Loading...
HomeMy WebLinkAbout5/25/2023 DMCC Board of Directors Meeting - Presentation©2023 CliftonLarsonAllen LLP. CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer. Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor. Audit Results for Year Ended December 31, 2022 Destination Medical Center Corporation ©2023 CliftonLarsonAllen LLP 2 Agenda •Financial Statements •Audit Results •Required Communications ©2023 CliftonLarsonAllen LLP 3 Financial Statements •Prepared based on Governmental Accounting Standards Board pronouncements •Single program entity—present expenditures by type (natural classification) •Component unit o DMCC is a component unit of (included in) City of Rochester’s financial statements o DMC EDA is not a component unit of DMCC o Will evaluate component unit reporting annually ©2023 CliftonLarsonAllen LLP 44 Financial Statements : Assets & Liabilities $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 $450,000 $500,000 2018 2019 2020 2021 2022 Assets Liabilities ©2023 CliftonLarsonAllen LLP 55 Financial Statements : Revenues & Expenditures $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 2018 2019 2020 2021 2022 Revenues Expenditures ©2023 CliftonLarsonAllen LLP 6 Audit Results •Financial statements – clean opinion •Internal controls – no findings •Minnesota legal compliance – no findings ©2023 CliftonLarsonAllen LLP 7 Required Communications •Audit provides reasonable, but not absolute assurance •Accounting policies o Described in Note 1 to the financial statements o No impact from new accounting standard for leases •Audit adjustments – none •No disagreement or difficulties with management ©2023 CliftonLarsonAllen LLP 8 Items to Complete •Federal and state tax filings CLAconnect.com CPAs | CONSULTANTS | WEALTH ADVISORS ©2023 CliftonLarsonAllen LLP. CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer. Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor. Craig Popenhagen, CPA PrincipalLuke Greden, CPA Manager 2689 Commerce Drive NW, Suite 201 Rochester, MN 55901 Direct (507) 280-2325 Luke.greden@claconnect.com Craig Popenhagen, CPA Principal 2689 Commerce Drive NW, Suite 201 Rochester, MN 55901 Direct (507) 280-2327 Craig.popenhagen@claconnect.com Main Street Grant Program Lookback on Round 1 Program Objectives –From Co-Designers 1.Predictable and timely turnaround on applications 2.Community input shapes recommendations to EDA board decisions 3.Support many smaller projects and a few bigger projects 4.Meter out the awards to leave funds available for projects needing more time. Program Objectives –From DEED 1.Revitalization of properties or organizations harmed by events since March 2020. 2.Elevating opportunities for BIPOC, veteran, or disabled business and property owners 3.Creating and retaining permanent jobs. 4.Enabling existing businesses to strengthen and diversify their products and services. Round 1 Program Summary -$3M Awarded, 54 Projects 31 Retail & Dining 13 Office, Technical & Mixed Use 5 Non- profit 5 Housing & Lodging Round 1 Program Summary –By The Numbers •13: BIPOC awardees (24%) •16: Women-led projects (30%) •22: Unoccupied project sites •270+: Permanent jobs created Round 1 Program –Range of Awards 18 12 8 6 8 2 0 2 4 6 8 10 12 14 16 18 20 <$10K $10K-$24K $25K-$49K $50K-$99K $100K-$200K >$200K Median award = $22,290K Round 1 Lessons Learned •Building a grant-making operation is complex. •The level to which entrepreneurs must embrace significant financial risk is eye-opening. •Clear, concise and timely communication is critical. •Patience is necessary -most scramble to assemble capital. •Building trust with minority communities is critical, and difficult. •Assembling the 70% match is challenging for BIPOC applicants. •Finding alternative funding sources to supplement grant funds would be impactful Next Steps •Complete Round 2 •Follow up on Round 1 awarded projects •Storytelling •Consider a local version DMC Metrics May 2023 Private Investment TODAY Overall Investment numbers 1 Market Trends2 Potential Tactics3 Create a comprehensive strategic plan Leverage the public investment of $585 million to attract $5.6B Create approximately 30,000 new jobs Generate approximately $7.5 -$8.0 billion in new net tax revenue Achieve the highest quality patient, companion, visitor, employee, and resident experience DMC Metrics Describing Progress Toward DMC Goals ANNUAL INVESTMENT Development Headwinds •Higher construction costs •Higher interest rates •Construction labor shortages •Supply chain disruptions Market Demands •More housing •Specialized office/lab space •Hotel keys •Vibrant retail Looking Forward Specialized spaces Placemaking Adaptive reuse Discussion May 2023 BUSINESS DEVELOPMENT, LEAD GENERATION, & DISCOVERY SQUARE Q10: How much do you know about ………. (n = 153/168) 79% 31% 5% BASELINE AWARENESS TA R G E T 91% 9% No Yes CONSIDERED ROCHESTER, MN ALL AUDIENCES Q20: Have you ever considered the Rochester area for an investment project? (n = 153/168) Q4: Have you ever considered a relocation or expansion for your company? (Select all that apply) (n = 168) ALL (100%) CONSIDERED EXPANSION (82%) CONSIDERED ROCHESTER (7%) 75% “CONSIDERATION GAP” STRATEGIC DIRECTIONS BUILD AWARENESS •Rochester as a destination •DMC as a support •Mayo Clinic’s close connection to both BUILD ECOSYSTEM •Define what is here •Productively engage partners •Improve the product BUILD INFRASTRUCTURE •Reduce risk •Speed to market •Make us “bigger” 2023 Progress STRATEGIC PROGRESS: BUILD AWARENESS •Industry Outreach (concluded) •Phacilitate Advanced Therapies Network, January 2023 •Arab Health (DEED), February 2023 •San Francisco lead generation event, March 2023 •Builder Owner & Manager Association Medical Office event, April 2023 •Design of Medical Devices conference, April 2023 •SelectUSA Investment Summit (DEED), May 2023 •Industry Outreach (upcoming) •International Society of Cellular Therapies conference, May 2023 •Western Europe lead generation event, May 2023 •BIO International, June 2023 •New York lead generation event, July 2023 •“Connector” Outreach •Site Selector’s Guild Annual Meeting (DEED), March 2023 •Minneapolis site selector outreach, March 2023 San Francisco Lead Generation Campaign, March 2023 BIO 2023: MINNESOTA PAVILLION •Minnesota Pavilion •DEED, DMC, Greater MSP, UofM, Mortenson •Governor Walz reception •Minnesota BIO Breakfast •Mayo Clinic •University of Minnesota •DEED •DMC •Enhanced digital marketing •Lead generation campaign •First MN presence since 2018 STRATEGIC PROGRESS: BUILD ECOSYSTEM •Healthcare Technology listening sessions (3), February 2023 •Local ED stakeholder listening session (ongoing), March 2023 •“Doing Business in Germany” education session (scheduled), June 2023 •Facilitated meetings with Australian and Netherlands trade officials •Chamber After Hours in Two Discovery Square Industry Economic Development Clinical Settings Research Higher Education Service Providers STRATEGIC PROGRESS: BUILD INFRASTRUCTURE •Facility Logix Shared Lab Study •BioLabs market visits, December 2022 and March 2023 •Protolab visit, March 2023 •Emerald Cloud Lab visit, March 2023 •Portal Innovations lab visit, April 2023 Discovery Labs Shared Lab Infrastructure for Early Stage Companies Discovery Labs –What and Why •Life sciences infrastructure that supports startups: •Low-cost laboratory space •Short lease terms •Access to shared equipment •Wraparound support services •Why develop this infrastructure: •Critical “product” for business recruitment •Attract startups and the follow-on economic impacts Discovery Square Strategy •A variety of off and lab space •Vibrant startup ecosystem Discovery Labs concept developed •Wet lab •Maker Lab •Sim Lab Market Analysis •SWOT •Wet and dry labs needed •Incentivize startups •Simplify Mayo access •Add local four -year degrees Perception and Awareness Analysis •Build Infra- structure •Build Ecosystem •Build awareness Real life research •Identify operating partner •Build out space •Marketing •Launch 2018 Current Next Steps –the Details Next Steps •Identify operating partners •Design and construct space •Pre-launch marketing •Business recruitment •Launch operations 2023 Grow the ecosystem Investment Matrix Operator DMC Mayo Clinic Mortenson Pre-Launch Space design X Capital for construction X Space construction Business recruitment X Business programming Launch and Ongoing Operations Daily ops and property mgt Business support services Business recruitment X Events and programming X Investment capital Sustainability and District Energy Agenda •Climate progress to date and the role of district energy to reach our 2050 climate targets Community Climate Goals DMC: 80% reduction by 2050 City: 50% reduction by 2030 100% reduction by 2050 DMC: 25% Energy Reduction by 2030 DMC:‘Create a clean, reliable and flexible energy network through an upgraded infrastructure, new efficient systems and optimization of renewables Greenhouse Gas Emissions Goal Energy Reduction Goal District Energy Resolution (2016) slideCommunity Climate Progress Waste:12.7% Building Energy: 23.8% Travel: 7.8% www.regionalindicatorsmn.com Community Planning •Sustainability and Resiliency Community Action Plan •RPU –100% Renewable Power Plan •Active Transportation Plan New Buildings •Sustainable Building Policy for City Buildings •Sustainable Building Policy for Private Buildings requesting public assistance •Aquathermal District Energy Development Existing Buildings •City Building RCx / Energy Improvement Program •Energy Benchmarking Program •Electrification support •Energy conservation support for homeowners and buildings Transportation •Electrify transit •Link –Rapid Transit Circulator (EV Buses) •Alternative commuting modes: bikeshare, scooter share •Vehicle charging network Education •Sustainability Community Education Courses (10) •Monthly Sustainability Series •Community Education courses on Sustainable Living and Home Heat Pump Conversions Environmental Justice •Air Quality Monitoring •Data Visualization and interpretation •GIS analysis to inform planning CLIMATE PROJECT PROGRESS 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 2,000,000 Gr e e n h o u s e G a s E m i s s i o n s ( M T C O 2 e ) Residential Electricity Commercial/Industrial Electricity Residential Natural Gas Commercial/Industrial Natural Gas Transportation IPCC Science-Based Target Emissions Growth Forecast 2030: 100% Renewable Electricity Convert homes and buildings to electric heating and cooling, 35% Increase electric vehicles, 31% Improve building energy efficiency, 19% Improve home energy efficiency, 9% Compact Mixed-Use Development, 6% How to reach 2050 Climate Targets? 2023 Sustainability Plans Home and Business Electrification Campaign Source: www.rewiringamerica.org Electric Vehicle Charging Infrastructure Plan Mandatory Benchmarking Policy Development Compact, Mixed-Use Development District Energy System Rochester (DESR) Project Staging and Costs Downtown Building Energy Transition (DBET) CC Approved Budget: $15.6M Project Cost:$13.2M IRA Rebate:($1.8M) Net City Cost:$11.4M City Building Project: Climate Impact - 500.00 1,000.00 1,500.00 2,000.00 2,500.00 3,000.00 3,500.00 Downtown Building Energy Transition (DBET) 2024 DBET with IRA (2025)DBET with IRA (2030) Me t r i c T o n s o f C a r b o n D i o x i d e E q u i v a l e n t (M T C D E ) ELECTRICITY EMISSIONS GAS EMISSIONS Project Staging and Costs Downtown Building Energy Transition (DBET) CC Approved Budget: $15.6M Project Cost:$13.2M IRA Rebate:($1.8M) Net City Cost:$11.4M DBET IRA Scope (2025) Project Cost:$22.9M IRA Rebate:($7.3M) CDS Grant:($2M) DMC Funds:($1M) Net City Cost:$12.7M City Building Project: Climate Impact - 500.00 1,000.00 1,500.00 2,000.00 2,500.00 3,000.00 3,500.00 Downtown Building Energy Transition (DBET) 2024 DBET with IRA (2025)DBET with IRA (2030) Me t r i c T o n s o f C a r b o n D i o x i d e E q u i v a l e n t (M T C D E ) GAS EMISSIONS ELECTRICITY EMISSIONS CITY BUILDINGS CONVERTED TO HEAT PUMPS WITH GEOTHERMAL WELLS ELECTRICITY EMISSIONS GAS EMISSIONS RPU –100% RENEWABLE ELECTRICITY 99.4% GHG Reduction City Building Project: Climate Impact 99% 99% 99% Project Staging and Costs Downtown Building Energy Transition (DBET) CC Approved Budget: $15.6M Project Cost:$13.2M IRA Rebate:($1.8M) Net City Cost:$11.4M DBET IRA Scope (2025) Project Cost:$22.9M IRA Rebate:($7.3M) CDS Grant:($2M) DMC Funds:($1M) Net City Cost:$12.7M DESR (2028) –Additional Sites Project Cost:$34.2M IRA Rebate:($12.8M) CDS Grant:($2M) DMC Funds:($5M) Net City Cost:$14.4M DESR: Climate Impact - 500.00 1,000.00 1,500.00 2,000.00 2,500.00 3,000.00 3,500.00 Downtown Building Energy Transition (DBET) 2024 DBET with IRA (2025)DESR (2025/26)DESR 2030 Me t r i c T o n s o f C a r b o n D i o x i d e E q u i v a l e n t (M T C D E ) RPU –100% RENEWABLE ELECTRICITY DESR CREATED -EMISSIONS INCREASE FROM ADDED PRIVATE DEVELOPMENT GAS EMISSIONS ELECTRICITY EMISSIONS CITY BUILDINGS CONVERTED TO HEAT PUMPS WITH GEOTHERMAL WELLS ELECTRICITY EMISSIONS GAS EMISSIONS ELECTRICITY EMISSIONS GAS EMISSIONS GAS EMISSIONS 99.4% GHG Reduction District Energy Rochester: Climate Impact 99% 99% 99% 99%99% 99% Project Staging and Utility Costs Downtown Building Energy Transition (DBET) Utility Cost = $1.23 per SF DESR (2028) –Additional Sites Utility Cost = $0.98 per SF Business As Usual -2023 Utility Cost = $1.38 per SF What are the benefits of geothermal DES? Reduced emissions impacts Lower Utility Costs Avoided health impacts Scalable system How can DMC support this project? •Financial support to connect public and private buildings •Identify potential District Energy Operator and Developer Questions? West Transit Village May 2023 2 Runs every 5 minutes during peak –opens spring 2026 New LINK Bus Rapid Transit West Transit Village Transit: -station platform -streets -parking (Mayo employees) -parking (public) -bus charging -RPT facilities Village: -housing -retail + services -open space -bike & ped connections + West Transit Village Update Since last DMCC Board Meeting -Mayo Clinic (property owner) selected a preferred development team -In partnership with Mayo Clinic, DMC, and the City of Rochester the development team has developed multiple concepts for the overall site plan and BRT infrastructure WEST TRANSIT VILLAGE Mixed Use+Transit| KA / Aeon WEST TRANSIT VILLAGE Mixed Use+Transit| KA / Aeon Downtown City Block 7 Revised Project Definition West Transit Village and other infrastructure added to FTA scope WEST TRANSIT VILLAGE Mixed Use+Transit| KA / Aeon Impact on Commuter Experience Imparts a sense of pride and place, belonging. Reliable service and relevant amenities to their daily commuting journey. Brings more housing options and amenity retail that makes daily life simpler and lower stress. Improves wellness and health, including mental health. Provides choices and shortens total commute time from home to work. WEST TRANSIT VILLAGE –Base Option Mixed Use+Transit| KA / Aeon WEST TRANSIT VILLAGE –Alternative Option Mixed Use+Transit| KA / Aeon West Transit Village Update Next steps: a.Spring 2023: preliminary plan ready for Risk Workshop with the Federal Transit Administration b.Fall 2023: further developed site plan ready to bring back to DMCC and the City Collaborating to create a community-based framework for moving downtown Rochester forward and continue down the path of recovery Phase 1: Consensus on key themes/Issues Phase 2: Build a draft list of recommended action items + share with community May Begin implementation and communications roll-out Feb + Mar April + May May Building the Action Plan in 90 Days Working Sessions Survey Working Sessions Continued Collaborations Four Main Themes Working Session Findings •Promotion, Activation, and Programming •Access to Downtown •Barriers to Doing Business •Growing Downtown Growing Downtown Action Recommendations Retention of small businesses Recruitment of new businesses Understand new market demands Thank you 2024 DMC CAPITAL AND OPERATING BUDGET REQUEST May 2023 Today’s Discussion •Consider proposed CIP priorities •Identify 2-3 board volunteers to advise staff on budget development ANNUAL FUNDING REQUEST Includes: •Capital Improvement Program •DMC EDA workplan and operating budget •City DMC Project Management team •Annual working capital loan renewal TIMELINE •May-August 2023: Workplan and budget prep •September 28, 2023: DMCC board consideration •October 2023: Rochester City Council consideration EVALUATING DMC INVESTMENT OPPORTUNITIES PROCESS FOR DEVELOPING RECOMMENDATIONS TO DMCC DMC Development Plan Goals DMC Guiding Principles DMC Strategic Priorities Annual Commitments -Visionary Planning -$5.6B of private investment -30,000 jobs -$7.5-$8B new tax revenue -Highest quality experience -Be Bold -Economic Engine -Comprehensive Strategy approach -Market Driven -Dynamic Downtown Core -Mobility to support growth -Model for Sustainability -Tech+ Innovation to promote globally -Heart of the City -Development along the Rapid Transit Corridor -Discovery Square -Waterfront -Transportation -Capital Improvement Plan -Workplan and operating budget •Enable Opportunity: New jobs, new investment, and tax base growth are critical to a vibrant city. •Be Extraordinary: Make investments befitting a global destination medical center, the state’s largest-ever economic development partnership, and an increasingly diverse community. •Incorporate Innovation: Encourage projects to focus on cutting edge business sectors, innovative collaborative processes, novel business models, new materials, new technologies, etc. •Be Sustainable: Always consider the financial, environmental, social, and other long-term effects of proposed capital projects. •Fulfill The Vision: Sustain Rochester and Mayo Clinic as a destination medical center and “economic engine” that benefits the residents of Rochester, Olmsted County, and Minnesota. DMC CIP PRIORITIZATION PRINCIPLES Current and Emerging Initiatives for Discussion •Discovery Square innovation district •Marketing/Business Development •Discovery Labs •3 Discovery Square •Public Realm and Infrastructure •Downtown Riverfront •West Transit Village •Link BRT •Sustainability Initiatives •District Energy •Downtown Vitalization •Downtown Rochester Task Force •Main Street Program •Historic Preservation District •Commercial Space Reuse •Opportunities associated with Mayo Clinic growth Today’s Discussion •Consider proposed CIP priorities •Identify 2-3 board volunteers to advise staff on budget development