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HomeMy WebLinkAbout9/28/2023 DMCC Board of Directors Meeting - PresentationDMC Corporation Board of Directors Meeting Thursday, September 28, 2023 ©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. September 2023 Destination Medical Center Corporation ©2023 CliftonLarsonAllen LLP 2 IRS Form 990 •Financial information reconciles to DMCC’s audited financial statements •Part III (page 3) – statement of DMCC’s organizational purpose •Part VI (page 7) – governance •Part VII (page 8) – board members •Part VIII (page 10) – no unrelated business income ©2023 CliftonLarsonAllen LLP 3 IRS Form 990 •Schedule B (page 23) – contributors •Schedule R (page 33) – related organizations •Filing deadline is November 15, 2023 ©2023 CliftonLarsonAllen LLP 4 MN Charitable Organization Annual Report •Filed with Minnesota Attorney General’s Office Charities Division •No changes in tax-exempt status (page 1) •No changes in organizational purpose or programs (page 1) •No changes in ability to solicit contributions (page 2) •No compensation paid in excess of $100,000 (page 2) •Filing deadline November 15, 2023 ©2023 CliftonLarsonAllen LLP 5 Minnesota Non-profit Corporation Annual Renewal •Filed online with Minnesota Secretary of State •In good standing through December 31, 2023 •Annual renewal to be filed (online) for 2024 ©2023 CliftonLarsonAllen LLP 6 Thank you for engaging us to serve you! Contact Information: Craig Popenhagen, Principal Katherine Lutzke, Director 507-280-2327 507-280-2314 Craig.popenhagen@claconnect.com katherine.lutzke@claconnect.com DMC Metrics September 2023 Experience 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 From Development Plan to Action Experience Goals + Public Space POST-OCCUPANCY ANALYSIS ANALYZEPUBLIC USAGE DESIGN CONSTRUCTION DATA GATHERING TEST + PROTOTYPE PROJECT GOAL Heart of the City Phase 1: Goals Increase: Safety Accessibility Public Space Flexibility Sustainability Art Installations Infrastructure DATA GATHERING ANALYZE TEST + PROTOTYPE Gehl: Peace Plaza Health Check POST-OCCUPANCY ANALYSIS Key Takeaways People have a better experience when adjacent to active private spaces Daytime users have different needs than evening and weekend users Well -maintained public spaces create exceptional experiences Unmaintained public spaces become distractions What is Next? Informs: Future programming of Peace Plaza Future public realm planning Discovery Walk Riverfront Link: Bus Rapid Transit Grow Downtown Together strategy Current and future partnerships Discussion 2024 DMC Operating and Capital Budget Today’s Discussion •Review Capital and Operating Budgets •Review 2024 Work Plan •Act on resolution recommending 2024 budget •Work Plan which advances DMCC Priorities: •Health •Sustainability •Equity •Affordability •Community Engagement •Capital Improvements •Ensure completion of PRIOR-APPROVED projects •Consider NEW time-sensitive investments •Identify FUTURE project initiatives Key Takeaways: Budget Process: •February 2023: Joint Meeting of DMCC, City Council, Olmsted County, and DMC EDA •May 2023: DMCC Board Discussion •June-August 2023: DMC/City Staff Collaboration •August 2023: Board work group meetings •September 2023: DMC EDA Recommendation •September 2023: DMCC board Action •October 2023: City Council Action Guiding $585M Public Infrastructure Investment The public infrastructure for to fulfill the DMC vision and goals for job growth, capital investment, new tax generation, and improved community experience. + Attracting $5.6B Private Investment The programs and project support to retain and attract developers, private capital, and businesses. Destination Medical Center: Primary Responsibilities 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 DMC Investments, 2015-2024 Phase 1 (2015-2019)Phase 2 (2020-2024) (2020-2024) Actual Approved 5 Year Update Actual + Proposed Public Realm $21,500,000 $35-50,000,000 $51,000,000 Mobility $9,800,000 $60-75,000,000 $60,000,000 Strategic Redevelopment $17,300,000 $20-45,000,000 $30,000,000 Streets & Sewers $28,900,000 $35-50,000,000 $34,000,000 Operations $20,700,000 $15-20,000,000 $20,000,000 TOTAL $98,500,000 $200,000,000 +/-$196,000,000 What We’ve Achieved: Public Realm Snapshot Public Realm Heart of the City What We’ve Achieved: Mobility Snapshot What We’ve Achieved: Strategic Redevelopment Snapshot Bio-med-tech Discovery Square Mayo Clinic Growth and Investment Total Private Investment $1.46B (through 2022) Housing Bryk on Broadway What We’ve Achieved: Streets & Sewers Snapshot •Mayo Clinic “Bold. Forward. Unbound.” •DMC 10-Year Development Plan Update •Halfway -point of available DMC funds Significant Upcoming Considerations •Ensure completion of PRIOR-APPROVED projects •Multi-year commitments, such as LINK transit, which cannot be redirected •Consider NEW time-sensitive investments •Programs like Discovery Labs, District Energy, or downtown property support •Identify FUTURE project initiatives •Build a list of known community priorities •Filter priority projects via 10-year update Recommended approach to 2024 Capital Improvement: LINK BRT & 2ND ST SW CHATEAU DES RIVERFRONT 6TH ST BRIDGE SAINT MARYS PLACE 3RD AVE SEWER 2024 PROJECT LOCATIONS Public Realm: Chateau Theatre Improvements and Asset Preservation •Project Definition: •2015 purchase of Chateau was first DMC-funded capital investment •Additional DMC investments have preserved and activated Chateau •In May 2022, the City entered a three-year operating agreement with Threshold Arts, a local non- profit •Budget Context: •Through 2023, $7.7M in DMC funds have been spent/budgeted •This figure includes the $5.5M acquisition cost. •2024 Request: •$1M for HVAC improvements •What Might Come: •Further detail regarding future capital needs, potential funding sources, anticipated uses, operating/business model, and expected operating duration before consideration of any additional funding after the 2024 CIP •Anticipated additional deferred maintenance projects in excess of $4M have been identified by City Public Realm: Downtown Riverfront Pre-development •Project Definition: •2 City-owned sites totaling ~5.5 acres along the downtown riverfront •Adjacency to CBD and LINK = redevelopment opportunity •City plan transforms sites from parking to public and private space •~2.5 ac of new space, 200,000-700,000 s.f. of private development •Budget Context: •Through 2023, $2M in DMC funds have advanced planning, design, site acquisition, and pre-development infrastructure •2024 Request: •$1M for advanced design, subject to State bonding approval Public Realm: Downtown Riverfront Pre-development •What Might Come: •The City of Rochester has submitted a State bonding request for riverfront projects (Total cost: $52.9 Million) •Securing State bonding will require local matching funds •If the City intends to request DMC funds for a portion of the local match requirement, bonding request updates will be presented at the November 2023 and February 2024 DMCC board meetings for DMCC consideration •Bonding request updates will also describe any efforts to prioritize project elements or develop additional non-DMC funding sources •Additionally, DMC funding may be required to support site private development Public Realm: Saint Marys Place Public Realm Design and Construction •Project Definition: •2016: Design framework prepared for SMP •LINK BRT plan includes design priorities identified in DMC plan and SMP framework •LINK’s construction provides additional opportunities to improve the pedestrian and user experience •Budget Context: •No capital project investments have been made to-date •The 2016 framework was prepared using DMC EDA operating funds •2024 Request: $500,000 to prepare design documentation •What Might Come: •The design process will develop the framework for the public realm investment in the St. Marys subdistrict per the DMC development plan •Following design documentation, staff will define future public realm investment timing, scope/benefits, and costs. Mobility: LINK BRT, including Second St SW Reconstruction •Project Definition: •2015: DMC Plan prioritized transit planning •2018: DMCC approved DMC Integrated Transit Studies •2018-2020: DMCC adopted resolutions defining and refining the scope of the rapid transit project, including approving the route, mode, and features of LINK •2022: Final federal grant application was submitted to U.S. FTA •Budget Context: •$56.1M in DMC funds will serve as local match to secure federal funding •Total project cost is $143.4M •2024 Request: •$9.3M (not “new” money; this is accounted for within total project budget) •What Might Come: Potential expansion (Phase 2) of bus rapid transit system. Strategic Redevelopment •Project Definition: •Since 2021, the DMC CIP has included a “strategic redevelopment” fund (2021, $7M; 2022, $3M; 2023, $3M) •This fund allows DMCC and City Council to respond to DMC funding applications •Prior to 2021 funding to support DMC-eligible elements of private development projects was funded through tax-increment financing (TIF) •Since 2021 funding has been awarded once (Bryk on Broadway workforce housing) •Budget Context: •The strategic redevelopment fund has a current balance of $10.8M. •2024 Request: $10 Million •What Might Come: •There are several projects currently in pre-development downtown •Workforce housing and bio-med-tech are DMCC priorities •Depending on project timing & scale, these funds will allow the DMCC and City Council to be responsive to this market interest Streets and Sewers: Sixth St. Bridge, Sixth St. S.E., Waterfront Connectivity •Project Definition: •2022: City is awarded $19.9M USDOT grant to support 6th St SE Bridge project •New bridge connects street and trail network across the Zumbro River •Original project cost estimate: $29.9M •Community co-design process refined project elements, including accessibility, sustainability, art, lighting, and more •Budget Context: •$1,000,000 has previously been approved for bridge planning •2024 Request: •$4,000,000 for design and construction •What Might Come: •Prior DMC CIP projected an additional $5M investment to fully leverage the federal grant •An additional $1.3M may be required due to increasing project costs, for a total future request of $6.3M Streets and Sewers: District Energy System •Project Definition: •The DMCC and City Council have both adopted energy use and greenhouse gas reduction goals •The proposed district energy system (DES) could serve a number of public and private buildings in the DMC Downtown Waterfront sub-district •The federal Inflation Reduction Act (IRA) includes resources to possibly re-scope the DES; securing the IRA funding requires additional local funding •Budget Context: •The DMCC has previously approved $1,500,000 to allow any district energy system to have enough capacity for future private development •2024 Request: •The City is pursuing IRA funding to enhance the DES for its own buildings •This proposed enhancement would become the necessary platform for a scalable private system •The enhancement platform cost is $2.2M, and the cost to provide for private connections to the DES is $5M •Total DMC request: $7.2M •What Might Come: •Private properties interested in connecting to the district energy system may request support to offset the connection cost Streets and Sewers: Sanitary Sewer Capacity Bypass •Project Definition: •This relief project diverts flows from 2nd Street SW to 4th Street SW along 3rd Avenue SW to provide added capacity to the trunk sewers to the north of 2nd Street SW •Current trunk sewers are at capacity due to downtown growth •Conceptual design is complete •Construction is expected to begin in 2024 •Budget Context: •$50,000 has previously been approved for design •2024 Request: •$1,500,000 for construction •What Might Come: •No additional costs or changes in scope are anticipated for this project Ten -Year DMC Development Plan Update: Project Definition: •MN law establishing the DMC initiative require the preparation and periodic renewal of a development plan •At minimum, the update must: include specific elements identified in the law; be approved by the DMCC and City Council; be updated not less than every five years •The plan was adopted in 2015 and an update was approved in 2020 •In 2024, the DMC EDA will coordinate the production of the next five-year update (2025) •This update comes at the half-way point of DMC’s 20-year plan •Budget Context: •Given the relative infrequency of these plan updates, there is no recurring CIP allocation to support this work •2020 plan update cost approx. $250,000 •The ten-year update will incorporate post-COVID learnings, Mayo Clinic’s growth, and other significant new public and private investments. •2024 Request: •$750,000 •What Might Come: •Some findings or strategies identified in this ten-year update may require further planning, programming, or research IDENTIFYING POSSIBLE FUTURE INITIATIVES Through 2025 and beyond: •Wayfinding and neighborhood connectivity •Sidewalks and pedestrian infrastructure •Bus Rapid Transit Phase II •Cultural, entertainment, or education venues •Projects identified in DMC ten-year update •Opportunities associated with Bold Forward Unbound •Energy Infrastructure OPERATIONS Outcome: Support the organizational and programmatic activities necessary to implement the DMC development plan •DMC Corp. expenses •DMC EDA operating budget •City of Rochester administrative costs •DMC City project management expenses A.Development Marketing, Planning, and Promotion, including: o Implementing the development plan, including soliciting development proposals for development… o Seeking financial support for the DMCC, the City, and projects o Comprehensive marketing program to global interests o Preparing and supporting the marketing and promotion of DMC o Partnering with others…in joint efforts to promote economic development o Administering the planning and development activities required to implement the development plan B.Development Services, including: o Evaluating and underwriting development proposals o Providing transactional services in connection with approved projects o Facilitate the sale, lease, or other transactions involving land and real property o Assist in applications for federal grants, tax credits, and other sources of funding to aid development C.Outreach and Communications, including: o Developing patient, visitor, and community outreach programs o Preparing and implementing a program for community and public relations DMC EDA RESPONSIBILITIES DEFINED IN MN STATUTE •Health •Sustainability •Equity •Affordability •Community Engagement Doing Our Work Through The Lens Of: •Business Recruitment •Downtown Growth •Equitable Development 2024 Work Plan: Areas of Program Growth 2024 DMC FUNDING ALLOCATION Capital Projects $35,246,423 DMCC $234,000 DMC EDA $2,842,507 City support to DMCC $100,000 City DMC Project Team $1,157,454 2024 DMC EDA BUDGET USES 2024 DMC EDA BUDGET SOURCES 2024 CITY DMC PROJECT MANAGEMENT TEAM 2024 DMCC OPERATING BUDGET DMCC RESOLUTION The resolution provides for specific approval of the: •DMCC budget, DMC EDA work plan and budget, and City of Rochester support costs •DMC Capital Plan •Working Capital Loan Extensions The resolution also sets conditions regarding the approval of capital projects, including: •Approving projects set forth in the first year of the Five-Year Capital Plan as DMC projects •Requiring future, specific DMCC approval of each capital project upon final determination of scope, costs, and availability of funds •For the Chateau Theatre, requiring further detail regarding future capital needs, potential funding sources, anticipated uses, operating/business model, and expected operating duration before consideration of any additional funding after the 2024 CIP •Directing staff to provide an annual reconciliation of budget amounts and expenditures for each of the capital projects •Work Plan which advances DMCC Priorities: •Health •Sustainability •Equity •Affordability •Community Engagement •Capital Improvements •Ensure completion of PRIOR-APPROVED projects •Consider NEW time-sensitive investments •Identify FUTURE project initiatives Key Takeaways: WHAT’S NEXT •October 2023: Rochester City Council Action Today’s Discussion •Review Capital and Operating Budgets •Review 2024 Work Plan •Act on resolution recommending 2024 budget September 2023 Business Development Work Plan 2024 Q10: How much do you know about ………. (n = 153/168) 79% 31% 5% BASELINE AWARENESS TA R G E T 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” BIGGEST BARRIERS TO CONSIDERATION Unaware Small MarketTalent Unaware Weather Rural/Remote SITE SELECTION INFLUENCERS EXECUTIVE 1st 2nd 3rd KEY SITE SELECTION DECISION DRIVERS •Labor Considerations •Talent pipeline •Availability of scientists (highly-skilled labor) •Location & Cost Considerations •Easy transportation access •Turn -key real estate •Community Considerations •Thriving ecosystem •Proximity to innovation RESEARCH BASED 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” AWARENESS INFRASTRUCTURE ECOSYSTEM PROGRAM FOCUS OVER TIME TIME → % O F A T T E N T I O N → 2023 Program of Work 2023 AWARENESS BUILDING FRANCE UAE JAPAN KOREA NETHERLANDS GERMANY NORWAY BELGIUM SCANDANAVIA CANADA JAPAN KOREA NETHERLANDS AUSTRALIA FRANCE CITCA-CHICAGO 2023 AWARENESS BUILDING 21 4 150k+ 100+ INDUSTRY EVENTS LEAD GEN CAMPAIGNS LEADS GENERATED INDUSTRY EXPOSURES 0 IN-MARKET FAM TOURS 80+ INFLUENCER VISITS 2023 ECOSYSTEM & INFRASTRUCTURE •Building Ecosystem •Begin definition process •Begin limited engagement via listening sessions •Applied for external ecosystem building funding through the federal EDA •Building Infrastructure •Shared Lab operator selection process •Site visits to four locations •Two in-market visits •Business planning exercises with key partners 2024 Program of Work 2024 AWARENESS PROGRAM OF WORK •Build Awareness •Continued focus on scaling the Rochester/DMC awareness program •Priority on industry, influencer, and international audiences •INDUSTRY: Bio Manufacturing, Cell Therapy, Next Gen Diagnostics, Radio Pharma, Medical AI, Device (+60% in 2024 spend) •INFLUENCER: Site Selection, Corporate Real Estate, Venture Capital, Design/Engineering (+42%) •Expanded in-market promotion program •In-market FAM tours of key audiences to Rochester (+72%) •Expanded lead generation program to more markets, with more frequency (+74%) •Addition of two team members to allow for expanded programming (+$180,000) •Continued development of (always-on) marketing program •Web, collateral, digital advertising (+$160,000) 2024 AWARENESS BUILDING GOALS 30+ 8+ 250k+ 200+ INDUSTRY EVENTS LEAD GEN CAMPAIGNS LEADS GENERATED INDUSTRY EXPOSURES 150+ INFLUENCER VISITS 1 IN-MARKET FAM TOURS 2023 to 2024 AWARENESS PROGRAM GROWTH INDUSTRY EVENTS INDUSTRY EXPOSURES INFLUENCER EXPOSURES LEAD GEN CAMPAIGNS LEADS GENERATED IN-MARKET FAM TOURS 2023 21 150k+80+4 100+0 2024 30+250k+150+8+200+1 % 43%66%88%100%100%100% INDUSTRY MARKETNG $ INFLUENCER MARKETING $ LEAD GENERATION $ IN-MARKET PROMOTION $ MARKETING SUPPORT $BD STAFF $ 2023 $98,160 $41,680 $50,000 $44,200 $9,000 $0 2024 $156,900 $59,100 $86,800 $76,000 $160,000 $180,000 % 60%42%74%72%NA NA 2024 AWARENESS BUILDING CALENDAR INDUSTRY INFLUENCER LEAD GEN 2024 ECOSYSTEM PROGRAM OF WORK •Build Ecosystem •Ecosystem Definition, Mapping, and Gap Analysis (+$25,000) •Develop a methodology for defining the ecosystem participants (NAICS, service categories, education, accelerators, etc) •Determine the appropriate geography •Populate the ecosystem based upon agreed upon definitions •Needs Assessment (+$25,000) •Determine work program priorities via quantitative and qualitative tools •Quantitative survey instrument deployed in Q3/Q4 •Ecosystem Programming (+$25,000) •Develop a partial 2024 Ecosystem program-of-work based on findings •Workforce, service providers, and capital are likely focus areas ECOSYSTEM MAPPING •INDUSTRY: private sector contributors within the ecosystems primary industry (life science). •ECONOMIC DEVELOPMENT: government entities, and NGO’s, focused primarily on supporting the ecosystem industry’s growth and prosperity. •CLINICAL PARTNERS: all clinical settings connected to the ecosystem industry within the geography. •RESEARCH PARTNERS: all academic, and non-academic, research institutions engaged in the ecosystem’s primary industry within the geography. •EDUCATION: primary and secondary education providers within the ecosystem’s geography supporting the primary industry. •SERVICE PROVIDERS: all private sector employers, outside of the ecosystem’s primary industry, that play a key role in the industry’s success. Industry Economic Development Clinical Partners Research Partners Education Service Providers 2024 INFRASTRUCTURE PROGRAM OF WORK •Build Infrastructure •Shared lab investment •Turn -key real estate •Focused on high-growth life science companies •Allows Rochester to compete more effectively with larger markets •Requires capital for build out, equipment, and operations Grow Downtown Collectively create a community-based action plan 4 Major Themes of focus DMC EDA and DMCC Boards gave direction to focus on Growing Downtown Downtown Rochester Task Force Strengthen Demand Drivers Mayo Clinic University of Minnesota Rochester Downtown Housing Cultural Anchors Mayo Civic Center Art Center Civic Theatre Chateau Theatre Catalytic Retail Define common goals related to the growth of downtown Build an understanding and document what is currently being done to support these goals Gather and track relevant data Identify resource gaps restricting success Determine tools and resources needed Develop programs to support the identified goals and outcomes Track and measure progress Workplan Strategies + Tactics 2023 - 2024 Desired Outcome Create the pathway to the most impactful work DMC and downtown stakeholders can do together… …attracting people downtown 2024 Equitable Economic Development Workplan Why are we here today? Overview of 2024 Equitable Economic Development Workplan and Goals AGENDA What are we going to cover? •Targeted Workforce •Equitable Housing •Equity Alliance •Equitable Engagement •What’s next? Data collected by the United States Census Bureau indicates that Rochester has 121,395 residents. 73.2% of residents are white and 26.8% are BIPOC residents 14.1% of residents are foreign born 82% of residents speak English only, and 18.7% speak a language other than English 16% of residents are age 65 and older 12.4% of residents have a disability 6% of residents are veterans 7.4% of residents below poverty level by income Targeted Workforce •Emerging Developer Expo. •Equity in the Built Environment Project Support. •Create Development Opportunities for BIPOC Developers. Equitable Housing Identify solutions for lack of sites, and shortage of builders & developers. Collaborate with stakeholders to identify creative solutions for housing. Collaborate with community partners and organizations to reduce barriers for BIPOC communities, and BIPOC developers. Equity Alliance Equity Series: Monthly Webinar to Provide the Rochester Community with DEI Best Practices. Launched in July 2023. Commitment to Equitable Policy Transformation, Improvement & Change. Continue to Grow Community Co- design in Rochester, MN. Equitable Engagement Community Co-Design Facilitator Training & Leadership Training Relationship Building Support BIPOC Communities Real Estate Development Projects Where are we headed? FURTHER ECONOMIC JUSTICE FOR EMERGING & BIPOC DEVELOPERS. IDENTIFY AND IMPLEMENT BEST PRACTICES FOR HOUSING. IMPLEMENT INTERNAL DEI BEST PRACTICES AND CULTURAL HUMILITY TRAINING. PROMOTE LOCAL MINORITY BUSINESS ECOSYSTEM. BUILD LOCAL COMMUNITY CO- DESIGN CAPACITY.