely submission of the report to the Minnesota Legislature.
February , 2023
The Honorable Erin Murphy
Chair, State and Local Government and
Veterans Committee
Minnesota State Senate
3211 Minnesota Senate Building
95 University Ave W
St. Paul, MN 55155
The Honorable Ginny Klevorn
Chair, State and Local Government Finance
and Policy Committee
581 State Office Building
100 Rev. Dr. Martin Luther King Jr. Blvd.
St. Paul, MN 55155-1206
The Honorable Bruce Anderson
State and Local Government and Veterans
Committee
Minnesota State Senate
2209 Minnesota Senate Building
95 University Ave W
St. Paul, MN 55155
The Honorable Jim Nash
State and Local Government Finance and
Policy Committee
349 State Office Building
100 Rev. Dr. Martin Luther King Jr. Blvd.
St. Paul, MN 55155-1206
The Honorable Bobby Joe Champion
Chair, Jobs and Economic Development
Committee
Minnesota State Senate
3401 Minnesota Senate Building
95 University Ave W
St. Paul, MN 55155
The Honorable Hodan Hassan
Chair, Economic Development Finance and
Policy Committee
Minnesota House of Representatives
597 State Office Building
100 Rev. Dr. Martin Luther King Jr. Blvd.
St. Paul, MN 55155-1206
The Honorable Rich Draheim
Jobs and Economic Development Committee
Minnesota State Senate
2225 Minnesota Senate Building
95 University Ave W
St. Paul, MN 55155
The Honorable Jon Koznick
Economic Development Finance and Policy
Committee
Minnesota House of Representatives
281 State Office Building
100 Rev. Dr. Martin Luther King Jr. Blvd.
St. Paul, MN 55155-1206
The Honorable John Marty
Chair, Finance Committee
Minnesota State Senate
3235 Minnesota Senate Building
95 University Ave W
St. Paul, MN 55155
The Honorable Liz Olson
Chair, Ways and Means Committee
Minnesota House of Representatives
479 State Office Building
100 Rev. Dr. Martin Luther King Jr. Blvd.
St. Paul, MN 55155-1206
EXHIBIT 1
February , 2023
Page 2 DRAFT
The Honorable Eric Pratt
Finance Committee
Minnesota State Senate
2217 Minnesota Senate Building
95 University Ave W
St. Paul, MN 55155
The Honorable Pat Garofalo
Ways and Means Committee
Minnesota House of Representatives
295 State Office Building
100 Rev. Dr. Martin Luther King Jr. Blvd.
St. Paul, MN 55155-1206
The Honorable Ann Rest
Chair, Taxes Committee
Minnesota State Senate
328 Capitol
75 Rev. Dr. Martin Luther King Jr. Blvd.
St. Paul, MN 55155
The Honorable Aisha Gomez
Chair, Taxes Committee
Minnesota House of Representatives
453 State Office Building
100 Rev. Dr. Martin Luther King Jr. Blvd.
St. Paul, MN 55155-1206
The Honorable Bill Weber
Taxes Committee
Minnesota State Senate
2211 Minnesota Senate Building
95 University Ave W
St. Paul, MN 55155
The Honorable Greg Davids
Taxes Committee
Minnesota House of Representatives
283 State Office Building
100 Rev. Dr. Martin Luther King Jr. Blvd.
St. Paul, MN 55155-1206
Commissioner Steve Grove
Minnesota Department of Employment and
Economic Development
1st National Bank Building
332 Minnesota Street, Suite E200
St. Paul, MN 55101-1351
The Honorable Gregg Wright
Chair, Olmsted County
Board of Commissioners
151 4th St SE
Rochester, MN 55904
Commissioner Paul Marquart
Minnesota Department of Revenue
600 North Robert Street
St. Paul, MN 55101
Re: Destination Medical Center - February 15, 2023 Report
Dear Senators, Representatives, Commissioners, and Chairs:
On behalf of the Destination Medical Center Corporation (the “DMCC”) and the
City of Rochester (the “City”), we are pleased to submit this report on the progress of the
Destination Medical Center (“DMC”) initiative, in accordance with Minnesota Statutes,
Sections 469.40 – 469.47 (the “Act”).
As we look back on the year 2022, the DMC public-private partnership proved
instrumental in turning from the challenges posed by the COVID-19 pandemic and
towards the future of establishing the City as the world’s premier destination for health
and wellness. The certified private investments demonstrate the on-going success of the
February , 2023
Page 3 DRAFT
DMC initiative. From 2013 through 2021, the collective efforts of Mayo Clinic and other
private entities exceeded $1.2 billion in qualified private investments.
Specifically, in 2022, we certified a total of $155,147,823.20 for the year ending
December 31, 2021, which includes $110,586,916.31 in Mayo Clinic investments and
$44,560,906.89 in other private investments. The cumulative total of Mayo Clinic and
other private investments through 2021 is $1,262,043,959.32. The City of Rochester has
contributed $56,861,752.23 in certified expenditures from July 1, 2013 through December
31, 2021.
In addition to these certified investments, there are many other projects proposed
or under construction, the majority of which are private investments with no direct DMC
public assistance. A map of the DMC development district and key projects is attached
as Exhibit A.
The success of the DMC initiative may also be measured by employment and tax
revenue. As detailed in the Five-Year Update to the Development Plan (the “Five-Year
Update”), from 2015 – 2019, the City added approximately 7,700 jobs. More than 80
percent of the new jobs paid more than the City’s Area Median Income of approximately
$75,000. Rochester currently has one of the lowest unemployment rates in the country
at 1.6%. Tax value per acre within the DMC district increased from approximately $0.828
billion in 2015 to $1.813 billion in 2020. A summary of significant projects is attached as
Exhibit B.
This report will provide a brief background of the DMC initiative and then provide
the responses required by the Act.
Destination Medical Center: Background.
A. Private Investment Leads the Public Investment.
The Act required that private investment lead the way for this private-public model
of partnership: over $200,000,000 in Mayo Clinic and other private investment had to
occur before any state funding would begin to flow. That threshold was met, and
exceeded, in 2017.
B. Development Plan.
One of the primary goals of the Act was the adoption of a Development Plan. In
September 2013, the DMCC established specific goals and object ives for the
Development Plan: to create a comprehensive strategic plan, and over the life of the
project, to stimulate over $5 billion in private investment that will be supported by $585
million in public funds, create 35,000-45,000 new jobs, generate $7.5 billion to $8.5 billion
in net new tax revenue, and achieve the highest quality patient, visitor , and resident
experience.
The Development Plan is the strategic framework for the Destination Medical
Center initiative, establishing a comprehensive business and economic development
February , 2023
Page 4 DRAFT
strategy. It includes land use, transportation and infrastructure planning, market
research, funding priorities, business and economic development, and market strategies.
Upon making the findings set forth in the Act, including finding that the City had approved
the Development Plan, the DMCC adopted the Development Plan on April 23, 2015. The
Act requires that the Development Plan be updated not less than every five years. The
Five-Year Update was approved by the City and by the DMCC in 2020.
C. Mission Statement.
The DMCC’s mission statement provides a framework to guide its work:
With Mayo Clinic at its heart, the Destination Medical Center (DMC) Initiative is the
catalyst to position Rochester, Minnesota, as the world’s premier destination for
health and wellness; attracting people, investment, and jobs to America’s City for
Health and supporting the economic growth of Minnesota, its bioscience sector,
and beyond.
D. Website.
The DMCC’s website is: www.dmc.mn. The website contains the regular meeting
schedule, meeting agendas, minutes, and other information on DMCC activities, as well
as project updates, investor and developer information, subdistrict descriptions, market
research, and ongoing activities of the EDA. The City’s website, www.rochestermn.gov,
also has a link to the DMCC website.
Specific Elements Required to Be Included in the Report.
Minnesota Statutes, Section 469.43, subd. 8 requires that five elements be
included in this annual report.
(1) “The Development Plan and any proposed changes to the Development Plan .”
The Development Plan was initially adopted on April 23, 2015 and amended in
2016 and in 2020 to modify the Destination Medical Center Development District, the
geographic area in the City of Rochester in which public infrastructure projects are
implemented to support DMC.
The Act requires that the Development Plan be updated not less than every five
years. In 2020, the Five-Year Update was posted publicly and a public hearing was held.
The Development Plan and the Five-Year Update can be found at the DMCC website:
https://dmc.mn/plan-priorities/.
(2) “Progress of projects identified in the Development Plan.”
According to the Act, a public infrastructure project must be approved by the
DMCC before it is proposed to the City. The DMCC must review the project proposal for
consistency with the Development Plan. Since the adoption of the Development Plan on
April 23, 2015, a number of projects have been approved by the DMCC and the City. A
February , 2023
Page 5 DRAFT
map of the DMC development district and key projects is included as Exhibit A. A
summary of major approved projects in the DMC development district is attached as
Exhibit B.
We wish to note the progress in 2022 of certain approved projects, in particular:
Heart of the City Phase One: Heart of the City creates a true center of the City,
where Mayo Clinic, commercial, hospitality, retail, and residential meet. Enhancing public
spaces in Peace Plaza and First Avenue in the Heart of the City subdistrict, home to many
hotels, restaurants, medical facilities, and entertainment venues, is a long-standing
priority. The first phase of this project focused on renovating the east side of Peace Plaza
and surrounding areas. New and expanded commercial and retail businesses occurred.
A commemoration was held in May to celebrate the significant progress in completing
phase one. Completion is expected in 2023.
Discovery Square Updates: Discovery Square is a sixteen-square-block area in
the Development District and is the cornerstone of the DMC economic development
strategy. As a live, work, and play environment, it has become a hub of biomedical
research, education, and technology innovation. In 2022, construction was completed on
February , 2023
Page 6 DRAFT
Two Discovery Square, a 125,000 square foot bioscience building that expanded the
DMC bio-medical, research, and technology innovation campus. It features tech-forward
tenant spaces designed with flexible lab capacity and leading-edge technology.
Discovery Walk: Construction is well underway for Discovery Walk, a four-block
linear parkway along 2nd Avenue SW. It is planned to connect Annenberg Plaza to
Soldiers Field Park and function as an extension of the Heart of the City public realm
project. Discovery Walk will serve pedestrians and vehicle traffic while also serving as a
catalyst to future private development in Discovery Square. Construction is expected to
be completed in 2023.
February , 2023
Page 7 DRAFT
Bryk on Broadway Project: The Bryk on Broadway is a mixed-use, mixed-income
apartment building with 180 workforce housing apartments, providing rents at varying
levels. Construction is anticipated to be completed in the first quarter of 2023.
Riverfront Reimagined: Following a City-initiated small area plan study for a
portion of the 60+ acre area, located southeast of the downtown core on the Zumbro
River, the City continues to lead development of this “front door” to the river to a gateway
into downtown. In July 2022, the City adopted a preferred plan to guide the transformation
of the redevelopment area to a future mixed -use neighborhood. Next steps include
review by the Army Corps of Engineers, further design work, and interim site activation.
In August of 2022, the City was awarded a RAISE grant in the amount of $19.9 million for
the Sixth Street Bridge crossing the Zumbro River. Funds from the DMCC- and City-
approved Capital Improvement Plan supported both the small area plan and the Sixth
Street Bridge initial planning and design work.
February , 2023
Page 8 DRAFT
Mobility: In 2022, with community input, the DMCC and the City approved
revisions to the approximately three-mile bus rapid transit project known as “Link BRT.”
They approved a route realignment, including a new station on 6th Street SE, west of 3rd
Avenue SE, and adding a westbound station at the downtown library. In addition, they
approved enhanced station design, with weather projection for twelve stations and direct
vertical access to pedestrian subways for three stations, to improve the riders’ use. These
revisions were made to the pending Federal Transit Administration (FTA) Small Starts
application. The amount of DMC funds is expected to remain constant . To advance the
long-term success of this project, the City and Mayo Clinic entered a twenty-year
operating agreement in which Mayo Clinic will cover the annual local match for operating
costs and all riders may use the system without paying fares.
In addition to these projects, the DMCC and the City have approved a Capital
Improvement Plan (“CIP”) for public infrastructure projects for 2023. Projects identified in
the CIP are categorized as follows: Public Realm, Strategic Redevelopment, Streets and
Sewers, and Mobility.
Public Realm Projects include:
• Chateau Theatre Improvements and Assets Preservation
• Discovery Walk Construction
• Education-Recreation Subdistrict (Soldiers Memorial Field Park)
• Downtown Waterfront: Riverfront Planning and Design
Streets and Sewers Projects include:
• Sixth Street Bridge, Sixth Street SE, Waterfront Connectivity
• Sanitary Sewer Capacity Bypass on 3rd Ave. SW
February , 2023
Page 9 DRAFT
Mobility Projects include:
• Arrive Rochester Implementation
• Rapid Transit Implementation, including Second Street Reconstruction and
Streetscape
Soldiers Memorial Field Park (“Soldiers Field”) contains 150 acres of memorials
and active recreation space. The northern portion lies within the DMC district and is
featured in the Development Plan. Discovery Walk will connect the Heart of the City to
Soldiers Field and the Sixth Street Bridge will link Soldiers Field to the downtown
waterfront area. In 2022, the City Park Board adopted a short -term Soldiers Field Master
Plan. The 2023 CIP includes funding for planning, design, and construction for this
significant project.
DMC public realm projects have benefited from a community co -design process
that encourages the involvement of individuals and communities most impacted by a
project. Community members are retained to assist with reaching previously
underrepresented communities and perspectives. It is an example of the efforts to
advance equitable and inclusive economic development strategies. Building on the
success of community co-design in a variety of DMC-funded projects, in May 2022, a
community co-design toolkit was created to assist others with inclusive engagement. It
is available at: https://dmc.mn/dmc-celebrates-community-co-design-toolkit/.
The DMC-funded projects above reflect only a portion of the number and type of
public and private development projects in the DMC district. Early strategic DMC
investments in public infrastructure and commercial and residential projects successfully
established Rochester as a destination for investment and development. Other projects,
which are now proceeding without the need for public DMC support, include workforce
and market-rate housing, extended stay hotels for patients and companions, renovations
to historic properties, world-class medical care and research facilities, co-working space,
small business improvements, and more.
(3) “Actual costs and financing sources, including the amount paid under
Minnesota Statutes Section 469.47, and required local contributions of projects
completed in the previous two years by the DMCC, City, Olmsted County and
Mayo.”
The Act requires that an annual certification of private investment by Mayo Clinic
and other private investors be made to DEED by April 1 of each year, and DEED must
certify that $200,000,000 of private investment has been made before any state funding
may be paid. This threshold was met and exceeded in 2017. The cumulative total amount
of private and Mayo Clinic certified investments to date is $1,262,043,959.
In compliance with Minnesota Statutes Section 469.47, attached is the annual
certification of Mayo Clinic and other private investment that was submitted to DEED on
March 23, 2022, as revised June 16, 2022 (Exhibit C). We also attach the revised annual
certification of City expenditures, which was submitted to DEED on June 15, 2022
(Exhibit D). DEED conducted its own audit process of the certified expenditures,
February , 2023
Page 10 DRAFT
requested revisions, and then approved the expenditures. The DEED certifications, dated
June 30, 2022, are attached (Exhibit E).
In addition, we offer the following information:
1. Through December 31, 2022, State Infrastructure Aid in the amount
of $97,591,189.36 has been received. No State Transit Aid has been
received.
2. Actual costs paid by the City from commencement through
December 31, 2022 have totaled $79,018,424.79, based on year-end
unaudited costs. The funding source was initially City internal borrowing,
which is being repaid, along with the costs for new projects and initiatives,
by the City’s 0.25% DMC sales tax. The City has also issued capital debt
for a new parking ramp in the district. Just as the Mayo Clinic investments
and other private investments have underscored the commitment to DMC,
so too have the City contributions.
3. Through December 31, 2022, Olmsted County has contributed
$16,500,000.
4. The 2023 combined operating and capital improvements budget for
the DMC totals $52,181,135, a portion of which (approximately $8 million)
is being paid for with funding other than state funds. Of this amount
$3,419,779 will be provided by Olmsted County from its 0.25% sales tax.
The remaining amount is to be provided by the City of Rochester from a
variety of City funding sources, including its 0.25% DMC sales tax. In
addition, Mayo Clinic has pledged financial and in-kind funding to the EDA
in the amount of $1,411,390.
(4) “Estimated costs and financing sources for projects to be started in the next
two years by the DMCC, City, Olmsted County and Mayo.”
The Development Plan sets forth a framework and examples of projects that may
be considered for funding in the next several years. Each project will be approved on an
individual basis. See also the response to “2” and “3,” above.
(5) “Debt service schedules for all outstanding obligations of the City for debt
issued for projects identified in the plan.”
The debt service schedule is attached as Exhibit F.
February , 2023
Page 11 DRAFT
CONCLUSION
Thank you for your consideration of this annual report. On behalf of both the
DMCC and the City, we welcome your comments or questions. We look forward to
continued progress on the Destination Medical Center initiative in 202 3.
DRAFT DRAFT
Pamela Wheelock, Chair Kim Norton, Mayor
Destination Medical Center Corporation City of Rochester
Enclosures
cc: Legislative Reference Library
1442888-8.DOCX
TABLE OF EXHIBITS
Exhibit A Map of DMC Development District and key projects
Exhibit B Summary of major projects
Exhibit C Annual certification of Mayo Clinic and other private investment dated March
23, 2022, as revised June 16, 2022
Exhibit D Revised annual certification of City expenditures dated June 15, 2022
Exhibit E DEED certifications dated June 30, 2022
Exhibit F City debt service schedule
Berkman
Even Hotels and StaybridgeSuites TownePlace Suitesby Marriot
Hue Apartments
Residence at Discovery Square 501 on First
Conley Maass Building
Flats on 4th
Lofts at MayoPark
1st Ave Flats
Bryk on Broadway
Hilton
The Maven on Broadway
One Discovery Square
Two Discovery Square
Wellls FargoRenovation
Hyatt House
Hotel Indigo
Heart of the City
Discovery Walk
DMC District Boundary
_EXHIBIT A
1
EXHIBIT B
Summary of Major Projects in the Destination Medical Center Development District
(Non-Mayo Clinic)
I. DMCC-APPROVED PROJECTS WITH PUBLIC FUNDING
The Hilton Rochester Mayo Clinic Area (formerly known as the “Broadway at Center”
project): is located in the “Downtown Waterfront” subdistrict as described in the
Development Plan. Approved in 2015, this 371,000 square foot mixed-use project
includes a 264-room hotel, restaurants, retail space, a skyway connection, and a five-
level public parking ramp with 540 public spaces and 90 private spaces. The restaurants
and hotel opened in 2019.
The Berkman Apartments (formerly known as the “Alatus Project”): is located on 2nd
Street SW in the “Saint Marys” subdistrict as described in the Development Plan.
Approved in 2016, this mixed- use project involved the construction of an approximately
350,000 square foot, thirteen-level commercial and residential complex. It includes 350
market-rate rental units, created an estimated 235 construction jobs and eight permanent
jobs, and generated a total of $115 million in private investment. The Berkman was
completed in 2020.
The Maven on Broadway (formerly known as Urban on First): is located south of 4th
Street SW between 1st Avenue SW and Broadway Avenue and is in the “Discovery
Square” subdistrict as described in the Development Plan. Approved in 2017, this
approximately $38 million mixed use project includes a six-story building with 156 market
rate rental units, parking, and street level commercial and retail space for a total of
238,700 square feet. The Maven on Broadway was completed in 2019.
One Discovery Square (formerly known as Discovery Square Phase One): is on First
Avenue SW in the “Discovery Square” subdistrict as described in the Development Plan.
Approved in 2017, this approximately $35 million bio-science building will be a center of
innovation and is housing companies whose mission is to accelerate bioscience and
technology discoveries to market. The four-story, 89,000 square foot building includes
office, collaborative and retail space. As noted above, this project is the first phase of
achieving a key component of the Development Plan: providing jobs in the bio-science
sector. One Discovery Square was completed in 2019 and is approximately 100 percent
leased.
Wells Fargo Renovation (21 1st Street SW): This project is a renovation of a 92,000
square foot existing building, located in the “Heart of the City” subdistrict as described in
the Development Plan. Approved in 2018, this project is a catalyst for the public realm in
the Heart of the City subdistrict and includes connections to the street and pedestrian
skyway. The renovation has made approximately 23,000 additional square feet of
commercial or office space available. The project created an estimated 30 construction
jobs and provided 115 permanent jobs. This project was completed in 2020.
2
Hotel Indigo Renovation: The Hotel Indigo project involved the renovation of an existing
172-room Holiday Inn, located in the “Downtown Waterfront” subdistrict as described in
the Development Plan. Approved in 2018, the $42 million redevelopment included the
addition of 33,000 square feet to the existing 114,500 square feet and provided
approximately 111 construction jobs and 28 new permanent jobs. Opening of the new
hotel and restaurant occurred in 2020.
Hyatt House: The Hyatt House project is located in the “Central Station” subdistrict as
described in the Development Plan. Approved in 2018, the $44 million project includes
an eight-story, 172- room extended-stay hotel, and is providing approximately 257
construction jobs and while creating 38 permanent jobs. This project was completed in
2021.
Heart of the City Phase 1 – Peace Plaza: This phase of the project is a renovation of the
east side of Peace Plaza and surrounding areas. The construction of this transformative
project, which includes improved safety, accessibility, universal design elements,
sustainability, integrated art and improved infrastructure, was largely completed in 2022.
Bryk on Broadway Project: This project is located at 401 Broadway Ave N. It is a mixed-
use, mixed-income apartment building consisting of 180 workforce housing apartments,
providing rent at varying levels. Construction is expected to be completed the first
quarter of 2023.
Two Discovery Square: Located at 209 5th St SW, this expansion of the DMC bio-
medical, research, and technology innovation campus is a 125,000 square foot
bioscience building. It features tech-forward tenant spaces designed with flexible lab
capacity and leading-edge technology. Construction was completed in 2022.
II.OTHER PRIVATE PROJECTS
Conley Maass Building: This project involved the renovation of a historic building into a
restaurant space and leased space for high tech companies. The renovation was
completed in 2016.
1st Avenue Flats: This is a 68-unit affordable housing building, and all of the units are
income- restricted to persons at or below 60% of the area median income. The building
opened in 2017.
Lofts at Mayo Park: The Lofts at Mayo Park is a five-story, 29-unit market rate rental
apartment project, which opened in 2017.
Flats on 4th: This project is a six-story mixed use development consisting of 92 rental
apartment units, with 19 of the units affordable to persons at 50% of the area median
income, and 2,300 square feet of ground floor retail space. The building opened in 2018.
EXHIBIT B
3
501 on First: 501 on First is a five-story, mixed use development consisting of 84 rental
apartment units and 21,000 square feet of commercial/retail spaces. It opened in 2018.
Residence at Discovery Square: The Residence at Discovery Square is a six-story,
mixed use development consisting of 143 rental apartment units, with 20% of the units
affordable to persons at 60% of the area median income, and 15,400 square feet of
commercial/retail space. It opened in 2019.
Hue Apartments: The Hue Apartments is a six-story, mixed use development consisting
of 50 rental apartment units and 2,000 square feet of commercial/retail space. The Hue
Apartments opened in 2020.
Even Hotels and Staybridge Suites: This is a 246-unit dual-branded hotel, which opened
in 2021.
TownePlace Suites by Marriot: TownePlace Suites by Marriot consists of a 110-unit hotel
with two levels of underground parking. The hotel opened in 2021.
EXHIBIT B
EXHIBIT C
Annual Certification of Mayo Clinic and Other Private
Investment Dated March 23, 2022
as revised June 16, 2022
(Correspondence to Steve Grove, Commissioner, Minnesota
Department of Employment and Economic Development and
Attachments 1, 2 and 3)
EXHIBIT C
EXHIBIT C
Building Permits within the DMC Boundary
(Does not include Mayo Projects)
Completed
Year Projects
2014
2018
2019
2020
2021
$
$
$
$
$
TOTAL $
38,400
584,079
7,585,007
14,490,740
438,000
23,136,226
EXHIBIT C - ATTACHMENT 1
2021 Tracking Worksheet
2019/2020 Destination Medical Center -Partially Completed Projects Tracking
2019 .··.
Total Building Permit
Project Address Value Partial Completed Work I Hyatt House 1315 1st Ave. NW $ 32,253,475.00 $ 6,940,448.00
IE1even02 1101 11th Ave. SW $ 29,690,975.00 $ 4,159,810.90
$ $
$ 61,944,450.00 $ 11,100,258.90 $
2020 Destination Medical Center -Partially Completed Projects Tracking
Total Building Permit
Project Address Value To Date
ITwo Discovery Square 1415 2Ave SW $ 20,161,480.00
2021 Destination Medical Center -Partially Completed Projects Tracking
Total Building Permit
Project Address Value To Date
IBrky Apartments 1401 N Broadway $ 25,000,000.00
TOTAL $ 44,560,906.89
· ... < · .. · 2020 ·.·· .. · .•
Partial Completed Work
$ 5,553,179.85
2021
Partial Completed Work
$ 4,500,612.64
ATTACHMENT 1-1
$
2020 2021 ·· ..
Completed Work Completed Work
24,151,076.04 $ 1,161,950.96
24,377,346.96 $ 1,153,817.14
48,528,423.00 $ 2,315,768.10
2021
Completed Work
14,608,300.15
Commercial Bldg Alteration R14-0094CB 3/14/2014 017965 101 E CENTER ST, ROCHESTER, MN 55904 $38,400 Replaced all old windows, replace some brick A & K Properties Finaled 11/17/2021 that is bad and fill some holes
commercial Bldg Alteration R18-0144CB 8/1/2018 017926 21 SW 1 ST, ROCHESTER, MN 55902 $584,079 Interior renovation of existing retail bank Wells Fargo co 10/13/2021 including electrical, plumbing and HVAC.
ltwells Farno)
Commercial Bldg Alteration R19-0364CB 10/17/2019 018102 211 NW 2 ST 1311, ROCHESTER, MN 55901 $75,000 Alteration to an existing dwelling unit. (Charter CHARTERHOUSE INC -Deborah Finaled 12/2/2021 House) Kenitz
commercial Bldg Alteration R19-0308CB 12/9/2019 048779 624 SW 3 AVE, ROCHESTER, MN 55902 $600,000 Adding an elevator to an existing 60,791 sf ZUMBRO EVANGELICAL co 1/26/2021 church. (Zumbro Lutheran Church) LUTHERAN
commercial Bldg Alteration R19-0361CB 12/27/2019 025320 709 SW 1 AVE, ROCHESTER, MN 55902 $47,924 Whirlpool equipment remodel and adding YOUNG MEN'S CHRISTIAN Finaled 12/6/2021 mechanical room. (Rochester Area Family ASSOCIATION
YMCA\
Demolition Commercial R19-0015D 7/3/2019 017784 324 SW 1 AVE, ROCHESTER, MN 55902 $50,000 Demolition of single story art building and Ackerberg Group Finaled 12/6/2021 existino narkina lot
Demolition Commercial R19-0017D 7/25/2019 075680 1101 SW 2 ST, ROCHESTER, MN 55902 $35,000 Demo of Virgil's Building ROCHESTER HOTEL PARTNERS Finaled 12//6/2021
LLC
Demolition Commercial R19-0021D 9/6/2019 017760 405 SW 1 AVE, ROCHESTER, MN 55902 $40,000 Tear down and remove entire Oamsey Premier Bank Finaled 12/6/2021 restaurant structure
Commercial Bldg Commercial R19-0211CB 2/27/2020 83133 601 SW 2 ST, ROCHESTER, MN 55902 $5,437,083 Portland Hotel LLC Finaled 8/13/2021
Footing, foundation to level to for 6 story
110 unit hotel with 2 levels of underground
parking. {TownePlace Suites by Marriott)
Commercial Bldg Commercial Rl9-0432CB 2/19/2020 81707 19 SW 1 AVE ROCHESTER, MN 55902 $1,300,000 Tenant improvement new restaurant space Ringneck Restaurants Inc co 11/23/2020
within Kahler Hotel. (Olde Brick House)
Multi-Family Bldg Alteration R20-0020MFB 08/28/20 11576 1111 2 ST SW, ROCHESTER, MN 55902 $30,913 Reinforcement of existing roof structure to Tyler Miles Finaled 12/13/21
accommodate the increase snow loading due
to the 1102 Hotel built next to it. (Eleven02
Hotel Snow Drift)
Sign Business R20-00865 08/25/20 83133 123 6 AVE SW, ROCHESTER, MN 55902 $612,000 Wall signs for Towneplace Suites [lit] Persona Sign Company Finaled 12/13/21
"TOWNEPLACE SUITES BY MARRIOTT"; "Will
& Charlie's Pub
Commercial Bldg Alteration R20-00SOCB 04/08/20 83795 202 4 ST SW 240, ROCHESTER, MN $612,468 Build out of second level space for new office Silver lake Investors co 06/28/21
55902 use tenant. /Discovery Sauare)
Multi-Family Bldg Alteration R20-0013MFB 04/20/20 17786 325 1 AVE SW, ROCHESTER, MN 55902 $727,504 Reroofing, tuckpointing, window Tapestry Companies cc 03/01/21
replacement, new entry doors, carpet, water
piping, HVAC, lighting and misc. alteration
throughout building. (Newbridge
Apartments)
Sign Business R20-0073S 07/14/20 17784 33 4 ST SW, ROCHESTER, MN 55902 $23,336 Wall signs for The Hue [lit] ACKY-324 LLC Fina led 12/13/21
Commercial Bldg New R20-00S3CB 08/05/20 83133 601 2 ST SW, ROCHESTER, MN 55902 $11,660,444 New 6 story 110 guest room hotel with 2 TPS ROCHESTER I LLC co 08/13/21
levels of underground parking. (TownePlace
Suites by Marriott)
Demolition Demolition R20-0009D S/20/20 75694 18 1 Ave SE, Rochester 55904 $824,075 Demolition and remival of existing building PB Rochester Investments LLC Finaled 12/13/21
(former Post Bulletin building) on site
Partial remodel of main level. Adding
conference room, moving office, updating
Commercial Bldg Alteration R21-0027CB 2/4/2021 14505 44 SE 4 ST, ROCHESTER, MN 55904 $ 20,000.00 bathroom. (Schatz law Firm) Michael Schatz Finaled 8/27/2021
Interior alteration to existing by expanding
kitchen line, adding a new hood and oven.
Commercial Bldg Alteration R21-0031CB 2/10/2021 17894 155 SW 1 AVE, #140, ROCHESTER, MN 55902 $ 80,000.00 (Bruegger's Bagel) Fred Leon C of C Issued 4/30/2021
Remodel of approximately 1620 sq.ft. of
existing space into a space for youth. ZUMBRO EVANGELICAL LUTHERAN
Commercial Bldg Alteration R21-0156CB 5/24/2021 48779 624 SW 3 AVE, ROCHESTER, MN 55902 $ 75,000.00 (Zumbro Lutheran Church) Sara Lichty C of C Issued 12/2/2021
210 N BROADWAY AVE, #103, ROCHESTER, MN Fit-up of the Suite #103 at the Queen Center
Commercial Bldg Alteration R21-0167CB 6/4/2021 81808 55906 $ 75,000.00 (210 N. Boadway) for "The Fit loon". SKIATHOS LLC C of C Issued 10/19/2021
interior demolition and remodel for Wells
Commercial Bldg Alteration R21-0352CB 10/7/2021 17926 21 SW 1 ST, #102, ROCHESTER, MN 55902 $ 25,000.00 Fargo ROCHESTER PROPERTY OWNER LLC C of C Issued 10/28/2021
CHARTERHOUSE INC· Deborah
Multi-Family Bldg Alteration R21-000SMFB 3/2/2021 18102 211 NW 2 ST, #816, ROCHESTER, MN 55901 $ 125,000.00 Remodel of apartment #816. {Charter House) Kenitz Fina led 9/8/2021
Multi-Family Bldg Alteration R21-0037MFB 7/27/2021 81810 207 SW 5 AVE, APT 608, ROCHESTER, MN 55902 $ 38,000.00 Kitchen Remodel Cindy Boese Fina led 12/15/2021
$23,136,226
ATTACHMENT 1- 2
EXHIBIT C - ATTACHMENT 1
MAYO CLINIC Cry
March 3, 2022
Steve Grove
Commissioner
EXHIBIT C - ATTACHMENT 2
Minnesota Department of Employment and Economic Development
1st National Bank Building
332 Minnesota Street, Suite E-200
Saint Paul, MN, 55101-1351
Dear Commissioner Grove:
200 First Street SW
Rochester, Minnesota 55905
507-284-2511
Attached with this letter is Mayo Clinic's certification of qualified expenditures of the medical business entity for
the Destination Medical Center (DMC) initiative from January 1, 2021, to December 31, 2021. The amount of
qualified investment is approximately $110.6 million. Major projects included the continued modernization of
Mayo Clinic Hospital, Saint Marys Campus; many improvements to Mayo Clinic's downtown Rochester,
Minnesota, campus; and investment in DMC's Discovery Square life science sub-district.
As in prior years, Mayo Clinic is taking a conservative approach when counting DMC-eligible capital
expenditures. Overall, we spent more than $340 million on capital projects and equipment in Rochester in 2021
including improving our medical tissues archive and purchasing world-class medical equipment. In total, we plan
to invest more than $1 billion in Rochester facilities and equipment between now and 2025. Through 2021, our
DMC investment totals more than $762 million.
Looking back on 2021, I am grateful for our hard-working staff-in Minnesota and across the globe-who have
put the needs of the patient first and sustained Mayo Clinic as a beacon of hope and healing. Last year, our
dedicated Mayo Clinic team served more than 1.4 million patients, administered more than 1.1 million COVID-
19 tests, and expended more than $1 billion on research activities. Mayo Clinic also committed to investing in
our people and our communities, including a guaranteed 4% minimum salary increase for eligible allied health
staff in 2022 and community investments in Rochester totaling more than $8.5 million including significant
contributions to the Coalition for Rochester Area Housing, the Southeast Regional Crisis Center, and COVID-19
outreach and education.
Together, these commitments to our patients, our people, and the places where we live and work demonstrate
Mayo Clinic's continued efforts to sustain and grow Rochester as a global destination medical center. We remain
committed to achieving the long-term DMC development and investment goals and, despite COVID-19, we
remain on a strong path. We look forward to continuing our DMC partnership with the city of Rochester,
Olmsted County, and state of Minnesota.
Thank you.
Sincerely,
Christina Zorn, J.D.
Chief Administrative Officer
Mayo Clinic
ATTACHMENT 2 - 1
EXHIBIT C - ATTACHMENT 2
EXHIBIT C - ATTACHMENT 2
EXHIBIT C - ATTACHMENT 2
EXHIBIT C - ATTACHMENT 3
Revised Certification of Expenditures
Destination Medical Center
For Calendar Year 2021
Due to Commissioner of Employment and Economic Development (DEED) by April 1, 2022
The Medical Business Entity and the Destination Medical Center Corporation (DMCC) Board of Directors (assisted by
the City of Rochester) hereby submit to the Department of Employment and Economic Development (DEED) the
following report for expenditures that relate to the Destination Medical Center (DMC) Development for the calendar
year 2021, and the certifications required to support the documentation under the City of Rochester Commissioner of
Employment and Economic Development State Infrastructure Aid Agreement.
Expenditures Reported this Year
Total Expenditures Reported This Year by Medical Business Entity1
Total Expenditures Reported This Year for other Private Entities 1,2
TOTAL Expenditures This Year
All Expenditures claimed since June 30, 2013
Previous Years Expenditures (cumulative)
TOTAL Expenditures This Year3 (from Box 3)
All Claimed Expenditures as of 12/31 /21 (Box 4 plus Box 5)
Qualified Expenditures claimed in 2021 (Box 6 minus $200,000,000)
$110,586,916.31
$44,560,906.89
$155, 147,823.2(
$1,106,896,136.12
$155,147,823.20
$1,262,043,959.32
$1,062,043,959.3:;
2
3
4
5
6
7
State Aid Qualified for This Year (local government match also required)
General State Infrastructure Aid Qualified for (Box 7 multiplied by .0275)
State Transit Aid Qualified for (Box 7 multiplied by .0075 and then multiplied by .6)
$29,206,208.88 s
$4,779,197.82 9
By providing my signature below, I am hereby certifying that, to the best of my knowledge, the information stated herein
is accurate, true, and complies with the provisions of Minnesota Statutes Section 467.47 and the approved
methodology as outlined in the City of Rochester Commissioner of Employment and Economic Development State
Infrastructure Aid Agreement.
For Expenditures By the Medical Business Entity:
5-23-22
Mayo Clinic Chief Financial Officer Date
Destination Medical Center Corporation
1 Expenditures need to be after June 30, 2013
2Other Private Entities' certification of expenses may be certified retroactively in 2014 after the Destination Medical
Center District and Development Plan are adopted.
3This figure is based solely upon project building permit costs. Minn. Stat. § 469.47, subd 1 (d) permits additional
expenditures, and discussion is underway as to how to document such additional expenditures, which may result in
adjustments.
Form Revised 05/18/2022
1340053-2.xls
ATTACHMENT 3 - 1
EXHIBIT D
Aaron Parrish
Brent Svenby
Kaela Brennan
Alison Zelms
Amanda Mack
*201 4th Street SE,Rochester,MN 55904 Phone:507-328-2900 Fax:507-328-2901 www.rochestermn.gov
Steve Grove, Commissioner DEED
Page 2
June 15, 2022
cc: Kevin McKinnon
Jeremy Lacroix
Pam Wheelock, Chair DMC Corporation
Kim Norton, Mayor
Patrick Seeb
Noloan Schild
EXHIBIT D
REVISED AS OF JUNE 15, 2022
EXHIBIT D
June 30, 2022
Pamela Wheelock, Chair
Destination Medical Center Corporation
C/O Kaela Brennan
McGrann Shea Carnival
Straughn & Lamb, Chartered
800 Nicollet Mall, Suite 2600
Minneapolis, MN 55402-7035
Dennis Dahlen, Chief Financial Officer
Mayo Clinic
200 First Street SW
Rochester, MN 55905
Dear Ms. Wheelock and Mr. Dahlen:
Thank you for submitting the 2021 Certification of Expenditures for Destination Medical Center (DMC).
We are excited to assist with this initiative to make the Mayo Clinic, Rochester, and Minnesota a premier
medical destination.
Your revised certification listed $110,586,916.31 in Mayo Clinic expenditures and $44,560,906.89 in
other expenditures. The Mayo Clinic provided DEED with information on all invoices and payments
(more than 12,000 entries) to account for their certification amount. You also provided an independent
third party report from Ernst & Young LLP stating the law and procedures for certifying expenditures are
being followed properly. Additionally, DEED staff reviewed invoices and payments in your certification.
We selected 68 expenditures totaling $9,018,157.38. We selected one expenditure from each of the 68
new projects listed. All invoices for the selected expenditures were on file and payments were made in a
timely fashion. DEED staff also confirmed that projects had building permits after June 30, 2013. DEED
acknowledges the expenses and payments met guidelines and the internal accounting and auditing
system the Mayo Clinic has in place is sufficient.
Additionally, the DMCC and the City of Rochester provided DEED with a list of 26 completed projects for
$23,296,226 in expenditures. DEED randomly selected 10 permits and was provided the permit
application, permit, project closeout, and map of projects. From this information, DEED confirmed 9 of
the 10 projects’ values, dates, eligibility, and completion. One project was located outside of the DMC
area and was ineligible. The city also approved $62,397,519.85 in expenditures on eight projects that are
completed over multiple years. Your revised certification reduced and properly listed the total amount
of other private entities expenditures at $44,560,906.89. DMCC contracted with Clifton Larson Allen
(CLA) to complete a review on its Certification to insure it is correct. CLA issued an opinion that the
DMCC certification process was correct.
As required by law, I have determined that the amount of 2021 Destination Medical Center
(;+,%,7E
Expenditures are the $155,147,823.20 as you certified (in a revised certification). DMC cumulative
Expenditures are now $1,262,043,959.32. As directed by statute, $200 million is subtracted from this
amount to provide Qualified Expenditures of $1,062,043,959.32. Based on this figure and adequate
general aid contributions from the city, I have determined the City of Rochester has qualified for
$29,210,609 of General State Infrastructure Aid in 2022. As per state statute, this payment will be made
prior to September 1.
Thank you again for your efforts on this groundbreaking economic development effort.
Regards,
Steve Grove
Commissioner
C: Patrick Seeb, Economic Development Agency Executive Director
Brent Svenby, City of Rochester
EXHIBIT E
June 30, 2022
The Honorable Kim Norton
Mayor, City of Rochester
201 4th Street SE – Room 281
Rochester, MN 55904-3708
Dear Mayor Norton:
Thank you for submitting the 2021 Certification of Contributions for Destination Medical Center (DMC).
We are excited to assist with this initiative to make the Mayo Clinic, Rochester, and Minnesota a premier
medical destination.
Your revised 2021 Certification listed $2,729,666.79 in city general aid contributions between July 1,
2013 and December 31, 2021. You provided a detailed listing of more than 600 expenditures. These
expenditures consisted of direct DMC expenses paid by the city as well as DMC Corporation and DMC
Economic Development Authority expenses paid for by the city. From that list, DEED randomly selected
41 expenses for review. We reviewed invoices, payments and city payroll files for accuracy and
eligibility.
Additionally, the city provided DEED with an independent third party report from Clifton Larson Allen
stating the law and procedures for certifying contributions are being followed properly.
Your revised certification listed $0 in transit contributions and no transit aid will be paid by DEED for
2021.
The amount of your general aid contributions qualifies you for the annual maximum of $30 million of
general aid, however Qualified Expenditures from Mayo Clinic and others were $1,062,203,959. This
amount of Expenditures reduces the amount of general aid to the city to $29,210,609. Your excess
Contributions will be credited towards future years. We will be providing payment prior to September 1
as mandated by statute.
Thank you again for your efforts on this groundbreaking economic development effort.
Regards,
Steve Grove
Commissioner
C: Pamela Wheelock, Chair of Destination Medical Center Corporation
Dennis Dahlen, Chief Financial Officer Mayo Clinic
Patrick Seeb, Economic Development Agency Executive Director
EXHIBIT E
Post-Sale
$21,265,000
Rochester, Minnesota
General Obligation Tax Increment Revenue Bonds, Series 2017B
(Parking Ramp Project)
DEBT SERVICE SCHEDULE
Date Principal Coupon Interest Total P+I
02/01/2018 ----
08/01/2018 --540,639.84 540,639.84
02/01/2019 550,000.00 5.000%381,628.13 931,628.13
08/01/2019 --367,878.13 367,878.13
02/01/2020 735,000.00 5.000%367,878.13 1,102,878.13
08/01/2020 --349,503.13 349,503.13
02/01/2021 775,000.00 5.000%349,503.13 1,124,503.13
08/01/2021 --330,128.13 330,128.13
02/01/2022 815,000.00 5.000%330,128.13 1,145,128.13
08/01/2022 --309,753.13 309,753.13
02/01/2023 855,000.00 5.000%309,753.13 1,164,753.13
08/01/2023 --288,378.13 288,378.13
02/01/2024 895,000.00 5.000%288,378.13 1,183,378.13
08/01/2024 --266,003.13 266,003.13
02/01/2025 940,000.00 5.000%266,003.13 1,206,003.13
08/01/2025 --242,503.13 242,503.13
02/01/2026 990,000.00 5.000%242,503.13 1,232,503.13
08/01/2026 --217,753.13 217,753.13
02/01/2027 1,035,000.00 5.000%217,753.13 1,252,753.13
08/01/2027 --191,878.13 191,878.13
02/01/2028 1,090,000.00 2.000%191,878.13 1,281,878.13
08/01/2028 --180,978.13 180,978.13
02/01/2029 1,110,000.00 2.250%180,978.13 1,290,978.13
08/01/2029 --168,490.63 168,490.63
02/01/2030 1,135,000.00 3.000%168,490.63 1,303,490.63
08/01/2030 --151,465.63 151,465.63
02/01/2031 1,170,000.00 2.750%151,465.63 1,321,465.63
08/01/2031 --135,378.13 135,378.13
02/01/2032 1,200,000.00 2.750%135,378.13 1,335,378.13
08/01/2032 --118,878.13 118,878.13
02/01/2033 1,235,000.00 2.875%118,878.13 1,353,878.13
08/01/2033 --101,125.00 101,125.00
02/01/2034 1,270,000.00 2.875%101,125.00 1,371,125.00
08/01/2034 --82,868.75 82,868.75
02/01/2035 1,305,000.00 3.000%82,868.75 1,387,868.75
08/01/2035 --63,293.75 63,293.75
02/01/2036 1,345,000.00 3.000%63,293.75 1,408,293.75
08/01/2036 --43,118.75 43,118.75
02/01/2037 1,385,000.00 3.000%43,118.75 1,428,118.75
08/01/2037 --22,343.75 22,343.75
02/01/2038 1,430,000.00 3.125%22,343.75 1,452,343.75
Total $21,265,000.00 -$8,185,705.47 $29,450,705.47
SIGNIFICANT DATES
Dated Date...........................................................................................................................................................................11/16/2017
Delivery Date....................................................................................................................................................................... 11/16/2017
First Coupon Date................................................................................................................................................................8/01/2018
Yield Statistics
Bond Year Dollars................................................................................................................................................................$254,390.21
Average Life.........................................................................................................................................................................11.963 Years
Average Coupon.................................................................................................................................................................. 3.2177754%
Net Interest Cost (NIC).........................................................................................................................................................2.7176241%
True Interest Cost (TIC)....................................................................................................................................................... 2.6417803%
Bond Yield for Arbitrage Purposes.......................................................................................................................................2.6130470%
All Inclusive Cost (AIC)........................................................................................................................................................ 2.6889724%
IRS Form 8038
Net Interest Cost.................................................................................................................................................................. 2.6154299%
Weighted Average Maturity..................................................................................................................................................11.612 Years
Series 2017B GO TIF Parki | SINGLE PURPOSE | 10/16/2017 | 12:02 PM
EXHIBIT F