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HomeMy WebLinkAboutDMCC Resolution No. 154-2024 (Approving the 2025 DMCC Funding Request, the Extension of Working Capital Loan, and Authorizing Transmittal to the City of Rochester)DESTINATION MEDICAL CENTER CORPORATION RESOLUTION NO. 154-2024 A RESOLUTION APPROVING THE 2025 DMCC FUNDING REQUEST, THE EXTENSION OF WORKING CAPITAL LOAN, AND AUTHORIZING TRANSMITTAL TO THE CITY OF ROCHESTER The following Resolution was offered by Douglas Baker, Jr., seconded by Mark Thein. BACKGROUND RECITALS A. The Destination Medical Center Corporation (“DMCC”) must adopt an annual Funding Request and Five Year Capital Plan. The DMCC Funding Request includes the DMCC annual budget, the Destination Medical Center Economic Development Agency (“EDA”) annual budget and work plan, and support costs incurred by the City of Rochester. B. On February 26, 2015, the DMCC adopted Resolution No. 26-2015, approving the form of and authorizing the Chair and Treasurer to execute, amend, and take other actions to implement the working capital loan documents to provide for advance funding of DMCC and EDA operations (collectively, the “Loan Documents”). C. The DMCC has completed the required annual reconciliation of the advances to the DMCC and the DMCC eligible expenses and has prepared a DMCC Request for Extension of the Working Capital Loan for 2025 in the amount of $1,000.00, as such amount may be adjusted by the City pursuant to Section 2.8(c) of the Working Capital Loan Agreement (DMCC-City) effective April 1, 2014, as amended. D. The EDA has submitted an EDA Request for Extension of the Working Capital Loan for 2025, requesting that the Loan Documents be extended for 2025 in the amount of $100,000,00, as such amount may be adjusted by the City pursuant to Section 2.8(c) of the Working Capital Loan Agreement (DMCC-EDA), effective April 1, 2014, as amended, and has provided the required annual reconciliation of advances and eligible expenses paid from such advances. E. The DMCC and EDA Requests for Extension of the Working Capital Loan for 2025 are attached as Exhibit A. RESOLUTION NOW, THEREFORE, BE IT RESOLVED, by the DMCC Board of Directors that the 2025 DMCC Funding Request and the Five Year Capital Plan, each on file with the DMCC, are approved. Further, the DMCC hereby approves the projects set forth in the first year of the Five Year Capital Plan as public infrastructure projects within the meaning of Minnesota Statutes Section 469.40, Subdivision 11, and consistent with the Development Plan, adopted on April 23, 2015, as amended (each, an “Approved Capital Project” and collectively , the “Approved Capital Projects”); provided that: 2 1. The scope of approval for each Approved Capital Project is set forth in the 2025 DMC Capital Improvement Program Summary attached as Exhibit B. 2. Final approval of funding for each Approved Capital Project will be subject to subsequent approval by the DMCC, which approval shall be based upon final determination and review of scope, costs, and availability of funds; 3. For the Chateau Theatre project, the current authorized funding is restricted to expenditures which may be necessary to facilitate the development of a plan for future capital needs, potential funding sources, anticipated uses and ongoing operating and business modeling, it being understood that any additional funding for the Chateau Theatre project is subject to future approval by DMCC; and 4. Staff is directed to provide the Board with an annual reconciliation of budget amounts and expenditures for each of the Approved Capital Projects. BE IT FURTHER RESOLVED, that the EDA Request for Extension of the Working Capital Loan for 2025, and the DMCC Request for Extension of the Working Capital Loan for 2025, attached as Exhibit A and on file with the DMCC, are approved. BE IT FURTHER RESOLVED, that the Chair and Treasurer are hereby authorized and directed to transmit this Resolution to the City of Rochester and to take such actions as are necessary or convenient to effectuate the 2025 DMCC Funding Request, the Five Year Capital Plan, and the extension of the Loan Documents, including, but not limited to, the authority to execute, deliver, and perform, in the name of and on behalf of the DMCC, the DMCC Request for Extension of the Working Capital Loan for 2025 and the Loan Documents to which the DMCC is a party, with such modifications, additions, deletions, or other changes as the Chair and Treasurer may deem necessary or appropriate to accomplish the requested extension, all which may be performed without further action of this Board. 29753110v4 3 The question was on the adoption of the Resolution and there were 7 YEAS and 0 NAYS, as follows: BOARD OF DIRECTORS Destination Medical Center Corporation YEA NAY OTHER Douglas M. Baker, Jr. X James R. Campbell X Brooke Carlson X R.T. Rybak X Mark Thein X Pamela Wheelock X Paul D. Williams X RESOLUTION ADOPTED on September 26, 2024. ATTEST: Pamela Wheelock, Chair Destination Medical Center Corporation EXHIBIT A DMCC REQUEST FOR EXTENSION OF WORKING CAPITAL LOAN FOR 2025 To: City of Rochester, Minnesota (the “City”) 1. The undersigned authorized representative (the “Representative”) of the Destination Medical Center Corporation (“DMCC”) hereby authorizes and requests an extension of the Term of the Working Capital Loan Agreement (DMCC-City), dated April 30, 2015, as amended, by and between the City and the DMCC (the “Agreement”) and renewals of the DMCC Note and the EDA Note, in the amount and on the date specified below, in order to pay certain DMCC Eligible Expenses and to provide the EDA Tranche to pay certain EDA Eligible Expenses, pursuant to the terms and conditions of the Agreement. Capitalized terms not otherwise defined herein shall have the meanings given them in the Agreement. 2. The Representative certifies that (i) attached as Attachment 1 is a true and correct annual reconciliation of the DMCC Tranche Advances made through August 31, 2024 and the DMCC Eligible Expenses paid from such Advances, as required by Section 2.6 of the Agreement; (ii) each item for which the DMCC sought payment in Attachment 1 was a DMCC Eligible Expense; and (iii) the Advances received by the DMCC have not exceeded the limitations set out in Section 2.4(a) of the Agreement. 3. The Representative further certifies that attached as Attachment 2 is a true and correct copy of the EDA Request for Extension of the Working Capital Loan for 2024. 4. The DMCC hereby requests an extension of the Agreement Term and renewals of the DMCC Note and the EDA Note, in the amount of $1,000.00 as the DMCC Tranche Advance and in the amount of $100,000.00 as the EDA Tranche Advance, as such amounts may be adjusted by the City pursuant to Section 2.8(c) of the Agreement, for payment of DMCC Eligible Expenses and, as to the EDA Tranche, for payment of EDA Eligible Expenses. 5. The Representative further certifies that no portion of the amount requested in paragraph 4 above constitutes a DMCC Excess Request under Section 2.3 of the Agreement. 6. The Representative further certifies that this statement and all exhibits and attachments hereto, and documents furnished in connection herewith, shall be conclusive evidence of the facts and statements set forth herein and shall constitute full warrant, protection, and authority to the City for its actions taken pursuant hereto. Dated: ________________, 2024 Authorized DMCC Representative September 26 ATTACHMENT 1 EDA REQUEST FOR EXTENSION OF WORKING CAPITAL LOAN FOR2025 To:Destination Medical Center Corporation City of Rochester,Minn esota 1.The undersigned authorized representative (the "Representative")of the Destination Medical Center Economic Development Agency ("EDA")hereby authorizes and requests an extension of the Term of the Workin g Capital Loan Agreement (DMCC-EDA),dated April 30,2015,by and between the Destination Medical Center Corporation ("DMCC") and the EDA (the "Agreement"),and a renewal of the EDA Note,in the amount and on the date specified below,in order to pay certain EDA Eligible Expenses pursuant to the terms and conditions of the Agreement.Capitalized terms not otherwise defined herein shall have the meanin gs given them in the Agreement. 2.The Representative certifies that (i)attached as Exhi bit A is a true and correct ann ual reconciliation of the Advances made through July 31,2024 and EDA Eligible Expenses paid from such Advances,as required by Section 2.6 of the Agreement;(ii)each item for which the EDA sought payment in Exhi bit A was an EDA Eligible Expense;and (iii)the Advances received by the EDA have not exceeded the limitations set out in Section 2.4(b) of the Agreement. 3.The Representative hereby requests an extension of the Agreement Term and a renewal of the EDANote through the period December 31,2025,in the Maxim um Aggregate EDA Advances am ount of $100,000,as such am ount may be adjusted by the City as provided in Section 2.8(c)of the Agreement,for payment of EDA Eligible Expenses pursuant to the terms and conditions of the Agreement. 4.The Representative furth er certifies that no portion of the am ount requested in paragraph 3 above constitutes an EDA Excess Request under Section 2.3 of the Agreement. 5.The Representative furth er certifies that this statement and all exhi bits and attachm ents hereto, and docum ents furnished in connection herewith,shall be conclusive evidence of the facts and statements set forth herein and shall constitute full warrant,protection,and authority to the DMCC for its actions taken pursuant hereto. Dated:September 12,2024 _a Authorized EDA Representatlve ATTACHMENT 2 EXHIBIT B Description of Approved Capital Projects Chateau Theatre Project Description: DMC funds have served as the primary source of capital investment in the Chateau Theatre since DMC and Mayo Clinic resources funded the City of Rochester’s purchase of the building in 2015. Since that time additional DMC funds have been authorized to support the preservation, functionality, and activation of the building, with occasional from non-DMC sources (including City-secured federal grant funding). In 2022, the City of Rochester entered an operating agreement with Threshold Arts, a local non-profit corporation. The agreement included details related to operations, cost- and revenue-sharing, performance indicators, and more. Most recently, in September 2023, the DMC Corp. board of directors authorized 2024 CIP funding for HVAC improvements at the property, but conditioned any additional funding on receiving “further detail and information regarding future capital needs, potential funding sources, anticipated uses, operating and business model, and expected operating duration.” The 2024 DMC CIP includes $100,000 to complete the analysis and planning necessary to respond to the September 2023 DMCC board direction. Any future planning, capital improvement, or operating DMC funding requests will be informed by the recommended analysis and planning. Interim Wayfinding Project Description: The anticipated commencement of major construction in the DMC development district, including LINK bus rapid transit and Mayo Clinic’s “Bold. Forward. Unbound” program, will create frequently evolving mobility and commuting circumstances for employees, residents, patients, and visitors. Interim wayfinding assets and strategies will be deployed to ensure that pedestrians, transit and micro-mobility users, and drivers can successfully navigate to and through transformation- impacted areas. Assets could include items like signage providing direction to retail and dining amenities, hotels and recreation assets, Mayo Clinic campuses and Discovery Square, and other areas of interest. Rapid Transit Project Description: Link rapid transit is a planned 2.8 mile route along 2nd Street that will connect downtown Rochester, Mayo Civic Center, Mayo Clinic campuses, and the Downtown Waterfront Southeast area. Link will be operated by Rochester Public Transit and will be free for all users. Link buses are high amenity, 60-foot electric buses which will provide service to 7 stations across the city. Service intervals will be every 5 minutes on weekdays from 6 to 9 a.m. and 3 to 6 p.m., and every 10 to 15 minutes at other times. Link will operate from 5 a.m. to midnight on weekdays and 8 a.m. to midnight on weekends. 2 The project is being completed using funds from DMC and a U.S. Federal Transit Administration (FTA) grant. In August 2022, the total project budget was estimated to be $143,373,300, with $57,349,320 being paid from DMC resources and $86,023,980 financed by the federal grant. As the project has continued to proceed through the federal review and grant approval process, the FTA has required that additional contingency funding in the amount of $13,740,000 be allocated to the project budget. These funds would be allocated from DMC State and County Transit Aid. Staff will continue to report on project progress. The overall committed share of DMC funding remains at $57,349,200. The additional contingency funds of $13,740,000 will be expended based on criteria developed at the direction of the DMCC board and following approval by DMC and City staff made prior to use. Strategic Redevelopment Project Description: In 2020, the DMCC board and Rochester City Council began the practice of allocating a portion of DMC General State Infrastructure Aid to support requests for public infrastructure supportive of private development. Approved funding included $7 million in 2021, $3 million in 2022, $3 million in 2023, and $10 million in 2024, for a total of $23 million. This allocation of funds provides the DMCC board and City Council with an additional tool with which to respond to requests for DMC funding. Previously, all approved requests for DMC funding were supported through tax increment financing (TIF). Through May 23, 2024, the DMCC board has approved funding for several projects, including: $2.2 million for Bryk on Broadway, $3 million for the civic center north lot redevelopment proposed by Sherman Associates, $3.9 million for the first-phase senior housing development proposed by Aeon at the West Transit Village, and $5 million for eligible properties of the City of Rochester’s Downtown Commercial Historic District. All of these approvals were offered via board resolution. Developer interest in downtown Rochester continues to rise, particularly in the housing and life science markets, making this capital budget a useful asset in board and council decision-making. Sixth Street Corridor Project Description: The 6th Street Bridge, Roadway Safety and Riverfront Improvements project will construct a bridge over the Zumbro River that connects East and West 6th Street South as well as redevelop the area’s existing flood control system into an accessible riverfront space. In 2020, the City led the Downtown Waterfront Southeast Small Area Plan to create a vision for the area. The 6th Street Bridge and Riverfront Improvements project was a key component of this plan and during the study process a preferred bridge concept was identified. 3 The project is intended to: provide a safe multimodal east-west connection to Discovery Walk, southeast neighborhoods and downtown; provide greater access to the Zumbro River by creating an active, accessible, welcoming space that takes advantage of this natural amenity while also providing flood protection; improve access to support redevelopment areas in the near-term (AMPI plant site, Kmart site) and to support the economic vitality goals of the DWSE Plan; provide equitable transportation access to all through enhanced pedestrian and bicycle infrastructure and Complete Streets; implement traffic calming and other safety improvements that limit traffic volumes and speeds in adjacent neighborhood; and commit to social and economic equity and environmental sustainability throughout the project design and implementation processes. The project cost is $29.9 million and is being funded by a U.S. Department of Transportation Rebuilding American Infrastructure with Sustainability and Equity (RAISE) grant award of $19.9 million and a required local grant match of $10 million, which is sourced from DMC GSIA. No additional DMC funds have been requested or approved. Construction is expected to begin in 2026. Supporting Infrastructure Alignment: Bold. Forward. Unbound. Project Description: Beginning with the demolition of portions of Mayo Clinic’s Ozmun Building in late 2024, approximately fifteen blocks of Mayo Clinic’s downtown campus will be impacted by the “Bold. Forward. Unbound.” program in 2025. As Mayo Clinic plans for and initiates its transformative private investment, the DMC EDA and City of Rochester will coordinate public infrastructure improvements to ensure maximum public benefit with minimum public impact. The proposed 2025 DMC CIP budget of $1,000,000 is a placeholder figure while staff and consultants from Mayo, City, and DMC evaluate infrastructure needs, develop a proposed construction and responsibility matrix, and make recommendations to optimize project schedules. These funds are not intended to support specific physical improvement, and any future capital requests in the affected area will be informed by these coordinating activities. Supporting Infrastructure Alignment: West Transit Village Project Description: Mayo Clinic, the City of Rochester, DMC, and the master development team (Kraus Anderson and Aeon) are partnering to develop the West Transit Village. In May 2024, the first major DMC capital investment in the West Transit Village was approved, $3.9 million in DMC GSIA to support the senior housing development proposed by Aeon. Timely development of the site remains a priority, as the transit-related elements of the site plan must be constructed in time to serve the users of the LINK rapid transit system. There are more than 42 different major plan components that need to align to realize the vision for the site. As the development team advances toward construction, the DMC EDA and City of Rochester will coordinate public infrastructure improvements to ensure maximum public benefit with minimum public impact. The proposed 2025 DMC CIP budget of $1,000,000 is a placeholder figure while staff and consultants from Mayo, City, and DMC evaluate infrastructure needs, 4 develop a proposed construction and responsibility matrix, and make recommendations to optimize project schedules. These funds are not intended to support specific physical improvement, and any future capital requests in the affected area will be informed by these coordinating activities. DMC Corporation Project Description: The annual operating budget of the DMC Corporation provides funding for professional services, including audit and tax preparation and legal counsel; insurance and required non-profit filings; board meetings; and eligible board member travel, per diem, and reimbursable expenses. City of Rochester DMC Project Management Team Project Description: The annual operating budget of the City of Rochester DMC Project Management Team for 8 employees (7.5 FTE) engaged in project, program, and technical support of the DMC initiative. Supported projects include LINK Rapid Transit, 6th Street Connectivity, West Transit Village development, Heart of City, Riverfront development, and project coordination related to “Bold. Forward. Unbound.” Supported programs include targeted business and workforce utilization, the downtown task force, the Downtown Commercial Historic District property preservation program, active transportation, and “Business Forward” construction enhancement and impact mitigation strategies. Annual project management activities are presented in an annual work plan. City of Rochester administrative support to the DMCC Project Description: The City of Rochester provides administrative support to the DMC Corporation, including serving at the DMCC’s fiscal agent, coordinating the completion of its annual financial audit and tax filings, posting meeting agendas and other required notices. DMC EDA Project Description: The DMC EDA provides ongoing program and advisory services to the DMCC. The scopes of services are informed by the DMC EDA’s responsibilities under the DMC Act, the services agreement between the DMCC and the DMC EDA, and the approved annual work plan.