HomeMy WebLinkAbout3/23/2023 DMCC Executive Committee Meeting - Agenda and Meeting Packet
Destination Medical Center Corporation
Board of Directors
Executive Committee Meeting
Thursday, March 23, 2023
9:30 A.M.
1
DESTINATION MEDICAL CENTER CORPORATION (DMCC)
EXECUTIVE COMMITTEE MEETING
Thursday, March 23, 2023
9:30 A.M.
Remote Viewing: https://www.youtube.com/destinationmedicalcenter
AGENDA
PAGE
I.Call to Order
II.Roll Call
III.Approval of Agenda 1
IV.Approval of Minutes: March 10, 2022 2
V.April 1, 2023 Report to DEED 3
(Presenters: Patrick Seeb, EDA; Doug Holtan, Mayo Clinic;
Cindy Steinhauser, City of Rochester)
Resolution A: Authorizing and Approving the April 1, 2023
Report to DEED Pursuant to Statute
VI.Request for Revisions to Bryk on Broadway Apartments Project 11
Resolution B: Approving Revisions to the Bryk on Broadway
Apartments Project
VII.Adjourn
DESTINATION MEDICAL CENTER CORPORATION (DMCC)
EXECUTIVE COMMITTEE MEETING
Thursday, March 10, 2022
9:30 A.M.
MINUTES
I. Call to Order. Chair R.T. Rybak called the meeting to order at 9:30 a.m.
II. Roll Call. Chair R.T. Rybak, Vice Chair Kim Norton, and Pam Wheelock were present.
Doug Baker, Jim Campbell, Council President Brooke Carlson, and Commissioner
Mark Thein also attended the meeting. Chair Rybak and Ms. Wheelock participated
via interactive technology due to a scheduling conflict.
III. Approval of Agenda. Vice Chair Norton moved approval of the agenda. Ms. Wheelock
seconded the motion. Ayes: Vice Chair Norton, Chair Rybak, Ms. Wheelock. Nays:
None.
IV. Approval of Minutes: March 26, 2020. Ms. Wheelock moved approval of the minutes.
Vice Chair Norton seconded the motion. Ayes: Vice Chair Norton, Chair Rybak, Ms.
Wheelock. Nays: None.
V. April 1, 2022 Report to DEED. Patrick Seeb, DMC EDA Executive Director, provided
an overview of the April 1, 2022 Report to DEED. He reported that new private
investment in 2021, including investment by Mayo Clinic and other private entities,
totals $155.3 million, exceeding the private investment in 2020 by approximately $11
million. Doug Holtan, Mayo Clinic Department of Facilities and Support Services
Chair, highlighted Mayo Clinic investments in research, education, and patient care.
Alison Zelms, City of Rochester City Administrator, described private investments,
other than from Mayo-Clinic, in affordable housing, retail, hospitality, and life science.
Resolution A: Authorizing and Approving the April 1, 2022 Report to DEED
Pursuant to Statute. Ms. Wheelock moved approval of the resolution. Vice Chair
Norton seconded the motion. Ayes: Vice Chair Norton, Chair Rybak, Ms. Wheelock.
Nays: None.
VI. Adjourn. Vice Chair Norton moved to adjourn; Secretary Wheelock seconded the
motion. Ayes: Vice Chair Norton, Chair Rybak, Ms. Wheelock. Nays: None.
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DESTINATION MEDICAL CENTER
APRIL 1 REPORT TO DEED
TABLE OF CONTENTS
Page 4: Summary Memo from DMC EDA
Page 5: Resolution authorizing the DMCC Chair or Vice Chair to submit the report
Page 6: Certification of Expenditures form
Pages 7-9: Summary of 2022 Non‐Mayo‐Clinic private investment
Page 10: Letter from Mayo Clinic to DEED
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MEMO
TO: Destination Medical Center Corporation
FROM: Destination Medical Center Economic Development Agency
RE: 2022 DMC PRIVATE INVESTMENT
By April 1 of each year, the DMC Corporation and Mayo Clinic must report DMC private
investment to the State of Minnesota Department of Employment and Economic Development
(DEED). DEED uses this information to affirm the progress of the DMC initiative and determine
the required amount of annual State DMC funding. This productive reporting relationship is
one aspect of the unique DMC economic development model. The formal report follows this
summary memo.
New private investment in 2022, comprised of investment by Mayo Clinic and other private
investors, totals $199.1 million:
a.Mayo Clinic private investment: $172.6 million
b.Non‐Mayo‐Clinic private investment: $26.5 million
2022 private investment exceeded 2021 private investment by approximately $44 million,
boosted by Mayo Clinic’s largest‐ever annual investment. It is an encouraging sign that
Rochester’s economy, secured by the financial and operational health of Mayo Clinic, is on a
recovery trajectory. Many significant projects, from Mayo Clinic’s Proton Beam Therapy Center
to the Bryk on Broadway affordable housing development, made significant progress over the
course of 2022.
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A.
DESTINATION MEDICAL CENTER CORPORATION
EXECUTIVE COMMITTEE
RESOLUTION NO. EC-___ -2023
Authorizing April 1, 2023 Report to DEED Pursuant to Statute
BACKGROUND RECITALS
A.Minnesota Statutes, Section 469.47, provides that by April 1 of each year, the
medical business entity (Mayo Clinic) must certify to the Commissioner of the Department of
Employment and Economic Development (“DEED”) the amount of expenditures made by Mayo
Clinic in the preceding year. For expenditures made by an individual or entity other than Mayo
Clinic, the Destination Medical Center Corporation (“DMCC”) must compile the information on
the expenditures and may certify the amount to DEED. The certification to DEED must be in the
form prescribed by DEED and include any documentation and supporting information regarding
the expenditures that DEED requires. By August 1 of each year, DEED must determine the
amount of expenditures for the previous year.
B.Staff from the City of Rochester and the Destination Medical Center Economic
Development Agency (“EDA”) have prepared the draft report, due on April 1, 2023, attached
hereto as Exhibit A.
RESOLUTION
NOW, THEREFORE, BE IT RESOLVED, by the Executive Committee of 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 Department of
Employment and Economic Development as required by Minnesota Statutes, Section 469.47, in
form similar to the form attached hereto as Exhibit A, as may be modified through further
discussions with Mayo Clinic or the City of Rochester, and to take such other actions as are
necessary and appropriate to effectuate the timely submission of the report to DEED.
1455123
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1
2
3
4
5
6
7
8
9
For all other Expenditures:
Certification of Expenditure
Destination Medical Center
For Calendar Year 2022
Due to Commissioner of Employment and Economic Development (DEED) by April 1, 2023
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 2022, and the certifications required to support the documentation under the City of Rochester Commissioner of
Employment and Economic Development State Infrastructure Aid Agreement.
$172,632,461.06
$26,456,228.36
$199,088,689.42
Total Expenditures Reported This Year by Medical Business Entity1
Total Expenditures Reported This Year for other Private Entities1,2
TOTAL Expenditures This Year
Expenditures Reported this Year
All Expenditures claimed since June 30, 2013
State Aid Qualified for This Year (local government match also required)
General State Infrastructure Aid Qualified for (Box 7 multiplied by .0275)$34,681,147.84
$1,262,043,959.32
$199,088,689.42
$1,461,132,648.74
$1,261,132,648.74
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)
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.
State Transit Aid Qualified for (Box 7 multiplied by .0075 and then multiplied by .6)
DateMayo Clinic Chief Financial Officer
For Expenditures By the Medical Business Entity:
$5,675,096.92
1Expenditures need to be after June 30, 2013
2Other Private Entities' certification of expenses may be certified retroactively in 2014 after the Destination Medical
Center District and Development Plan are adopted.
Form Revised 02/28/2023
3This figure is based solely upon project building permit costs. Minn. Stat. § 469.47, subd 1(d) permits additional
expenditures, and discussion is underway as to how to document such additional expenditures, which may result in
adjustments.
DateDestination Medical Center Corporation
EXHIBIT A
6
Building Permits within the DMC Boundary
(Does not include Mayo Projects)
Completed
Year Projects
2018 250,000$
2020 392,588$
2021 4,100,399$
2022 1,213,854$
TOTAL 5,956,841$
2022 Destination Medical Center ‐ Partially Completed Projects Tracking
2021 2022
Project Address
Total Building Permit Value
To Date Partial Completed Work
Bryk Apartments 401 N Broadway 25,000,000.00$ 4,500,612.64$ 20,499,387.36$
TOTAL 26,456,228.36$
7
2016 2017 2018
Project Address
Partial Completed
Work Claimed Permit Number Value
Completion
Date Permit Number Value
Completion
Date Total Permits Balance Claimed Balance Claimed
1st Avenue Flats 400 NW 1 Avenue 4,976,244.00$ R16‐0024MFB 622,000.00$ R16‐0008MFB 8,097,735.57$ 6/26/2017 8,719,735.57$ 3,743,491.57$ ‐$
Lofts at Mayo Park 123 SE 6 Avenue 6,347,552.97$ R15‐0079MFB 794,323.00$ 3/6/2017 R16‐0011MFB 6,105,677.00$ 8/17/2017 6,900,000.00$ 552,447.03$ ‐$
501 on First 501 SW 1 Avenue 12,534,186.96$ R15‐0053MFB 1,555,125.00$ 9/2/2016 R15‐0058MFB 11,422,057.75$ 1/28/2018 12,977,182.75$ ‐$ 442,995.79$
Flats on 4th (Buckeye) 412 SE 3 Avenue 8,906,937.40$ R15‐0107MFB 2,400,000.00$ 12/6/2018 R16‐0009MFB 10,682,292.00$ 2/12/2018 13,082,292.00$ ‐$ 4,175,354.60$
TOTAL for 2016 32,764,921.33$ 41,679,210.32$ 4,295,938.60$ 4,618,350.39$
Dollar amount finaled in 2016 1,555,125.00$
Dollar amount submitted for partial work in 2016 31,209,796.33$
TOTAL for 2017 4,295,938.60$
TOTAL for 2018 4,618,350.39$
2017 2018
Project Address
Partial Completed
Work Claimed Permit Number Value
Completion
Date Permit Number Value
Completion
Date Permit Number Value Completion Date Total Permits Balance Claimed
Broadway @ Center 10 East Center Street 33,866,963.98$ R15‐0081CB 1,000,000.00$ 12/6/2018 R15‐0384CB 45,000,000.00$ TCO 4/1/19 R15‐0447CB 38,282,463.00$ 7/25/2019 84,282,463.00$ 50,415,499.02$
Discovery Square 202 4th Street SW 2,965,073.30$ R17‐0384CB 1,750,000.00$ 11/13/2018 R17‐0454CB 1,290,000.00$ 11/13/2018 R17‐0492CB 12,969,000.00$ 7/10/2019 16,009,000.00$ 13,043,926.70$
TOTAL for 2017 36,832,037.28$ 100,291,463.00$ 63,459,425.72$
TOTAL for 2018 63,459,425.72$
2018 2019 2020
Project Address
Partial Completed
Work Claimed Permit Number Value
Completion
Date Permit Number Value
Completion
Date Permit Number Value
Completion Date Total Permits Balance Claimed Balance Claimed
Ronald McDonald House 850 2nd Street SW 4,872,363.01$ R18‐0048CB 10,126,000.00$ 11/4/2019 10,126,000.00$ 5,253,636.99$ ‐$
Hotel Indigo (Holiday Inn) 220 South Broadway 1,156,333.15$ R18‐0294CB 500,000.00$ 4/19/2021 R18‐0389CB 5,000,000.00$ 10/22/2020 R18‐0454CB 5,000,000.00$ 10/27/2020 10,500,000.00$ 9,343,666.85$ ‐$
Residence @ Dis. Sq. 511 3rd Ave. SW 9,820,880.09$ R17‐0143MFB 1,750,000.00$ 8/30/2019 R17‐0141MFB 17,250,000.00$ 4/7/2020 19,000,000.00$ 9,179,119.91$ ‐$
Urban on First 429 South Broadway 12,455,954.00$ R18‐0003MFB 2,428,958.00$ 11/19/2019 R18‐0015MFB 28,380,000.00$ 11/19/2019 30,808,958.00$ 18,353,004.00$ ‐$
Berkman (Alatus)217 & 301 14th Ave SW 25,936,546.00$ R17‐0157MFB 4,900,000.00$ 7/15/2020 R18‐0011MFB 86,237,507.00$ 7/15/2020 R18‐0037MFB 2,178,293.00$ 7/14/2020 93,315,800.00$ 59,063,337.00$ 8,315,917.00$
TOTAL for 2018 54,242,076.25$ 101,192,764.75$
TOTAL for 2019 101,192,764.75$
TOTAL for 2020 8,315,917.00$
2019 2020 2021
Project Address
Partial Completed
Work Claimed Permit Number Value
Completion
Date Permit Number Value
Completion
Date Permit Number Value
Completion Date Total Permits Balance Counted Balance Counted
Ryan/Wells Fargo 21 1st SW 5,250,000.00$ R19‐0029CB 5,250,000.00$ 3/27/2020 5,250,000.00$ ‐$
Hyatt House (Civic on First) 315 1st Ave. NW 6,940,448.00$ R18‐0467CB 3,710,000.00$ 2/18/2021 R19‐0003D 63,000.00$ R19‐0078CB 28,480,475.00$ 2/4/2022 32,253,475.00$ 24,151,076.04$ 1,161,950.96$
Eleven02 101 11th Ave. SW 4,159,810.90$ R19‐0206CB 6,750,000.00$ 2/16/2022 R19‐0235CB 22,940,975.00$ 4/26/2021 29,690,975.00$ 24,377,346.96$ 1,153,817.14$
TOTAL for 2019 16,350,258.90$ 48,528,423.00$ 2,315,768.10$
TOTAL for 2020 48,528,423.00$
TOTAL for 2021 2,315,768.10$
2020 2021
Project Address
Partial Completed
Work Claimed Permit Number Value
Completion
Date Permit Number Value
Completion
Date Permit Number Value
Completion Date Total Permits Balance Counted
Two Discovery Square 415 2 Ave SW 5,553,179.85$ R20‐0243CB 7,500,000.00$ 12/15/2021 R20‐0281CB 2,200,000.00$ 12/15/2021 R20‐0312CB 10,461,480.00$ 3/2/2022 20,161,480.00$ 14,608,300.15$
TOTAL for 2020 5,553,179.85$
TOTAL for 2021 14,608,300.15$
2021 2022
Project Address
Partial Completed
Work Claimed Permit Number Value
Completion
Date Permit Number Value
Completion
Date Total Permits Balance Counted
Bryk Apartments 401 N Broadway Ave 4,500,612.64$ R21‐0031MFB 1,000,000.00$ 8/18/2022 R21‐0038MFB 24,000,000.00$ 25,000,000.00$ 20,499,387.36$
TOTAL for 2021 4,500,612.64$
TOTAL for 2022 20,499,387.36$ Based on the Application and Certificate for Payment for the project, the total contract price for the development is $33,894,231
2021 Destination Medial Center ‐ Partially Completed Projects Tracking
2021
2020 Destination Medial Center ‐ Partially Completed Projects Tracking
2020
2018 Destination Medial Center ‐ Partially Completed Projects Tracking
2018
2019 Destination Medial Center ‐ Partially Completed Projects Tracking
2017
2016 Destination Medial Center ‐ Partially Completed Projects Tracking
2017 Destination Medial Center ‐ Partially Completed Projects Tracking
2017
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Permit Type Permit Number Permit Date Parcel ID Address Amount Description Owner Permit Status Date
Commercial Bldg R18‐0141CB 7/31/2018 017883 7 SW 2 ST $250,000 New restaurant within an existing space.Yong Hao Liu Finaled 12/9/2022
Commercial Bldg R20‐0225CB 10/26/20 82430 206 BROADWAY AVE S $254,588 Tenant build‐out Cornerstone Management Services Finaled 02/11/22
Commercial Bldg R20‐0153CB 07/02/20 17926 21 1 ST SW $100,000 Interior remodel of existing office. (Wendland‐Utz Law)Chris Wendland C of C Issued 04/27/22
Sign R20‐0120S 12/04/20 17926 21 1 ST SW $38,000 Wall signs for Wells Fargo [lit]none given Finaled 10/21/22
Commercial Bldg R21‐0047CB 3/2/2021 83795 202 SW 4 ST $1,900,000 Tenant fit‐up of offices, conference rooms and lab spaces. (Discovery Square)Paul Stalboerger CO Issued 3/22/2022
Commercial Bldg R21‐0097CB 4/7/2021 79185 318 SW 1 AVE $1,661,399 Remodeling of the second floor of 318 Commons ‐ offices and collaboration spaces.GH HOLDINGS LLC C of C Issued 4/22/2022
Commercial Bldg R21‐0326CB 9/16/2021 84934 311 NW 1 AVE $52,000 Fit‐up of commercial space to accommodate new salon ARTIKA CIVIC CENTER HOTEL JV LLC C of C Issued 2/22/2022
Commercial Bldg R21‐0442CB 12/15/2021 17773 20 SW 3 ST $25,000 Interior finishes for Mezza Cafe Sammi, Lawernce Finaled 9/16/2022
Commercial Bldg R21‐0443CB 12/15/2021 18097 223 N BROADWAY AVE $230,000 Tenant improvement for a new office space for Ironton IRONTON LLC C of C Issued 7/22/2022
Commercial Bldg R21‐0058MFB 12/3/2021 12780 621 SW 1 ST $120,000 Renovating the following units in Uptown Landings Apartments: G2, 103, 104, 203, 205 & 306 UPTOWN LANDING HOLDINGS LLC Finaled 12/16/2022
Commercial Bldg R21‐0059MFB 12/3/2021 9449 625 SW 3 ST $112,000 Renovations for Uptown Terrace Apartments in the following units: 2, 3, 8, 9, and 15 UPTOWN TERRACE HOLDINGS LLC Finaled 10/21/2022
Commercial Bldg R22‐0045CB 2/1/2022 83795 202 SW 4 ST $20,000 Tenant fit‐up of a conference room for Thermo Fisher Scientific at Discovery Square Thermo Fisher C of C Issued 8/4/2022
Commercial Bldg R22‐0059CB 2/9/2022 81808 212 N BROADWAY AVE $83,490 Tenant fit‐up for Queen Center Interiors by J Curry SKIATHOS LLC C of O Issued 7/6/2022
Commercial Bldg R22‐0060CB 2/10/2022 56916 1125 SW 2 ST $67,000 Replacing small amount of insulation and drywall. Flooring in eight rooms, laundry room and maintenance offi CARPENTER AND TORGERSON SSMR LLC Finaled 2/23/2022
Commercial Bldg R22‐0146CB 3/31/2022 78774 221 SW 1 AVE $46,000 Addition of doors to Bio Business 6 Sean Williams Finaled 10/18/2022
Commercial Bldg R22‐0214CB 5/20/2022 79921 426 SE 3 AVE $619,300 Interior remodel of existing space into a warming/day shelter. (The Landing)Dan Fifield C of O Issued 11/10/2022
Commercial Bldg R22‐0235CB 6/8/2022 83133 601 SW 2 ST $200,000 Towne Place Suites remodel of existing bar into Spyhouse Coffee Roasters coffee shop TPS ROCHESTER I LLC C of O Issued 11/22/2022
Commercial Bldg R22‐0268CB 7/7/2022 25728 27 SE 9 ST $99,256 Re‐roof at Soldiers Field Plaza TRCH PLAZA LLP Finaled 9/20/2022
Commercial Bldg R22‐0364CB 9/26/2022 18097 223 N BROADWAY AVE $78,808 Roof replacement for 223 Building IRONTON LLC Finaled 12/2/2022
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200 First Street SW Rochester, Minnesota 55905
507-284-2511
March 16, 2023
Kevin McKinnon
Interim Commissioner
Minnesota Department of Employment and Economic Development
1st National Bank Building
332 Minnesota Street, Suite E-200
Saint Paul, MN, 55101-1351
Dear Interim Commissioner McKinnon:
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, 2022, to December 31, 2022. The amount of
qualified investment is approximately $172.6 million. This figure represents Mayo Clinic’s largest-ever annual
investment and is a strong signal of our commitment to further solidify Rochester, Olmsted County and the
state of Minnesota as a global destination medical center.
In 2022, major projects included the ongoing construction of the Anna-Maria and Stephen Kellen Building in
downtown Rochester’s Discovery Square and the expansion of the Mayo Clinic Proton Beam Therapy Program.
Through 2022, our cumulative DMC investment totaled more than $934.7 million. A significant share of these
investments would not be possible without the community infrastructure investments enabled by the unique
public resources of the DMC initiative.
Looking back on 2022, 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 Mayo
Clinic teams served about 1.4 million patients from nearly 130 countries. In recognition of staff excellence,
Mayo Clinic made unprecedented investments in our employees in 2022. Additionally, we remained focused on
addressing pressing needs in our community, forging innovative partnerships to tackle social determinants of
health, and strengthening the health and vibrancy of the DMC district that surrounds our downtown campus.
Looking ahead, we are confident that Mayo Clinic’s Bold. Forward. strategy has positioned us to lead the
transformation of health care, including the transformation of physical health care infrastructure through the
construction of new physical spaces in downtown Rochester. Through thoughtful, connected physical and
digital frameworks, Mayo Clinic has the potential to make health care better integrated and more seamless for
our patients. The DMC initiative is an integral partner in achieving this goal and facilitating and supporting the
future of health care.
Together, I trust these examples demonstrate Mayo Clinic’s dedication to our patients, our staff, and the places
where we live and work. We look forward to maintaining our ongoing DMC partnership with the city of
Rochester, Olmsted County and the state of Minnesota.
Thank you,
Christina Zorn, J.D.
Chief Administrative Officer
Mayo Clinic 10
B.
DESTINATION MEDICAL CENTER CORPORATION
EXECUTIVE COMMITTEE
RESOLUTION NO. EC-__-2023
Approving Revisions to the Bryk on Broadway Apartments Project
BACKGROUND RECITALS
A.In Resolution 113-2021, the Destination Medical Center Corporation (“DMCC”)
approved the Bryk on Broadway Apartments Project as presented therein (the “Project”) as a
public infrastructure project within the meaning of Minnesota Statutes, Section 469.40,
subdivision 11 and as consistent with the Development Plan adopted by the DMCC on April 23,
2015, as amended (the “Development Plan”). The Project included a range of housing choices
affordable to persons and families who comprise the Development District’s workforce, with
30% of units at 50% of Adjusted Median Income (AMI), 10% of the units at 60% AMI, and 60%
of the units at 80% AMI.
B.The DMCC further approved the Project for the purposes of Minnesota Statutes,
Section 469.47, subdivision 3, of up to $2,200,000 in funding through general state infrastructure
aid, and for purposes of Minnesota Statutes, Section 469.47, subdivision 4, and supported the
City of Rochester’s (the “City’s”) expenditures of up to $2,237,354 in tax increment financing.
C.The DMCC approvals in Resolution 113-2021 were expressly contingent upon an
agreement by the parties to a development assistance agreement as to both tax increment funding
and general state infrastructure aid that secured public funds and enforced the income-
affordability criteria for a period of at least thirty years, requiring repayment for breach or
default.
D.The Project has experienced difficulty in renting units at the 80% AMI level and
has requested a temporary revision in income eligibility for certain of these 80% AMI units.
E.DMCC Resolution 51-2017 provides that the DMCC Board of Directors or the
DMCC Executive Committee will reconsider a prior approval of a project upon a finding
presented to the DMCC from either the City or the Destination Medical Center Economic
Development Agency Board of Directors (“EDA”) of a significant change in the essence or
character of the project as approved.
F.By correspondence dated March 17, 2023 and attached hereto as Exhibit A, the
City and the EDA have considered the Project and the income eligibility requirements in light of
current market conditions. As set forth in Exhibit A, staff have found a significant change and
recommend amending the development assistance agreement and related documents by a
temporary revision in the income eligibility requirements, as follows:
11
One-half of the Project’s 80% AMI units (54 units) would be available to
prospective tenants with income up to 110% or less of current AMI until October
1, 2023. Starting October 1, 2023, absent further approvals, any of these units
that are or become vacant shall automatically convert to income eligibility of 80%
AMI.
The remaining 80% AMI units (54 units) would remain limited to income of 80%
AMI or less.
Any unit that has two or more unrelated adult occupants and at least as many
bedrooms as occupants will be deemed eligible for 80% AMI if either (A) each
unrelated adult occupant’s income does not exceed 80% AMI or (B) the combined
income of the unrelated adult occupants does not exceed 80% of AMI multiplied
by the number of adult unrelated occupants.
Rent for all of the Project’s initially designated 80% AMI units shall remain equal
to or less than 30% of 80% of AMI.
RESOLUTION
NOW, THEREFORE, BE IT RESOLVED, by the Executive Committee of the
Destination Medical Center Corporation, that it approves, contingent upon approval by the City,
the request of the City and the EDA as set forth in Exhibit A to modify the development
assistance agreement and related documents:
(1) to permit up to one-half of the Project’s 80% AMI units to be available to tenants
with income up to 110% or less of current AMI until October 1, 2023. Starting October 1, 2023,
absent further approvals, any of these units that are or become vacant shall automatically convert
to income eligibility of 80% AMI; and
(2) to deem unrelated adult occupants eligible for 80% AMI if either (A) each unrelated
adult occupant’s income does not exceed 80% AMI or (B) the combined income of the unrelated
adult occupants does not exceed 80% of AMI multiplied by the number of adult unrelated
occupants.
The Executive Committee finds that these revisions are consistent with the Development
Plan.
BE IT FURTHER RESOLVED, that these approvals are expressly contingent upon (1)
the Project’s remaining 80% AMI units (54 units) continuing to be limited to income of 80%
AMI or less; and (2) rent for all of the Project’s initially designated 80% AMI units shall remain
equal to or less than 30% of 80% of AMI.
BE IT FURTHER RESOLVED, that DMCC Resolution No. 51-2017 is incorporated
fully herein by reference.
BE IT FURTHER RESOLVED, that City and EDA staff are requested to provide
updates with respect the Project.
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BE IT FURTHER RESOLVED, that the Chair or the Treasurer of the DMCC is
authorized to take such actions as are necessary and appropriate to effectuate the findings and
approvals of this Resolution.
1456267-8
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Bryk on Broadway Apartments Project
DMC Economic Development Agency and
City of Rochester Administration
March 17, 2023
STATEMENT OF RECOMMENDATION:
Adopt a resolution authorizing the City to amend the Developer Assistance Agreement (DAA) with Bryk Apartments
Rochester, LLC that would adjust the income eligibility requirements for a portion of the units within the building.
Based on our discussions with the developer, we support amending the Development Agreement to include the following:
1.Allow half of the units (54 units) restricted to 80% AMI to be rented by persons or families whose income is 110% or less of the
area median income until October 1, 2023. The rents for these units will remain at 80% AMI levels. Starting October 1, 2023,
these units would convert to 80% Units for the remainder of the Qualified Project Period (30 years). Part of the timeline will be
to meet with the developer leading into October 2023 to understand how this change has impacted leasing opportunities in
the building. Any future change past October 1st, would be brought back to the decision‐making bodies for consideration.
2.In situations where two or more unrelated adult occupants and at least as many bedrooms as occupants are living together,
allow for each occupant’s income will be looked at separately in determining if they meet the 80% area median income
restriction.
PROJECT SUMMARY:
On March 23, 2021, the DMCC Board approved a Resolution (Resolution 113‐2021) between the DMCC Board and the Bryk Apartments
Rochester, LLC to provide up to $2.2M of public infrastructure funding to support the project. The project consists of a 6‐story, 180‐
unit workforce residential apartment building with approximately 7,260 square feet of commercial/retail space, underground and
surface parking, and indoor and outdoor community spaces. The project is located along North Broadway Avenue between Civic Center
Drive NW and 5th Street NW.
The project provides the following mix of units:
30% of the units (54 units) are affordable at 50% area median income and rents. Current income limits put the income limits
at $39,050 for a 1‐person family (max rent $976), and $55,750 for a 4‐person family (max rent $1,394).
10% of the units (18 units) are affordable at 60% area median income and rents. Current income limits put the income limits
at $46,850 for a 1‐person family (max rent $1,171), and $66,990 for a 4‐person family (max rent $1,673).
60% of the units (108 units) are affordable at 80% area median income and rents. Current income limits put the income limits
at $62,450 for a 1‐person family (max rent $1,561), and $89,200 for a 4‐person family (max rent $2,230).
When the project was shared with the DMCC Board in 2021, the Bryk project was presented to the DMCC Board along with its
community benefits which still remain in place. These community benefits are included below.
Mixed Income Workforce Housing: There remain different income levels within the building, allowing for people to remain in
the building if they make more money each year and providing a diversity of units at different income levels that more closely
match the income makeup of Rochester.
Neighborhood Stabilization and Revitalization: Investment in a proximate downtown area and prominent intersection with
housing at various affordability levels
Designed to meet Sustainability Performance Goals: The project is tracking to receive Green Communities Certification
Transit Corridor Density: The Bryk project is located along a primary transit corridor as identified in the City’s comprehensive
plan and provides 180 housing units along this corridor
Walkability to downtown and employment: The project is located along the transit corridor, proximate to the bike trail, and 6
blocks away from downtown, a major employment center
As outlined above, there are many community benefits to the project that remain for the occupants and City of Rochester. It is a great
multifamily housing project and with this change, we anticipate the project’s leasing success.
The project is nearing completion and the developer has started the lease‐up phase. According to the developer, they have had initial
success filling the units restricted to the 50% and 60% Area Median Income (AMI) levels. However, they have needed to turn ~40
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individuals away from the units restricted to the 80% AMI level since their incomes are slightly above the 80% AMI level. Income limits
are established by the Department of Housing and Urban Development (HUD) on an annual basis. The updated 2023 Income Limits
report has been delayed, causing the developer to rely on 2022 Income Limits to meet the AMI requirements. The developer’s goal
with targeting 80% AMI levels is to provide workforce housing for Rochester’s large population of residency program students, nurses,
and other service industry positions. Based on current income verifications, those positions earn over the 2022 HUD income restrictions
for 80% AMI. This is causing a gap in the developer’s ability to lease units between 60% and 80% AMI levels.
The Bryk is a unique housing product type by targeting 80% AMI levels. Typically, affordable housing projects include a mixture of
market rate and 60% or below units. A reason for this is there are no Property Tax breaks for housing units above 60% AMI. Therefore,
even though the Bryk is required per the DAA to provide rents at 80% AMI, they are taxed at the full market rate for those units. This
coupled with the escalating costs of construction and interest rates has made it very difficult for the developer.
With the slower than expected lease up of the 80% units, in addition to the increase in costs, staff recommend adjusting the income
limits for 54 of the 108 units priced at 80% AMI rents. Increasing the rent eligibility for 54 of the units will help the build leasing process
and fill the building, while also providing financial relief to the developer. Through this income change, the pool of potential eligible
renters will increase by about 15% or close to 14,000 workers using average wage data provided by the Minnesota Department of
Employment and Economic Development (MN DEED).
Please note that this recommendation will not alter the rental rate of the units, but only broaden the income eligibility of potential
renters for 54 of the 180 units in the building. There are no recommended changes to the 50% and 60% AMI rental units.
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