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HomeMy WebLinkAbout2/1/2024 DMCC Board of Directors Meeting - Agenda and Meeting PacketDestination Medical Center Corporation Board of Directors Meeting Thursday, February 1, 2024 9:30 A.M. 1 DESTINATION MEDICAL CENTER CORPORATION (DMCC) SPECIAL BOARD MEETING Thursday, February 1, 2024 9:30 A.M. Mayo Civic Center, 30 Civic Center Dr SE, Suite 101, Rochester, MN To View the Meeting Remotely: https://us02web.zoom.us/j/81741811080 AGENDA PAGE I. Call to Order II. Roll Call III. Approval of Agenda 1 IV. Approval of Minutes: November 17, 2023 3 V. Public Comment 1 VI. Chair’s Report VII. Consent Agenda A. DMCC 2023 Budget: Year to Date Update 5 B. EDA 2023 Budget Encumbrance Request 8 VIII. Annual Report to the Legislature 9 Resolution A: Approving February 15, 2024 Report to the Legislature IX. EDA Board President Comments X. Metrics XI. Discussion Items A. Minnesota MedTech 3.0 65 1 For public comments, please indicate that you wish to speak either in-person at the meeting, through the chat feature on the web link, or by emailing info@dmc.mn by 9:00 A.M. on the meeting day. Written comments may also be submitted to info@dmc.mn. 2 B. Supporting Transformation 1. City of Rochester Report 66 2. DMC Development Plan Update 67 C. Progress on pre-authorized DMC Capital Priorities 1. Discovery Square Med-Tech Infrastructure 70 2. Downtown Property Support 71 3. Riverfront Reimagined 74 XII. Status Reports A. Business Development and Lead Generation 75 B. Chateau Theatre 76 C. Development along the Rapid Transit Corridor/West Transit Village 78 D. District Energy 80 E. Equitable Economic Development 81 F. Housing 83 G. Mobility/LINK Bus Rapid Transit 85 H. Public Realm Projects i. Discovery Walk 87 ii. Heart of the City 88 iii. Soldiers Memorial Field 89 I. Project Previews 90 J. Rochester Downtown Task Force XIII. Meeting Schedule A. Executive Committee: March 14, 2024 at 1:00 P.M. B. Next Regular Meeting: May 23, 2024 at 9:30 A.M. (at Hilton Rochester Mayo Clinic Area, 10 East Center Street) XIV. Adjournment DESTINATION MEDICAL CENTER CORPORATION (DMCC) BOARD MEETING FRIDAY, NOVEMBER 17, 2023 MINUTES I.Call to Order. Chair Pamela Wheelock called the meeting to order at 9:30 a.m. II.Roll Call. James Campbell, Council President Brooke Carlson, R.T. Rybak, Commissioner Mark Thein, Chair Pamela Wheelock, and Paul Williams were present. Mr. Campbell participated via interactive technology because he was out of state. III.Approval of Agenda. Council President Carlson moved to approve the agenda. Commissioner Thein seconded the motion. Ayes: Mr. Campbell, Council President Carlson, Mr. Rybak, Commissioner Thein, Chair Wheelock, and Mr. Williams. Nays: None. IV.Approval of Minutes: September 28, 2023. Council President Carlson moved to approve the September 28, 2023 minutes. Mr. Rybak seconded the motion. Ayes: Mr. Campbell, Council President Carlson, Mr. Rybak, Commissioner Thein, Chair Wheelock, and Mr. Williams. Nays: None. V.Public Comment. No public comments were offered. VI.Chair’s Report. Chair Wheelock noted that the metrics information was included in the meeting packet. She also noted that, similar to the recent Request for Proposals (RFP) for audit services, the DMCC will issue an RFP for legal services. Council President Carlson provided a brief overview of the recent approval of the local option sales tax referendum. Chair Wheelock also proposed that, after the conclusion of some Board meetings in 2024, there be an informal opportunity to listen to a speaker and learn more information on a topic of interest to the DMC initiative. VII. Consent Agenda. A.DMCC 2023 Budget: Year to Date Update. B.Selection of Audit and Tax Service Provider. Resolution A: Approving the Appointment of CliftonLarsonAllen LLP, Subject to Successful Negotiation and Execution of Agreement. C.Amended Regular Meeting Schedule. Resolution B: Amending the 2024-2025 DMCC Board Regular Meeting Schedule. Mr. Rybak moved to approve the consent agenda. Commissioner Thein seconded the motion. Ayes: Mr. Campbell, Council President Carlson, Mr. Rybak, Commissioner Thein, Chair Wheelock, and Mr. Williams. Nays: None. 3 VIII. Discussion Items. A.2025 Development Plan Update. Patrick Seeb, EDA Executive Director, and Catherine Malmberg, EDA Public Infrastructure & Development Strategy Director, presented the timeline and process for preparing and approving the 2025 update to the Development Plan. B.Discovery Labs. Chris Schad, EDA Business Development Director, and Michael Flynn, EDA Senior Economic Development Director, provided an update on shared lab development planning. The Board requested additional information as to the DMCC’s specific role, as well as capital costs and operating model information. C.Downtown Riverfront. Cindy Steinhauser, City of Rochester Deputy Administrator, David Gamble, Gamble Associates Founding Principal, and Ms. Malmberg presented an update regarding the downtown riverfront small area plan. The Board discussed connections to nearby amenities, including Mayo Park and Discovery Walk, the on-going review of watershed scale, potential mixed use options, and recreational use. The Board expressed interest in learning more about the City’s proposed bonding request to the State. D.University of Minnesota Rochester Update. Dr. Lori Carrell, Chancellor of the University of Minnesota Rochester, provided an update on campus planning and growth. IX.Status Reports. The Board discussed the interest rate environment, increased construction costs, and the impact on investment. Chair Wheelock requested an update on the West Transit Village. Mr. Campbell noted the recent federal designation of Minnesota as the MedTech 3.0 hub. X.Adjournment. Mr. Rybak moved to adjourn the meeting. Council President Carlson seconded the motion. Ayes: Mr. Campbell, Council President Carlson, Mr. Rybak, Commissioner Thein, Chair Wheelock, and Mr. Williams. Nays: None. 1759439.DOCX 4 To: Mark Thein, Treasurer Kaela Brennan, Attorney From: Jean McGann, City of Rochester Interim Finance Director Date: January 24, 2024 RE: December 2023 DMCC Budget Summary – unaudited The attached budget summary through December 2023 reflects DMCC operating expenditures totaling $3.1 million of the $3.9 million approved 2023 budget. The remaining amount unspent represents 22% of the total budget with 0% of the year remaining. The second page of this summary provides a listing of DMCC authorized capital projects managed by the City of Rochester and categorized by program budgets. Approximately $11.8 million has been spent on these projects in 2023 with the majority spent on Discovery Walk and Rapid Transit activity. Total life-to-date expenditures on all projects is approximately $116.2 million. As 2023 financial information is finalized, there will be adjustments to the financial information presented. Please contact me with any questions or concerns. 5 PROJECT PROJECT STATUS YEAR TO DATE EXPENSES PROJECT BUDGET LIFE TO DATE EXPENSES LIFE TO DATE ENCUMBRANCE Administration C.8601 - City Project Administrative Costs-DMCC (Budget-Current Yr)Annual Budget 665,078 1,096,277 3,386,398 C.8606 - City Staff Costs-DMCC - (Budget-Current Yr)Annual Budget 9,954 443,267 C.8607 - County Staff Costs-DMCC Complete 168,754 C.8629 - Development Plan Update Complete 750,000 154,960 C.8632 - Downtown Changes COVID-19 Complee 250,000 43,524 C.8902 - FestivalAreaStdy&ConceptDesign Complete 84,133 Total Administration 675,032 2,096,277 4,281,037 Econ Development/Public Realm C.8624 - ChateauTheatreBldgImprov/Purch Nearly Complete 1,086,991 9,951,362 9,730,362 200,998 C.8625 - Heart of the City Nearly Complete 218,018 20,643,209 21,288,263 313,931 C.8633 - Strategic Development Ongoing 13,000,000 2,200,000 C.8634 - Riverfront Reimagined Study 752,001 1,000,000 931,548 C.8904 - Discovery Walk Active Construction 5,938,193 15,720,000 14,584,439 4,121,383 C.8905 - CnstrctSnSwCpBys3AveSWfr2StSW Open 29,606 3,100,000 29,606 Total Econ Development/Public Realm 8,024,809 63,414,571 48,764,218 4,636,312 Infrastructure C.8611 - San. Sewer 12th Ave from 2nd St NW to 2nd St SW Post Construction 174,155 6,260,294 6,163,981 C.8612 - West Zmbro San Sewer Lift Line from CookPk to Civic C Drive Complete 950,000 46,592 Combined w/8611 C.8626 - San. Sewer Upsize 1st Ave & 3rd Ave SE on 4th / Govt Cntr Siphon Complete 8,000,000 6,662,993 C.7326 - Reconst 4th St SW from 1st Ave to 6th Ave Complete 2,205,789 2,205,789 C.7319 - Reconst 7th Ave NW from 2nd St NwW to 4st NW Warranty 1,949 4,800,000 4,800,000 C.7318 - Reconst North Broadway - Active Construction - 4,400,000 4,000,000 C.1037 - Steam Replace/District Energy Active Construction - 2,000,000 731,815 - C. 4716 Downtown Sidewalk Experience Enhancement Active Construction 562,836 2,900,000 2,131,000 C. 7344 Reconstruct 3rd Avenue NW Between 4th St SW and 5th St SW Active Construction 38,272 1,578,000 345,000 27,824 C.7830 1st Street NW San Sewer Diversion from 1st Ave to Broadway Warranty - 1,479,000 1,400,032 C.7919 6th Street Bridge over Zumbro River Design 108,296 1,300,000 280,000 Total Infrastructure 885,509 35,873,083 28,767,203 27,824 Transit C.8614 - DMCTransit&InfrastrctrPgrmMgmt Complete 3,956,739 1,826,262 C.8617 - Broadway @ Center Parking Ramp Complete 10,500,000 10,500,000 C.8618 - SharedParkngStudy&PrgmDevlpmnt Complete 2,061,854 1,874,219 C.8620 - City Loop Plan Complete 1,209,938 968,732 C.8621 - Transit Circulator Study Complete 2,241,532 1,780,877 C.8623 - DMCC Street Use Study Complete 3,117,708 2,885,882 C.8628 - Downtown Circulator Project Complete 269,941 C.8706 - DMCTransitCirculatorTODPlnStdy Complete 829,414 C.8707 - Rapid Transit Projects Design 2,170,246 41,885,660 11,587,112 C.8709 - Arrive Rochester Implementatn Ongoing 44,672 300,000 163,437 C.8903 - Dedicated Bike Lanes-3rd/4thAve&CtrSt Complete 2,038,300 1,745,083 - Total Transit 2,214,918 67,311,731 34,430,959 - Grand Total 11,800,269 168,695,662 116,243,416 4,664,136 DMCC Projects by Category Managed by City of Rochester Through December 2023 6 De s t i n a t i o n M e d i c a l C e n t e r C o r p o r a t i o n Fi n a n c i a l B u d g e t S u m m a r y Pr e l i m i n a r y D e c e m b e r 3 1 , 2 0 2 3 Am o u n t P e r c e n t De c e m b e r 2 0 2 3 Cu r r e n t M o n t h 20 2 3 Re m a i n i n g R e m a i n i n g Ye a r T o D a t e De c e m b e r 2 0 2 3 Ap p r o v e d B u d g e t DM C C C o r p o r a t i o n : 34 , 0 1 7 Re n t s a n d L e a s e s 22 , 6 8 1 11 , 3 3 6 33 % 17 2 , 3 0 0 Pr o f e s s i o n a l S e r v i c e s 84 , 9 5 1 87 , 3 4 9 51 % 6, 0 0 0 Tr a v e l / T r a i n i n g 1, 6 8 4 4, 3 1 6 72 % 20 , 0 0 0 In s u r a n c e a n d B o n d s 18 , 6 8 1 12 In t e r e s t / O t h e r A d m i n i s t r a t i v e 58 23 2 , 3 1 7 Su b t o t a l D M C C 12 12 8 , 0 5 5 10 3 , 0 0 1 44 % Th i r d P a r t y C o s t s - D M C E D A 1, 2 8 9 , 1 7 2 Em p l o y e e S e r v i c e s 21 3 , 6 7 7 1, 2 4 4 , 9 2 1 44 , 2 5 1 3% 70 , 9 7 4 Op e r a t i n g E x p e n s e s 19 1 , 5 9 2 (1 2 0 , 6 1 8 ) -1 7 0 % 1, 1 8 9 Op e r a t i o n a l C o s t s - C o n t r a c t e d (1 , 1 8 9 ) 69 1 , 4 7 2 Ec o n o m i c D e v e l o p m e n t O u t r e a c h & S u p p o r t 3, 5 5 2 28 2 , 3 4 7 40 9 , 1 2 5 59 % 51 7 , 4 1 0 Pr o f e s s i o n a l S e r v i c e s 7, 0 9 3 28 1 , 3 4 8 23 6 , 0 6 2 46 % 54 , 5 0 0 Mi s c e l l a n e o u s E x p e n s e s 54 , 5 0 0 10 0 % 2, 6 2 3 , 5 2 8 Su b t o t a l E D A 22 4 , 3 2 2 2, 0 0 1 , 3 9 7 62 2 , 1 3 1 24 % Th i r d P a r t y C o s t s - C i t y o f R o c h e s t e r P r o j e c t M a n a g e m e n t B u d g e t 99 5 , 2 7 7 Em p l o y e e S e r v i c e s 80 , 0 9 5 88 9 , 2 9 2 10 5 , 9 8 5 11 % 38 , 7 6 0 Co n t r a c t u a l M a i n t a n d R e p a i r - 75 3 38 , 0 0 7 98 % 8, 1 6 0 Ex p e r t a n d P r o f e s s i o n a l S e r v i c e s 22 8 28 , 8 2 3 (2 0 , 6 6 3 ) -2 5 3 % 13 , 4 1 4 Tr a v e l / T r a i n i n g / M e m b e r s h i p s 36 5 11 , 0 5 8 2, 3 5 6 18 % 12 , 9 9 0 Op e r a t i o n s E x p e n s e s 1, 6 6 1 12 , 6 0 8 38 2 3% 11 , 5 6 8 Mi s c e l l a n e o u s / O t h e r 16 17 , 3 0 2 (5 , 7 3 4 ) -5 0 % 1, 0 8 0 , 1 6 9 Su b t o t a l C i t y P r o j e c t M a n a g e m e n t 82 , 3 6 5 95 9 , 8 3 6 12 0 , 3 3 3 11 % 3, 9 3 6 , 0 1 4 To t a l D M C C O p e r a t i o n s 2 0 2 3 30 6 , 6 9 9 3, 0 8 9 , 2 8 8 84 6 , 7 2 6 22 % NO T E : D e c e m b e r 2 0 2 3 i s n o t y e t c l o s e d , t h e r e f o r e t h e D e c e m b e r n u m ber s a r e n o t f i n a l . DM C C Wo r k i n g C a p i t a l N o t e : $ 1 , 0 0 0 ED A Wo r k i n g C a p i t a l N o t e : $ 1 0 0 , 0 0 0 7 Destination Medical Center MEMO To: Brian Anderson, Assistant Treasurer, DMC Corp. From: Patrick Seeb, Executive Director, DMC EDA Date: 01/26/24 RE: Request for 2023 Budget Encumbrance The 2023 DMC EDA work plan approved by the DMC Corp. board of directors and Rochester City Council included an objective to “(l)aunch a website housed within www.dmc.mn that includes information on business development in the DMC district, out-of-market job creators and investors, site selection professionals, and targeted industry research.” Some revisions were made to the DMC website, but the project remains a work in progress. The DMC EDA is requesting that the DMC Corp. board of directors approve a 2023 operating budget encumbrance of $100,000 to pay for these services. Funds remain available in the 2023 budget to cover these costs: as of December 31, 2023 DMC EDA operating budget expenses paid by the DMC Corp. totaled $2,208,005.62, or 84% of the approved $2.623,528.00 2023 budget. 8 Annual Report to the Legislature To: DMCC Board of Directors From: DMC EDA Date: January 26, 2024 Request of the board of directors: Approve Resolution A, “Authorizing Report to the Legislature Pursuant to Statute” Overview: The Minnesota state statutes governing the DMC initiative provide that by February 15 of each year, the DMCC and the City of Rochester must jointly submit a report to the chairs and ranking minority members of the legislative committees and divisions with jurisdiction over local and state government operations, economic development, and taxes, to the Commissioners of Revenue and Employment and Economic Development, and to Olmsted County. The report must include the following specific elements: • the development plan and any proposed changes to the development plan • progress of projects identified in the DMC development plan • actual costs and financing sources, including the amount paid with DMC state aid, and required City and County DMC contributions of projects completed in the previous two years by the DMCC, City, County, and Mayo Clinic • estimated costs and financing sources for projects to be started in the next two years by the DMCC, City, County, and Mayo Clinic • debt service schedules for all outstanding obligations of the City for debt issued for DMC projects DMC EDA, DMCC, and City staff have prepared a draft report for DMCC and City Council consideration. 9 A. DESTINATION MEDICAL CENTER CORPORATION RESOLUTION NO. __-2024 Authorizing Report to the Legislature Pursuant to Statute BACKGROUND RECITALS A. Minnesota Laws, Chapter 143, Article 10 (the “Act”) provides that by February 15 of each year, the Destination Medical Center Corporation (“DMCC”) and the City of Rochester (the “City”) must jointly submit a report to the chairs and ranking minority members of the legislative committees and divisions with jurisdiction over local and state government operations, economic development, and taxes, to the Commissioners of Revenue and Employment and Economic Development, and to Olmsted County. The DMCC and the City must also submit the report as provided in Minnesota Statutes, Section 3.195. The report must include the following specific elements: (1) the development plan and any proposed changes to the development plan; (2) progress of projects identified in the development plan; (3) actual costs and financing sources, including the amount paid with state aid under section 469.47, and required local contributions of projects completed in the previous two years by the corporation, city, county, and the medical business entity; (4) estimated costs and financing sources for projects to be started in the next two years by the corporation, city, county, and the medical business entity; and (5) debt service schedules for all outstanding obligations of the city for debt issued for projects identified in the plan. B. The DMCC and City staff have prepared a draft report, due on February 15, 2024, and attached as Exhibit 1. RESOLUTION NOW, THEREFORE, BE IT RESOLVED, by the Destination Medical Center Corporation Board of Directors that the Chair or Vice Chair of the DMCC is authorized to execute and submit the report to the Minnesota Legislature as required by the Act, in form similar to the report attached here as Exhibit 1, as may be modified through further discussions with the City, and to take such other actions as are necessary and appropriate to effectuate the timely submission of the report to the Minnesota Legislature. 1448137.DOCX 10 February , 2024 The Honorable Erin Murphy Chair, State and Local Government and Veterans Committee Minnesota State Senate 3211 Minnesota Senate Building 95 University Ave W St. Paul, MN 55155 The Honorable Ginny Klevorn Chair, State and Local Government Finance and Policy Committee 581 State Office Building 100 Rev. Dr. Martin Luther King Jr. Blvd. St. Paul, MN 55155-1206 The Honorable Bruce Anderson State and Local Government and Veterans Committee Minnesota State Senate 2209 Minnesota Senate Building 95 University Ave W St. Paul, MN 55155 The Honorable Jim Nash State and Local Government Finance and Policy Committee 349 State Office Building 100 Rev. Dr. Martin Luther King Jr. Blvd. St. Paul, MN 55155-1206 The Honorable Bobby Joe Champion Chair, Jobs and Economic Development Committee Minnesota State Senate 3401 Minnesota Senate Building 95 University Ave W St. Paul, MN 55155 The Honorable Hodan Hassan Chair, Economic Development Finance and Policy Committee Minnesota House of Representatives 597 State Office Building 100 Rev. Dr. Martin Luther King Jr. Blvd. St. Paul, MN 55155-1206 The Honorable Rich Draheim Jobs and Economic Development Committee Minnesota State Senate 2225 Minnesota Senate Building 95 University Ave W St. Paul, MN 55155 The Honorable Jon Koznick Economic Development Finance and Policy Committee Minnesota House of Representatives 281 State Office Building 100 Rev. Dr. Martin Luther King Jr. Blvd. St. Paul, MN 55155-1206 The Honorable John Marty Chair, Finance Committee Minnesota State Senate 3235 Minnesota Senate Building 95 University Ave W St. Paul, MN 55155 The Honorable Liz Olson Chair, Ways and Means Committee Minnesota House of Representatives 479 State Office Building 100 Rev. Dr. Martin Luther King Jr. Blvd. St. Paul, MN 55155-1206 11 February , 2024 Page 2 The Honorable Eric Pratt Finance Committee Minnesota State Senate 2217 Minnesota Senate Building 95 University Ave W St. Paul, MN 55155 The Honorable Pat Garofalo Ways and Means Committee Minnesota House of Representatives 295 State Office Building 100 Rev. Dr. Martin Luther King Jr. Blvd. St. Paul, MN 55155-1206 The Honorable Ann Rest Chair, Taxes Committee Minnesota State Senate 328 Capitol 75 Rev. Dr. Martin Luther King Jr. Blvd. St. Paul, MN 55155 The Honorable Aisha Gomez Chair, Taxes Committee Minnesota House of Representatives 453 State Office Building 100 Rev. Dr. Martin Luther King Jr. Blvd. St. Paul, MN 55155-1206 The Honorable Bill Weber Taxes Committee Minnesota State Senate 2211 Minnesota Senate Building 95 University Ave W St. Paul, MN 55155 The Honorable Greg Davids Taxes Committee Minnesota House of Representatives 283 State Office Building 100 Rev. Dr. Martin Luther King Jr. Blvd. St. Paul, MN 55155-1206 Commissioner Matt Varilek Minnesota Department of Employment and Economic Development Great Northern Building 180 E. 5th Street, Suite 1200 St. Paul, MN 55101 The Honorable Sheila Kiscaden Chair, Olmsted County Board of Commissioners 151 4th St SE Rochester, MN 55904 Commissioner Paul Marquart Minnesota Department of Revenue 600 North Robert Street St. Paul, MN 55101 Re: Destination Medical Center - February 15, 2024 Report Dear Senators, Representatives, Commissioners, and Chairs: On behalf of the Destination Medical Center Corporation (the “DMCC”) and the City of Rochester (the “City”), we are pleased to submit the enclosed annual report on the progress of the Destination Medical Center (“DMC”) initiative, in accordance with Minnesota Statutes, Sections 469.40 – 469.47 (the “Act”). The Act requires that this report include five elements: (1) the DMC development plan and any proposed changes; (2) progress of projects; (3) costs and financing sources, including State funding and required local contributions, for recent projects; (4) estimated costs and financing sources for future projects; and (5) debt service schedules for all outstanding obligations of the City for debt issued for DMC projects. We discuss each of these elements in the report. Below, we provide a summary of DMC’s 2023 milestones, as well as a brief background of Minnesota’s largest economic development initiative. 12 February , 2024 Page 3 Destination Medical Center: 2023 Milestones The DMC public-private partnership continued to flourish in 2023, ten years after the Legislature enacted this historic economic development initiative. Two highlights of the year deserve particular attention in the mission to position Rochester, Minnesota as the world’s premier destination for health and wellness. First, Mayo Clinic announced a momentous investment in the Bold. Forward. Unbound. in Rochester initiative. Second, qualified private investments from 2013 through 2022 neared $1.5 billion. Mayo Clinic announced a $5 billion expansion in its Rochester campus, the largest investment in Mayo’s 160-year history and the largest investment in Minnesota history. Mayo plans to add five new buildings with 2.4 million square feet of space, with a focus on integrating in-person and virtual visits and shading the traditional lines between inpatient and outpatient care and between in-person and digital health care. The project features two new clinical buildings at the center of campus, located in the heart of the DMC development district. Skyways and tunnels will connect the new facilities with existing buildings, as well as downtown retail, housing, higher education facilities, and other multi-purpose community assets. The success of the DMC initiative through 2023 helped to build the foundation to support Mayo Clinic’s new multi-billion-dollar investment. Mayo Clinic’s Bold. Forward. Unbound. in Rochester initiative will expand its clinical, research, and education facilities in Rochester and critically advance the DMC initiative. As to private investment certifications, in 2023, we certified to the Minnesota Department of Employment and Economic Development (“DEED”) a total of $199,088,689.42 for the year ending December 31, 2022, which includes $172,632,461.06 in Mayo Clinic investments and $26,456,228.36 in other private investments. The cumulative total of Mayo Clinic and other private investments through 2022 is $1,461,132,648.74. In addition, as to transportation, the City certified City and County transit contributions of $9,081,280.13 for 2022, qualifying for the maximum disbursement of State transit aid of $7,500,000. In addition to these certified investments, there are many other projects proposed or under construction, the majority of which are private investments with no direct DMC public assistance. A map of the DMC development district and key public and private projects is attached as Exhibit A to the report. A summary of significant projects is attached as Exhibit B to the report. Destination Medical Center: Background The Act established a unique public-private partnership to lead this historic economic development initiative. The law also required private investment to lead the public investment: it required $200 million in private expenditures before any State funding occurred. This threshold was surpassed in 2017, and more than $1.46 billion of private funding has been certified through 2022. 13 February , 2024 Page 4 The Act further established the partnership between the DMCC, the City, Mayo Clinic, and Olmsted County. The DMCC Board of Directors is appointed by the Governor, the City, the County, and Mayo Clinic. Key funding and strategy decisions require approval by both the DMCC and the City Council. Specifically, the Act required the preparation and joint approval of a development plan (the “Development Plan”), which serves as the strategic framework for DMC’s business and economic development strategy. It includes land use, transportation and infrastructure planning, market research, funding priorities, business and economic development, and market strategies. After City approval, the DMCC adopted the Development Plan on April 23, 2015. The Development Plan must be updated not less than every five years. The Five-Year Update was approved by the City and by the DMCC in 2020. The Ten-Year Update is underway and is scheduled for approval in May of 2025. The benefits of the DMC initiative may be measured in other ways. From the end of 2015 through the first quarter of 2023, Mayo Clinic alone added approximately 6,500 employees in Rochester. Hundreds of housing units and tens of thousands of square feet of bio-med-tech space have been developed, and hundreds of community members have been engaged in the visioning and design of DMC public investments. Mayo Clinic’s Bold. Forward. Unbound. in Rochester. will lead transformational progress on all fronts. For more information, including viewing the DMC Development Plan, public meeting materials, project updates, investor and developer information, and market research, visit www.dmc.mn. The City’s website, www.rochestermn.gov, also provides information on the DMC initiative. Thank you for your consideration of this annual report. On behalf of both the DMCC and the City, we welcome your comments or questions. We look forward to continued progress on the Destination Medical Center initiative in 2024. DRAFT DRAFT Pamela Wheelock, Chair Kim Norton, Mayor Destination Medical Center Corporation City of Rochester Enclosures cc: Legislative Reference Library 1760137-7.DOCX 14 Capital Improvement Plan (CIP) City of Rochester: 507.328.2900 City of Rochester DMC Corporation 201 4th St. SE Rochester, MN 55904 rochestermn.gov dmc.mn REPORT Destination Medical Center Corporation & City of Rochester ANNUAL February 15, 2024 DR A F T 15 01 Discovery Walk Heart of the City-Phase One 02-04 Riverfront Reimagined 05 Bryk on Broadway Soldiers Field Memorial Park TABLE OF CONTENTS Mobility Capital Improvement Plan (CIP) Statutory Element Three- Actual Costs and Financing Statutory Element Four- Estimated Cost for Future Projects Statutory Element Five- Debt Service Schedule Exhibit A- Map of DMC Development District Exhibit B- Summary of Major Projects Projects without DMCC Funding Exhibit C- Annual Certification of Mayo Clinic and others Exhibit D- Annual Certification of City Expenditures Exhibit E- DEED Certifications Exhibit F- City Debt Service Schedule Summary of Five Statutory Elements Statutory Element One-Development Plan Statutory Element Two- Progress of Projects 06 07 08 09 10 11 12-13 14-15 16-18 19 20-21 22-25 26-27 28-39 40-42 43-46 47-48 DR A F T 16 ONE The Development Plan and any proposed changes to the Development Plan. THREE Actual costs and financing sources, including the amount paid under Minnesota Statutes Section 469.47, and required local contributions of projects completed in the previous two years by the DMCC, the City, Olmsted County and Mayo Clinic. FIVE Debt service schedules for all outstanding obligations of the City for debt issued for projects identified in the plan. TWO Progress of projects identified in the Development Plan. FOUR Estimated costs and financing sources for projects to be started in the next two years by the DMCC, City, Olmsted County, and Mayo Clinic. 01 Minnesota Statutes, Section 469.43, subd. 8 requires that five elements be included in this annual report. DR A F T 17 ONE The Development Plan and any proposed changes to the Development Plan. FIRST AMENDMENT SECOND AMENDMENT TEN YEAR UPDATE 2016 2020 2020 2025 Modification made to the DMC Develop- ment District. FIVE YEAR UPDATE The update can be found at https://dmc.mn/investors- and-developers/ Report expected to be presented for approval in May 2025 2015 INITIAL ADOPTION April 15, 2015. Development Plan adopted. 02 Modification made to the DMC Develop- ment District. DR A F T 18 03 Development Plan. One of the primary goals of the Act was the adoption of a Development Plan. In September 2013, the DMCC established specific goals and objectives for the Development Plan: to create a comprehensive strategic plan, and over the life of the project, to stimulate over $5 billion in private investment that will be supported by $585 million in public funds, create 35,000-45,000 new jobs, generate $7.5 billion to $8.5 billion in net new tax revenue, and achieve the highest quality patient, visitor, any resident experience.. The Development Plan is the strategic framework for the DMC initiative, establishing a comprehensive business and economic development strate- gy. It includes land use, transportation and infrastructure planning, market research, funding priorities, business and economic development, and market strategies. Upon making the findings set forth in the Act, including finding that the City had approved the Development Plan, the DMCC adopt- ed the Development Plan on April 23, 2015. The Act requires that the Develop- ment Plan be updated not less than every five years. The Five-Year Update was approved by the City and by the DMCC in 2020. The Ten-Year Update is underway and is scheduled for approval in May of 2025. DR A F T 19 Development Plan cont. Private Investment Leads Public Investment. The Act required that private investment lead the way for this private-public model of partnership. The required private investment of $200,000,000 before state funding would begin under the Act was met in 2017. The graph below depicts the cumulative private investment, in millions of dollars, since 2013. 2013 200 400 600 800 1,000 1,200 1,400 1,600 2014 2015 2016 2017 2018 2019 2020 2021 2022 0 CUMULATIVE INVESTMENT IN MILLIONS 04 DRAFT 20 Progress of projects identified in the Development Plan. According to the Act, a public infrastruc- ture project must be approved by the DMCC before it is proposed to the City. The DMCC must review the project proposal for consis- tency with the Development Plan. Since the adoption of the Development Plan on April 23, 2015, a number of projects have been approved by the DMCC and the City. A map of the DMC Development District and key projects is included as Exhibit A. A summary of major approved projects in the DMC Development District is attached as Exhibit B. We wish to highlight the progress in 2023 of certain approved projects: Discovery Walk Heart of the City Phase One Riverfront Reimagined Bryk on Broadway Soldiers Field Memorial Park Mobility Capital Improvement Plan 05 DR A F T 21 DISCOVERY WALK Discovery Walk is a four-block linear parkway along 2nd Avenue SW. It is planned to connect Annenberg Plaza to Soldiers Field Memorial Park and function as an extension of the Heart of the City public realm project. Discovery Walk is designed to feel like a park and to promote health, wellness, and innovation. It will also serve as a catalyst for future private development in Discovery Square. Construction advanced significantly in 2023, including the pedestrian ramp located in the 300 block, pedestrian lighting art, and the snow melt system. Completion is anticipated in spring 2024. THE BIG DIG: A family friendly event hosted to bring excitement about the project. Sept 2022 06 DR A F T 22 HEART OF THE CITY PHASE ONE 07 The first phase of this project was renovating the east elements of Peace Plaza and surrounding areas. It was unveiled in 2023. The public realm proj- ect features universal design elements, sustain- ability, integrated art and improved infrastructure, and a catenary lighting system. This project has stimulated new and expanded commercial and retail businesses in the area and won the 2023 Award of Excellence in Urban Design from the American Society of Landscape Architects. DR A F T 23 RIVERFRONT REIMAGINED Following the City-initiated Downtown Waterfront S.E. Small Area Plan study for a 60+ acre area located southeast of the downtown core on the Zumbro River, the City continues to lead development of this future mixed-use neighborhood. In July 2022, the City adopted the Riverfront Small Area Plan as a preferred plan to guide the transformation of the redevelopment area as a “front door” to the river and gateway into downtown.  In August of 2022, the City was awarded a federal RAISE grant in the amount of $19.9 million for the Sixth Street Bridge crossing the Zumbro River. In 2023, the project advanced with site preparation, flood wall work with the Army Corps of Engineers, further design, and interim site activation. East and West side renderings of Riverfront Area. 08 Downtown Waterfront Southeast DR A F T 24 The Bryk on Broadway, located at 401 Broadway Ave N., opened in 2023 as a mixed-use, mixed-income apartment building with rents at varying levels. Of the 180 workforce housing apartments, 54 units are income-restricted to those at or below 50% of the area median income, 18 units to those at or below 60% of the area median income, and 108 units to those at or below 80% of the area median income. Rendering of BRYK on Broadway 09 BRYK ON BROADWAY DR A F T 25 (“Soldiers Field”) contains 150 acres of memorials and active recreation space, including 4,000 feet of riverfront. The north- ern portion lies within the DMC Development District and is featured in the Development Plan as an anchor of the Education and Recreation Subdistrict. This project also maximizes connections to other key features of the DMC Development District: Discovery Walk will connect the Heart of the City to Soldiers Field and the Sixth Street Bridge will link Soldiers Field to the downtown waterfront area. The public realm improvements within the district feature an aquatics center, with lap pool, bath house, wading pool, and outdoor seating, new basketball courts, adding a trail through the northeast corner of the park, nature play area, community shelter, public restrooms, and new public parking. Importantly, this project combines federal, State, City, and DMC funding sources to rein- vigorate this public asset. Project improve- ments are well underway and construction is expected to conclude in 2024. SOLDIERS FIELD MEMORIAL PARK Soldiers Field Concept 10 Education & Recreation Subdistrict Shelter & Nature Play Trail Connection Aquatics Lap & wading pools, splash pad & lazy river Bathhouse & pump house plaza, trail, art, landscaping, overlook EX H I B I T DR A F T 26 Progress continued on the approxi- mately three-mile bus rapid transit project known as “LINK.” This project has applied for the Federal Transit Administration (FTA) Small Starts funding process. In 2022, the City and Mayo Clinic entered a twenty-year operating agreement in which Mayo Clinic will cover the annual local match for oper- ating costs and all riders may use the system without paying fares. In 2023, design work was nearly completed, and state and federal environmental reviews concluded. With the significant progress in project planning and qualifying expendi- tures, the City certified, and the Minnesota Department of Employment and Econom- ic Development (DEED) approved, $9,081,280.13 in City and County transit contributions for 2022, qualifying for the State’s disbursement of $7,500,00 as the annual maximum of state transit aid. MOBILITY A critical component of the Link experience is the future develop- ment of the West Transit Village at the western terminus at Second Street SW. The vision for the West Transit Village extends far beyond parking, with the potential uses of mixed income housing, retail, and childcare. In 2023, Mayo Clinic selected a team of development partners to prepare design options for a final site plan. Service early in the morning to late at night. Service every 5 minutes during rush hours & 10 minutes other times. Fare-free servicefor all riders. Fully electric busfleet withon-routechargers. Stations with shelter, heating, light, and real-time signage. 11 DR A F T 27 24 CAPITAL IMPROVEMENT PLAN (CIP) In addition to these projects, the DMCC and the City have approved a Capital Improvement Plan (“CIP”) for public infrastructure projects for 2024. Projects identified in the CIP are categorized as follows: Public Realm, Mobility, Strategic Redevelopment, and Streets and Sewers. Chateau Theatre Improvements and Assets Preservation Downtown Waterfront: Riverfront Pre-development St. Mary’s Place: Public Realm Design and Construction PUBLIC REALM LINK Bus Rapid Transit, including Second Street Reconstruction and Streetscape MOBILITY STRATEGICREDEVELOPMENT STREETS ANDSEWERS Sixth Street Bridge, Sixth Street SE, Waterfront Connectivity District Energy Conversion to geothermal well heat pumps Sanitary Sewer Capacity Bypass on Third Avenue SW 12 Bio-med tech Workforce housing Downtown property support DR A F T 28 The DMC-funded projects above reflect only a portion of the number and type of public and private development projects in the DMC district. Early strategic DMC investments in public infrastructure and commercial and residential proj- ects successfully established Rochester as a destination for investment and development. Other projects, which are now proceeding without the need for public DMC support, include workforce and market-rate housing, extended stay hotels for patients and companions, renovations to historic properties, world-class medical care and research facilities, co- working space, small business improvements, and more. In addition to these transformative capital investments, the City and the DMC EDA have successfully secured economic revitalization, sustainability, workforce, and equitable community-building grants, including through DEED’s Main Street Economic Revitalization Program, Bloomberg Philanthropies Global Mayors Challenge, and the McKnight Foundation. These grant awards, secured by the DMCC’s partners, support and augment the advancement of DMC priorities. 13 DMC public realm projects continue to benefit from community co-design. This process recruits those most impacted by a project to assist in reaching previously underrepresented communities and perspectives. In the fall of 2023, the DMC EDA trained a third cohort of community co-design leaders, resulting in over 44 community leaders trained to advocate for co-design efforts within their organizations. DR A F T 29 THREE Actual Cost and Financing Sources. Actual costs and financing sources, including the amount paid under Minnesota Statutes, Section 469.47 and required local contributions of projects completed in the previous two years by the DMCC, the City, Olmsted County, and Mayo. The Act requires that an annual certification of private investment by Mayo Clinic and other private investors be made to DEED by April 1 of each year, and DEED must certify that $200,000,000 of private investment has been made before any state funding may be paid. This threshold was met and exceeded in 2017. The cumulative total amount of certified Mayo Clinic and other private investments to date is $1,461,132,648.74. 14 DR A F T 30 In compliance with Minnesota Statutes, Section 469.47, attached is the annual certification of Mayo Clinic and other private investment that was submitted to DEED on March 28, 2023 (Exhibit C). The annual certification of City expenditures, which was submitted to DEED on March 22, 2023 is also attached (Exhibit D). DEED conducted its own audit process of the certified expenditures and then approved the expenditures. The DEED certifications, dated June 16, 2023, are attached (Exhibit E). In addition, please note the following information: 15 Through December 31, 2023, Olmsted County has contributed $19,500,000. Actual costs paid by the City from commencement through December 31, 2023 have totaled $64,810,418.21, based on year-end unaudited costs. The funding source was initially City internal borrowing, which is being repaid, along with the costs for new projects and initiatives, by the City’s 0.25% DMC sales tax. The City has also issued capital debt for a new parking ramp in the district. Just as the Mayo Clinic investments and other private investments have underscored the commitment to DMC, so too have the City contributions. The 2024 combined operating and capital improvements budget for the DMC totals $39,565,314 a portion of which (approximately $8 million) is being paid for with funding other than state funds. Of this amount $3,718,569 will be provided by Olmst- ed County from its 0.25% sales tax. The remaining amount is to be provid- ed by the City of Rochester from a variety of City funding sources, includ- ing its 0.25% DMC sales tax. In addition, Mayo Clinic has pledged financial and in-kind funding to the DMC EDA in the amount of $1,531,700. Through December 31, 2023, General State Infrastructure Aid in the amount of $127,591,189.36 has been received. State Transit Aid in the amount of$7,500,000 has been received through December 31, 2023. $39,565,314 $127,591,189.36 $19,500,00 $64,810,418.21 DR A F T 31 FOUR Estimated Costs and Financing Sources for Projects to be started in the next two years by the DMCC, City, Olmsted County, and Mayo Clinic. The Development Plan sets forth a framework and examples of projects that may be considered for funding in the next several years. Each project will be approved on an individual basis. See also the report response to statutory elements “2” and “3”. 16 DR A F T 32 Rendering of planned new Mayo Clinic facilities in downtown Rochester BOLD. FORWARD. UNBOUND. IN ROCHESTER Project complete by 2030 $5 billion investment $500 million in sustaining projects 2.4 million square feet of new space First buildings open in 2029 $600M Rochester 2023 Permit Valuation $646M St. Croix Bridge $1 B US Bank Stadium $2.6 B 2024 State of MN Bonding Bill $2.7 B SW Light Rail $3.2 B MSP Airport Expansion $5 B Mayo BOLD FORWARD UNBOUND IN ROCHESTER Comparative Investments within Minnesota Highlights of the project: 17 DR A F T 33 18 DMC CAPITAL PLAN DESCRIPTION PUBLIC REALM MOBILITY STRATEGIC DEVELOPMENT STREETS AND SEWERS OPERATIONS DESCRIPTION DESCRIPTION DESCRIPTION DESCRIPTION Chateau Theatre Improvements and asset Preservation Downtown Waterfront-Pre-Riverfront Development St. Marys Place:Public RealmDesign and Construction Rapid Transit, including SecondStreet Reconstruction andStreetscape DMC Corp. DMC Administrative Supportby City of Rochester DMC EDA City DMC Project Management DMC Development Plan Update 2024 DMC FUNDING SOURCE PHASE 2 (2020-2024)DMC FUNDING STATE GSIA STATE GSIA STATE GSIA STATE GSIA STATE GSIA STATE GSIA STATE GSIA STATE GSIA DMC COUNTY TRANSIT AID DMC COUNTY TRANSIT AID CITY CITY CITY CITY Strategic Redevelopment (Bio-med-tech, workforcehousing, downtown propertysupport Streets: Sixth Street Bridge SE,Waterfront Connectivity District Energy Sewer: Construct Sanitary SewerCapacity Bypass on 3rd Ave SW from2nd St SW to 4th St SW PROPOSED 2024DMC FUNDING $1,000,000 $1,000,000 $500,000 Subtotal $2,500,000 $3,718,569 Subtotal $9,296,423 $5,577,854 $10,000,000 Subtotal $10,000,000 $4,000,000 $7,200,000 $1,500,00 Subtotal $12,700,000 $218,930 $100,000 $2,842,507 Subtotal $5,068,891 $1,157,454 $750,000 2024 DMCFUNDING TOTAL $39,565,314 2024 DMC GSIA:2024 City DMC Aid: 2024 County DMC Transit Aid: 2024 State DMC Transit Aid: $25,200,000 $5,068,891 $3,718,569 $5,577,854 Phase 2Subtotal Phase 2TargetRange Phase 2Subtotal Phase 2TargetRange Phase 2Subtotal Phase 2TargetRange Phase 2Subtotal Phase 2TargetRange Phase 2Subtotal Phase 2TargetRange $50,670,000 $35-50M $60,057,083 $60-75M $30,300,000 $20-45M $34,477,223 $35-50M $20,214,543 $15-20M $195,718,847 $200,000,000 DR A F T 34 FIVE Debt service schedules for all outstanding obligations of the City for debt issued for projects identified in the plan. The debt service schedule is attached as Exhibit F. 19 DR A F T 35 EX H I B I T MAP OF DMC DEVELOPMENT DISTRICT AND KEY PROJECTS 20 ADR A F T 36 MAP OF DMC DEVELOPMENT DISTRICT AND KEY PROJECTS A EXHIBIT 21 ADR A F T 37 34 SUMMARY OF MAJOR PROJECTS EXHIBIT 22 B DR A F T 38 TWO DISCOVERY SQUARE Located at 209 5th St SW, this expansion of the DMC bio-medical, research, and technolo- gy innovation campus is a 125,000 square foot bioscience building. It features tech-forward tenant spaces designed with flexible lab capacity and leading-edge tech- nology. Construction was completed in 2022. HYATT HOUSE The Hyatt House project is located in the “Central Station” subdis- trict as described in the Development Plan. Approved in 2018, the $44 million project includes an eight-story, 172- room extended-stay hotel, and is providing approximately 257 construction jobs and while creating 38 per- manent jobs. This project was completed in 2021. This phase of the project is a renovation of the east side of Peace Plaza and surrounding areas. The construction of this transformative project, which includes improved safety, accessibility, universal design elements, sustainability, integrated art, and improved infrastructure, is largely completed, with a catenary lighting system installed in late 2023. HEART OF THE CITY PHASE 1- PEACE PLAZA HOTEL INDIGO RENOVATIONS The Hotel Indigo involved the renovation of an existing 172- room Holiday Inn, located in the “Downtown Water- front” subdistrict as described in the Devel- opment Plan. Approved in 2018, the $42 million redevelopment includ- ed the addition of 33,000 square feet to the existing 114,500 square feet and provid- ed approximately 111 construction jobs and 28 new permanent jobs. Opening of the new hotel and restaurant occurred in 2020. 23 DR A F T 39 EXHIBIT THE BERKMAN The Berkman Apart- ments (formerly known as the “Alatus Project”) is located on 2nd Street SW in the “Saint Marys” subdistrict as described in the Devel- opment Plan. Approved in 2016, this mixed- use project involved the construction of an approximately 350,000 square foot, thirteen-level commer- cial and residential complex. It includes 350 market-rate rental units, created an estimated 235 construction jobs and eight permanent jobs, and generated a total of $115 million in private investment. The Berkman was completed in 2020. HILTON MAYO The Hilton Rochester Mayo Clinic Area (formerly known as the “Broadway at Center” project) is located in the “Downtown Waterfront” subdistrict as described in the Development Plan. Approved in 2015, this 371,000 square foot mixed-use project includes a 264-room hotel, restaurants, retail space, a skyway connec- tion, and a five-level public parking ramp with 540 public spaces and 90 private spaces. The restaurants and hotel opened in 2019. BRYK ON BROADWAY This Bryk on Broad- way is located at 401 Broadway Ave N. It is a mixed-use, mixed-in- come apartment build- ing consisting of 180 workforce housing apartments, providing rent at varying levels. Construction was completed in 2023. 24 DR A F T 40 HEART OF THE CITY PHASE 1- PEACE PLAZA WELLS FARGO RENOVATION This project is a renovation of a 92,000 square foot existing building, located in the “Heart of the City” sub- district as described in the Development Plan. Approved in 2018, this project is a catalyst for the public realm in the Heart of the City subdistrict and includes connections to the street and pedestrian skyway. The renovation has made approximate- ly 23,000 additional square feet of commercial or office space available. The project created an esti- mated 30 construction jobs and provided 115 permanent jobs. This project was completed in 2020. ONE DISCOVERY SQUARE One Discovery Square (formerly known as Discovery Square Phase One) is on First Avenue SW in the “Discovery Square” subdistrict as described in the Develop- ment Plan. Approved in 2017, this approximately $35 million bio-science building will be a center of innovation and is housing companies whose mission is to accelerate bioscience and technology discover- ies to market. The four story, 89,000 square foot building includes office, collaborative, and retail space. As noted above, this project is the first phase of achieving a key component of the Devel- opment Plan: providing jobs in the bio-science sector. One Discovery Square was completed in 2019 and is approximately 100 percent leased THE MAVEN ON BROADWAY The Maven on Broad- way (formerly known as Urban on First) is locat- ed south of 4th Street SW between 1 st Avenue SW and Broadway Avenue and is in the “Discovery Square” subdistrict as described in the Development Plan. Approved in 2017, this approximately $38 million mixed use proj- ect includes a six-story building with 156 market rate rental units, parking, and street level commercial and retail space for a total of 238,700 square feet. The Maven on Broadway was completed in 2019. 25 DR A F T 41 PROJECTS WITHOUT DMCC FUNDING ASSISTANCE 26 DR A F T 42 CONLEY MAASS BUILDING This project involved the renovation of a historic building into a restaurant space and leased space for high tech companies. The renovation was completed in 2016. 1ST AVENUE FLATS This is a 68-unit affordable housing building, and all of the units are income-restricted to persons at or below 60% of the area median income. The building opened in 2017. FLATS ON 4TH This project is a six-story mixed use development consisting of 92 rental apartment units, with 19 of the units affordable to persons at 50% of the area median income, and 2,300 square feet of ground floor retail space. The build- ing opened in 2018. RESIDENCE AT DISCOVERY SQUARE The Residence at Discovery Square is a six-story, mixed use development con- sisting of 143 rental apartment units, with 20% of the units affordable to persons at 60% of the area median income, and 15,400 square feet of commercial/retail space. It opened in 2019. HUE APARTMENTS The Hue Apartments is a six-story, mixed use development consisting of 50 rental apartment units and 2,000 square feet of commercial/retail space. The Hue Apartments opened in 2020. TOWNEPLACE SUITES BY MARRIOT TownePlace Suites by Marriot consists of a 110-unit hotel with two levels of underground parking. The hotel opened in 2021. LOFTS AT MAYO PARK The Lofts at Mayo Park is a five-story, 29-unit market rate rental apartment project, which opened in 2017. 501 ON FIRST 501 on First is a five-story, mixed use development consisting of 84 rental apartment units and 21,000 square feet of commercial/retail spaces. It opened in 2018. EVEN HOTELS AND STAYBRIDGE SUITES This is a 246-unit dual-branded hotel, which opened in 2021. UNIVERSITY OF MINNESOTA ROCHESTER STUDENT HOUSING In September 2023, the University of Minnesota Rochester opened a new 400-per- son-capacity student housing development at 150 Broadway Ave. South in the heart of down- town Rochester. The project, created via the renovation of the former DoubleTree Hotel on Broadway Avenue South, included approxi- mately $8 million in improvements. 27 DR A F T 43 EX H I B I T C ANNUAL CERTIFICATION OF MAYO CLINIC AND OTHER PRIVATE INVESTMENTS 28 As to private investment certifications, in 2023, we certified to the Minnesota Department of Employment and Economic Development (“DEED”) a total of $199,088,689.42 for the year ending December 31, 2022, which includes $172,632,461.06 in Mayo Clinic investments and $26,456,228.36 in other private investments. The cumulative total of Mayo Clinic and other private investments through 2022 is $1,461,132,648.74. $199,088,689.42$172,632,461.06$26,456,226.36 Private Investments Total Investment PRIVATE INVESTMENT CERTIFICATIONS IN 2023 Mayo Clinic InvestmentsDR A F T 44 29 DR A F T 45 A 30 DR A F T 46 AATTACHMENT ONE ATTACHMENT 1-1 31 DR A F T 47 32 DR A F T 48 33 DR A F T 49 ATTACHMENT TWO 34 DR A F T 50 a 35 DR A F T 51 36 DR A F T 52 37 DR A F T 53 ATTACHMENT THREE 38 DR A F T 54 39 DR A F T 55 EX H I B I T D ANNUAL CERTIFICATION OF CITY EXPENDITURES. $60,915,015.66 Total Expenditures CITY OF ROCHESTER’S CERTIFIED EXPENDITURES JUNE 2013 THROUGH DECEMBER 2022 40 DR A F T 56 41 DR A F T 57 42 DR A F T 58 DEED CERTIFICATIONS EX H I B I TE 43 DR A F T 59 44 DR A F T 60 45 DR A F T 61 46 DR A F T 62 EXHIBIT CITY DEBT SERVICE SCHEDULE 47 FDR A F T 63 35 Post-Sale $21,265,000 General Obligation Tax Increment Revenue Bonds, Series 2017B (Parking Ramp Project) DEBT SERVICE SCHEDULE Series 2017B GO TIF Parki /SINGLE PURPOSE/10/16/2017 ROCHESTER, MINNESOTA SIGNIFICANT DATES Dated Date...........................................................................................................................................................................11/16/2017 Delivery Date....................................................................................................................................................................... 11/16/2017 First Ccoupon Date................................................................................................................................................................8/01/2018 Yield Statistics Bond Year Dollars................................................................................................................................................................$254,390.21 Aaverage Life.........................................................................................................................................................................11.963 Years Aaverage Coupon.................................................................................................................................................................. 3.2177754% Net Interest Cost (NIC).........................................................................................................................................................2.7176241% True Interest Cost (TIC)....................................................................................................................................................... 2.6417803% Bond Yield for Arbitrage Purposes.......................................................................................................................................2.6130470% All Inclusive Cost (AIC)........................................................................................................................................................ 2.6889724% IRS Form 8038 Net Interest Cost.................................................................................................................................................................. 2.6154299% Weighted Average Maturity..................................................................................................................................................11.612 Years ----8102/10/20 48.936,04548.936,045--8102/10/80 02/01/2019 550,000.00 5.000%381,628.13 931,628.13 31.878,76331.878,763--9102/10/80 02/01/2020 735,000.00 5.000%367,878.13 1,102,878.13 31.305,94331.305,943--0202/10/80 02/01/2021 775,000.00 5.000%349,503.13 1,124,503.13 31.821,03331.821,033--1202/10/80 02/01/2022 815,000.00 5.000%330,128.13 1,145,128.13 31.357,90331.357,903--2202/10/80 02/01/2023 855,000.00 5.000%309,753.13 1,164,753.13 31.873,88231.873,882--3202/10/80 02/01/2024 895,000.00 5.000%288,378.13 1,183,378.13 31.300,66231.300,662--4202/10/80 02/01/2025 940,000.00 5.000%266,003.13 1,206,003.13 31.305,24231.305,242--5202/10/80 02/01/2026 990,000.00 5.000%242,503.13 1,232,503.13 31.357,71231.357,712--6202/10/80 02/01/2027 1,035,000.00 5.000%217,753.13 1,252,753.13 31.878,19131.878,191--7202/10/80 02/01/2028 1,090,000.00 2.000%191,878.13 1,281,878.13 31.879,08131.879,081--8202/10/80 02/01/2029 1,110,000.00 2.250%180,978.13 1,290,978.13 36.094,86136.094,861--9202/10/80 02/01/2030 1,135,000.00 3.000%168,490.63 1,303,490.63 36.564,15136.564,151--0302/10/80 02/01/2031 1,170,000.00 2.750%151,465.63 1,321,465.63 31.873,53131.873,531--1302/10/80 02/01/2032 1,200,000.00 2.750%135,378.13 1,335,378.13 31.878,81131.878,811--2302/10/80 02/01/2033 1,235,000.00 2.875%118,878.13 1,353,878.13 00.521,10100.521,101--3302/10/80 02/01/2034 1,270,000.00 2.875%101,125.00 1,371,125.00 57.868,2857.868,28--4302/10/80 02/01/2035 1,305,000.00 3.000%82,868.75 1,387,868.75 57.392,3657.392,36--5302/10/80 02/01/2036 1,345,000.00 3.000%63,293.75 1,408,293.75 57.811,3457.811,34--6302/10/80 02/01/2037 1,385,000.00 3.000%43,118.75 1,428,118.75 57.343,2257.343,22--7302/10/80 02/01/2038 1,430,000.00 3.125%22,343.75 1,452,343.75 74.507,054,92$74.507,581,8$-00.000,562,12$latoT DATE PRINCIPAL COUPON INTEREST TOTAL P+I 48 DR A F T 64 65 Minnesota MedTech 3.0 (MMT3.0) Grant Application To: DMCC Board of Directors From: DMC EDA Date: January 26, 2024 Request of the board of directors: Acknowledge that DMC is a partnering organization within the MMT3.0 consortium, and as such will meaningfully contribute to the MMT3.0 grant application project plan. Background • What is MMT3.0? o A strategy to grow Minnesota’s global market share in the medical technology industry by building an ecosystem that is even more connected, more strategic, and “smarter” through the incorporation of cutting- edge technologies, such as artificial intelligence, machine learning, and data science. o Grow the ecosystem to develop Smart MedTech products that are patient-ready, embraced by providers, and market-ready with an accelerated timeline. o Doing so will attract Smart MedTech businesses from the region and the world, bringing their technology to the doorstep of the largest and smartest medical device ecosystem in the world. • The U.S. Economic Development Administration posted a notice of funding opportunity (NOFO) for the 31 federally recognized Regional Tech Hubs, as authorized by the 2022 CHIPS and Science Act. o Aims to invest in regions across the country in key technology areas. o Requires deep collaboration among industry, higher education, government, economic development, and workforce/labor organizations. o Designates U.S. regions with global leadership potential, which makes them eligible for federal programming and access to federal funding. • The grant opportunity is for $40-70M over 2-5 years for each of 5-10 regional tech hubs. • The MMT3.0 strategy and the grant team are built around our rich history in medical devices. o Led by GREATER MSP, the MN coalition includes 140+ individuals from ~30 organizations, including Mayo Clinic, Destination Medical Center, University of MN, Medtronic, Allina Health, Boston Scientific, Fogarty Innovation, gener8tor, HealthPartners, Medical Alley Association, Minnesota State Universities, Shakopee Mdewakanton Sioux Community, Office of Governor Tim Walz, and many more. DMC role in Grant Preparation • Co-leading one of the five project streams, which involves engagement across all project streams and participants. • Coordinating connections across multiple Mayo Clinic entities for their engagement in the initiative. DMC Contributions to Grant Deliverables (examples) • The MMT3.0 ecosystem becomes additive to the value proposition for our already-existing DMC lead generation activities. Thus, DMC EDA will be positioned to bring Smart MedTech businesses into the Minnesota (including Rochester) ecosystem. • Coordinate and convene Rochester-based MMT3.0-related ecosystem meetings, conferences, and workshops as needed. • Contribute to developing and executing workforce development strategies. Next Steps and Timelines • Write first draft of project application by February 6. • Three rounds of reviews, edits, and design by February 26. • Submit grant February 28. City of Rochester: Preparing for Transformation To: DMCC Board of Directors From: DMC EDA Staff Date: January 26, 2024 Request of the board of directors: Learn about the City of Rochester’s efforts to advance its organizational designs, succession planning, and resourcing to meet this transformational moment in Rochester’s history. Discuss how DMC can strengthen its collaboration, aligning and optimizing resources. Background: On January 17, 2024, the Rochester City Council held the first of at least two discussions regarding the transformative impacts of projects across the city. As examples, these projects include the renewal of the local option sales tax and associated community investments, Mayo Clinic’s Bold. Forward. Unbound. in Rochester program, and Link rapid transit. Because the City of Rochester is a key DMC stakeholder and the entity with responsibilities for DMC public infrastructure project delivery and fiscal management, shared understanding of City capabilities and needs will be necessary to effectively enable and leverage these public and private projects. The City staff narrative that informed the City Council discussion is below: “The City of Rochester is experiencing significant transformation. This transformation results from several factors, including our success in pursuing state and federal funding to support the City Council's strategic priorities. The City has received significant State and Federal Funding for these priorities including funding for the $143 million Link Rapid Transit project, the $29.9 million 6th Street Neighborhood & Riverfront improvements, and the $20 million Soldiers Field renovation. Further, the Legislature and Rochester voters entrusted the City with a $205 Million extension of the Local Sales Tax. This will provide investment in a new Regional Sports and Recreation Complex, Street Reconstruction, Flood Control and Water Quality improvements, and Economic Vitality focused on housing. Finally, the state has invested bonding dollars toward a Regional Parks and Forestry Maintenance Facility, jumpstarted a North Broadway Park and Ride (built with a Federal Grant of $7.4 million) and we continue to leverage access to Inflation Reduction Act funds to continue to expand sustainability in our downtown building energy transition. These successes, coupled with Mayo Clinic’s announcement to invest $5 billion as part of their Bold. Forward. Unbound initiative, will present a once-in-a- lifetime opportunity for Rochester. As the City, along with partner organizations, begins to understand the challenges and opportunities associated with this unprecedented growth, we want to review with the City Council our current organizational landscape, succession planning, and the teammates and resources needed to 1) secure resources for projects, 2) deliver projects, and 3) meet future service needs. This conversation will be coordinated over two study sessions on January 17 and February 12, 2024.” 66 DMC Development Plan Update To: DMCC Board of Directors From: DMC EDA Date: January 26, 2024 Request of the board of directors: Support or direction on current planning process, including identifying data needs to ensure informed decision making. Overview: In accordance with the DMC Act, the DMC EDA will prepare an updated DMC Development Plan for DMCC and Rochester City Council consideration in 2025. The update will ensure that the plan meets legislative requirements and stakeholder expectations. The DMC Act requires that the DMC development plan: •Provides an outline for the development of the City as a destination medical center, and the Plan is sufficiently complete, including the identification of planned and anticipated projects, to indicate its relationship to definite State and local objectives; •Affords maximum opportunity, consistent with the needs of the City, County, and State, for the development of the City by private enterprise as a destination medical center; •Conforms to the general plan for the development of the City and is consistent with the city Comprehensive Plan; •Includes strategic planning consistent with a destination medical center in the core areas of: o commercial research and technology o learning environment o hospitality and convention o sports and recreation o livable communities, including mixed-use urban development and neighborhood residential development, retail/dining/entertainment, health and wellness, and transportation •Estimates short- and long-range fiscal and economic impacts •Provides a framework to identify and prioritize short- and long-term public investment and public infrastructure project development and to facilitate private investment and development, including the criteria and process for evaluating and underwriting development proposals •Includes land use planning; transportation and transit planning; operational planning required to support the medical center development district; and ongoing market research plans Additionally, as the 2020 DMC plan update did, this update can: •Reflect the progress to-date against agreed-upon DMC goals •Incorporate and/or complement other plans and strategies which may impact DMC •Address community priorities •Create opportunity to share and reaffirm DMC’s primary mission, vision, and purpose 67 Next Steps: As the DMC initiative approaches the half-way (ten year) point of implementation, this update presents an opportunity to comprehensively update the development plan. Build out necessary data set to establish baseline assumptions and inform future decision making. Identify existing plans or planning processes by others to avoid duplication of efforts. Timeline: Proposed update deadlines and approval dates are noted below. If this general schedule is agreed upon by the DMCC, the majority of plan update work will occur from June 2024 to January 2025, with staff updates at each regular board meeting. Budget: The approved 2024 DMC Capital Plan includes $750,000 to support the DMC plan update. Affirm plan update scope, requirements Nov. ‘23 Feb. ‘24 May ‘24 Jan.-Feb. ‘25 May ‘25 Determine data needs to ensure informed decision-making; identify existing planning by others to avoid duplication Joint meeting: DMCC, DMC-EDA, City Council, County Board EDA recommends, DMCC receives plan; sets date for public hearing; public comment period City Council considers plan; DMCC public hearing and plan consideration Update preparation, regular meeting updates 68 DRAFT Table of Contents: 1) Executive Summary a. Mission, Goals, and Vision b. Governance Model c. Guiding Principles of Development Plan d. Market Overview e. DMC Investment Priorities and Success Metrics 2) Significant Development Considerations a. Mayo Clinic “Bold. Forward. Unbound.” b. Post-COVID 19 Impacts on Downtown (Retail, workforce) c. Major Project Construction Impacts (LINK BRT, UMR, etc.) d. Macroeconomic Impacts on Real Estate Investment and Development (capital access, interest rates, workforce, supply chain, etc.) e. District Energy 3) Market Trends and Demand Forecasts (through 2029 and 2035) a. Health (sq ft) b. Bio-Med-Tech (sq ft) c. Office (sq ft) d. Hotel (rooms) e. Residential (units) f. Retail / Dining / Entertainment (sq ft) 4) Economic and Fiscal Impacts a. Impact of DMC investments, 2015-2024 i. Jobs ii. Taxes iii. Private Development and Investment 1. Growth (units, keys, sq ft) 2. Investment ($$$, Mayo and non-Mayo) iv. Experience b. Estimated impacts of DMC plan implementation, 2025-2029 i. Jobs ii. Taxes iii. Private Development and Investment 1. Growth (units, keys, sq ft) 2. Investment ($$$, Mayo and non-Mayo) 5) Plan Implementation Factors a. Business Recruitment and Lead Generation b. City for Health c. Communications d. Community Engagement and Experience e. Equitable Economic Development f. Historic Preservation g. Mobility Strategies h. Public Art and Design i. Sustainability j. Targeted Workforce and Business Participation k. Workforce Development 6) 2025-2029 DMC Capital Plan a. Overview of the DMC Financial Model b. Planned and Anticipated Public Infrastructure Projects (Streets, Sewers, Energy, Mobility, Public Realm, etc.) c. Strategic Private Development i. Private Investment Priorities ii. Process to Apply for Funding iii. Evaluation Criteria for Projects iv. DMC Development District Investment and Development Opportunities d. Operations Model e. Comprehensive Investment Framework (Sources and Uses) 69 Discovery Square Med-Tech Infrastructure To: DMCC Board of Directors From: DMC EDA Date: January 26, 2024 Request of the board of directors: Provide guidance on potential DMC support for Shared Wet Lab, the first of the three Med-Tech Infrastructure projects in Discovery Square. Background • This is infrastructure that fosters healthcare technology innovation, supports workforce development, and broadens the employment base. • Objectives of this infrastructure: o Attract early-stage companies and the follow-on economic impacts. o Be a resource for businesses already in the Discovery Square ecosystem. o Be an environment for advanced workforce training and education. • Includes three specific types of infrastructure: o Maker Lab – light manufacturing space for the design and development of medical devices. o Sim Lab – simulated healthcare space for workforce development and medical device validation. o Shared Wet Lab – laboratory space with a shared equipment model for life sciences technologies. Status • Maker Lab o Exploring funding and partnership opportunities. • Simulation Lab o Led by Greater Rochester Advocates for Universities and Colleges (GRAUC), in collaboration with numerous organizations, including DMC. o Secured $500K appropriation in 2023, launching pilot in 2024, location TBD. o Seeking ~$11M to design & develop space, acquire technology, hire staff for permanent operation. o Included in City bonding request. • Shared Wet Lab o Discussions underway with potential operator and Mayo Clinic around operating agreement and the business model. 70 Downtown Property Support To: DMCC Board of Directors From: DMC EDA Staff Date: January 26, 2024 Request of the board of directors: Discuss a downtown property support strategy intended to advance economic vitality, downtown vibrancy, property preservation, and other board priorities. Direct staff to prepare and propose program parameters and goals for consideration at a future DMCC board meeting. Background: Since 2020, the DMCC board of directors has engaged in discussions and directed staff to evaluate opportunities to identify eligible DMC investments in downtown properties. These discussions and directions to staff included: I. November 2020: DMCC board approval of the 2020 Update to the DMC Development Plan II. September 2021: DMCC board discussion of DMC funding application, direction to staff to provide further updates III. October 2021: DMC EDA is awarded funding through DEED’s Main Street Economic Revitalization Program IV. May 2023: DMC EDA report on outcomes of DEED Main Street Economic Revitalization Program V. September 2023: DMCC board approval of 2024 DMC Capital Improvement Program, including the possibility of downtown property support VI. January 2024: Rochester City Council designation of downtown historic landmark district More detail on each of these decision points is provided below: I. November 2020 Update to the DMC Development Plan The approved 2020 update to the DMC Development Plan prioritized: 1. Supporting existing local businesses 2. Prioritizing public infrastructure 3. Creatively reusing excess real estate capacity 4. Diversifying the economy 5. Proactively supporting development Additionally, the updated plan included an analysis of the City of Rochester’s tax capacity, demonstrating that downtown is a substantial contributor to city economic and tax generation activity (the DMC development district is approximately one percent of the city’s geographic area but accounts for approximately fourteen percent of city tax capacity). 71 II. September 2021 Board Discussion and Direction to Staff In September 2021, the DMC EDA proposed an initiative to the DMCC board to support downtown properties. The proposal was presented by the DMC EDA, in part, in recognition of the fact that DMC capital has only been approved for projects involving large-scale development and infrastructure. The DMC EDA was evaluating mechanisms for DMC capital to be made accessible for small- and medium-scale development projects. Contemporary discussions with DMCC legal counsel indicated that DMC “public infrastructure” funds could be directed to properties, subject to the uses allowable under state law (and specifically, the ability to direct funds to “demolish, repair, and rehabilitate buildings”). III. October 2021 DEED Main Street Economic Revitalization Program grant award In October 2021, the DMC EDA became a partner organization in the administrations of DEED’s Main Street Economic Revitalization Program, providing the funding opportunity necessary to evaluate the need for and interest in a downtown property revitalization effort. Given the awarding of these funds to the DMC EDA, the DMCC board suspended further discussion of the use of DMC funds for small- and medium-scale downtown property revitalization. IV. May 2023 report to DMCC board regarding outcomes of DEED Main Street Economic Revitalization Program By May 2023, the DMC EDA had allocated the $3 million provided through the Main Street grant program: 1. 54 total awards  $23,000 median project award  13 awards to Black, Indigenous, and People of Color (BIPOC) applicants (24%)  16 awards to non-BIPOC women-led applicants (30%) 2. Variety of projects  31 retail and dining projects  13 office, technical and mixed use projects  5 non-profit projects  5 housing and lodging projects  22 previously unoccupied project sites (41%) 3. 270 permanent jobs created (estimated) V. September 2023 DMCC approval of 2024 Capital Improvement Plan In September 2023, the DMCC board of directors approved the 2024 Capital Improvement Plan (CIP) that noted, as a possible use of funds, downtown property support. Additionally, the DMC EDA and community partners convened the Downtown Rochester Task Force. The task force produced four findings, two of which are noted below and relevant to this work: 1. Address Barriers to doing Business Downtown:  Simplify, improve, streamline policies and processes  Decrease costs of conducting business downtown 2. Support Downtown Growth:  Recruit new businesses  Retain small businesses  Understand new market demand 72 VI. January 2024 Rochester City Council designation of downtown historic landmark district In January 2024, the Rochester City Council designated a downtown historic landmark district. The district includes thirty-two properties. The designation of this district provides an opportunity to evaluate these properties as a part of a general class rather than on a case-by-case basis. The designation could serve as an additional consideration in board and City Council funding decisions (similar to the way the board has emphasized its interest in supporting the development of workforce housing and bio-med-tech infrastructure). Also, preserving these properties could contribute to the economic success of the DMC development district and enhance the patient, visitor, resident, and employee experience. Next Steps: If directed by the DMCC board of directors the DMC EDA, in collaboration with the DMCC legal counsel, the City of Rochester, and other stakeholders, would conduct further due diligence regarding a downtown property support program, including program parameters, funding application process, and goals. The results of this work would be presented at a future board meeting. 73 Riverfront Reimagined To: DMCC Board of Directors From: DMC EDA Date: January 26, 2024 Request of the board of directors: No action requested. Background: The Riverfront Small Area Plan consists of two sites with a total of approximately 5.5 acres. The first site is a 2.5 acre study area located southeast of the downtown core and bounded by 4th St SE to the south, S Broadway to the west, 2nd St SE to the south, and 3rd Ave SE to the east. The 3-acre parking lot and attached parcel north of 4th Street SE and east of 3rd Ave SE will also be included in the study. The site is located at the intersection of the Arts and Culture District and Main Street Mixed-Use District in the Rochester Downtown Master Plan, and it is located in the Waterfront Sub-District of the DMC Development Plan. Gamble Associates was selected in 2021 to lead the creation of a new vision for the Riverfront Small Area Plan. That work was completed in 2022. Gamble Associates is currently working on a second scope of work that includes: •Interim activation (in partnership with the Rochester Downtown Alliance and other organizations), Complete •Advance flood wall work with the Army Corps of Engineers, Complete •Due diligence analysis of former Red Owl and Time Theater buildings, Complete •Continue discussions with Olmsted County regarding the county-owned portion of the site, Complete •East site preparation, In-progress •Prepare developer RFQ/RFP, In-progress Progress: The City and DMC have continued to work closely with Gamble Associates to complete all work associated with the current scope of work. including: •Finalizing a draft RFQ structure to select a partner to develop the property. o A date to release the RFQ is still being determined. •The purchase of Mr. Muffler site is now complete and Olmsted County plans to vacate the building in the spring of 2024. Site prep will begin in the summer of 2024. •City team members are preparing for a Spring/Summer 2024 interim activation implementation including adding lighting, consolidated garbage, art, and programming. The City of Rochester has submitted a request for Minnesota State bonding support for this property, a total estimated cost of $52.9M. The City has indicated this is its priority bonding request. The project includes design, engineering, further environmental analysis, site remediation and preparation, limited demolition, and construction of public realm improvements, including trail improvements, tree planting, public wayfinding, public amenities, and related infrastructure for the reuse of properties. The City and DMC staff will present more details about this request at the Q1 2024 DMCC board meeting. 74 Business Development and Lead Generation To: DMCC Board of Directors From: DMC EDA Date: January 26, 2024 Request of the board of directors: No action requested. DMC Business Development Strategy •Build Awareness of Rochester as a business des�na�on, DMC as an economic development ini�a�ve, and Mayo Clinic’s close connec�on to both. •Build Infrastructure to reduce business risk in Rochester, decrease speed-to-market, and make our Rochester “bigger.” •Build Ecosystem in the life science community by defining the partners we have, engaging those partners in se�ng a comprehensive ecosystem strategy, and u�lizing their knowledge and experience to make our product beter. 2024 Business Development Program •Building Awareness Addi�on of two staff members to allow for increased ac�vity, and improved process. •Business Development Manager: responsibili�es include out-of-market lead genera�on, networking with key decision influencers, and suppor�ng DMC’s Ecosystem building work. •Data, Research, and Analytics Coordinator: responsibili�es include improving lead genera�on processes, CRM and repor�ng management, and suppor�ng DMC’s Ecosystem building work. Digital marke�ng ini�a�ve to allow for “always on” awareness building. •Overhaul of DMC’s BD-focused website •Refinement of DMC pitch materials •Crea�on of DMC sales collateral •Development of DMC communica�ons strategy and processes •Building Ecosystem Launch an ecosystem mapping and gap analysis research project. Begin ecosystem programming ac�vi�es in late 2024. •Building Infrastructure Develop turn-key real estate solu�on in response to 2022 research findings. Begin scoping workforce development infrastructure opportuni�es for future investment requests. Q1 2024 Program Ac�vi�es •Events o Phacili�ate Advanced Therapies Week (January): co-exhibit with Mayo Clinic CRB o Lead Genera�on Campaigns (February, March): Southern California and Northern California •Ini�a�ves o Launch the 2024 digital marke�ng ini�a�ve (January 11-12) 75 Chateau Theatre To: DMCC Board of Directors From: DMC EDA Date: January 26, 2024 Request of the board of directors: No action requested. Background: To-date, the DMCC and City Council have approved approximately $7.7 million in DMC funding for the purchase, maintenance and operation of Chateau Theatre. The DMCC and City Council approved an additional $1 million for HVAC upgrades in 2024. The City of Rochester also secured a U.S. Economic Development Administration tourism grant to support restroom renovations. Chateau Theatre - Facility Update: o The restroom renovations are now complete. o The HVAC is in the process of getting installed, a temporary system is in place. - The historic Chateau Theatre is open daily for guests to explore the space and shop at Threshold Art’s art boutique. The Chateau holds many events for the community and visitors as well. - Please see the enclosed 2023 activation summary. Fulfilling the DMC Vision, Mission, and/or Goals: Heart of the City subdistrict is a long-standing priority for the DMC Corp. board. It is home to many hotels, restaurants, entertainment venues, and medical facilities, many of which have been undergoing reinvestment. 76 14,033 4,892 4,958 1,606 2,680 Daily Walk-in 9.5% Rehearsal 5.7% Public Event - Ticketed 17.6% Private Rental 17.4% Public Event - Free 49.8% 2023 Attendance Tracking | 28,169 guests 2023 Milestones • 292 Days of activation• 45 Free public events• 28 Ticketed public events• 39 Private events• 82 Rehearsals• 98 Days open to the public without specific programming • 28,169 Visitors • Restroom renovations complete • A/V system purchased/installation being finalized • HVAC replacement in progress • Successful alley parklet installation (de-installed for winter) Historic Chateau TheatreHistoric Chateau Theatre 15 1st Street SW, Rochester, MN 55902 507-218-7214 | yourchateau.org77 West Transit Village To: DMCC Board of Directors From: DMC EDA Date: January 26, 2024 Request of the board of directors: No action requested. Background: The DMC vision for the West Transit Village is to provide an authentic place where people want to be and leverage the opportunity to make the BRT journey better than a trip in a private single occupant vehicle. To realize this ambitious vision, Mayo Clinic, the City of Rochester, DMC and a private developer need to collaborate. The parties have agreed to a public-private partnership approach but are also mindful of the FTA transportation funding schedule for the transit elements of the site as well. Fulfilling the DMC Vision, Mission, and/or Goals: The DMC goal of mode shift for transportation requires a significant portion of commuting trips downtown to shift away from Single Occupant Vehicle (SOV) trips and towards other modes including Bus Rapid Transit. The West Transit Village is a key element of enabling the BRT to function well and provide an experience befitting the goal of DMC vision of a world class destination. The conceptual site plan (work-in-progress): 78 Approvals, milestones, and decision points: Real estate advisory firm NTH was retained by DMC EDA and Mayo Clinic to assist in positioning the Mayo Clinic West Lot on 2nd Street SW for future development as the “West Transit Village” and to take advantage of the BRT line being developed along 2nd Street SW. Through that RFP process Mayo has selected a team of Kraus Anderson, Aeon, and Perkins + Will as the preferred development partner. Mayo, the development partner, City staff and EDA staff are participating in a series of design charettes to develop a preferred final development site plan and BRT infrastructure plan for the site. The preferred site plan has now been agreed upon and is advancing into more detailed design development. The next steps include: - Mayo Clinic and developer to establish base conditions of the site transaction and move towards a codified agreement, targeting fall 2024 to sign development agreement - Further advancement of the site design to provide conceptual pricing and definition of the needed infrastructure components of the site - Return to DMC Board with a request for support of needed infrastructure components (anticipated 2Q or 3Q 2024) 79 District Energy/Thermal Energy Networks To: DMCC Board of Directors From: DMC EDA Date: January 26, 2024 Request of the board of directors: No action requested; update regarding DMC district energy system investment to advance DMC carbon emission reduction goals. Project Updates: 1. The City of Rochester is convening stakeholders and consultants to develop the business plan that will be support the desired outcomes of the District Energy system, as well as entering into conversations with Mayo Clinic about the possibility of connecting the Mayo system with the City system for greater overall efficiency of the system due to large heating loads that are currently exhausted as waste heat by Mayo. 2. With its downtown location, proximity to infill redevelopment sites and other factors, the City and DMC EDA have been partnering for a period of years to leverage the City investment in its facilities to create an electrified + geothermal district energy system. 3. Rochester will be hosting the Thermal Energy Network Symposium March 12-14, which will convene leaders in geothermal energy systems and highlight the leading role of the City of Rochester and DMC in developing this downtown system Background: In 2015, DMCC adopted the DMC Development Plan, where the principles of sustainability planning are interwoven throughout, through an integrated mix of medium-to-high density uses, integrated live-work environments and green/park space features throughout the downtown. Subsequent action by the DMCC board further reinforces its commitment energy, environmental sustainability and the evaluation and strategic pursuit of district energy systems (DES): • 2015: DMC Sustainability Goals Adoption within DMC Development Plan • 2015: Sustainable Energy Options Report Accepted by DMCC • 2016: District Energy System Resolution Passed by DMCC • 2019: EIC Strategic Energy Project Plan Approval by DMCC • 2023: Rochester City Hall installs first downtown geothermal wells • March 2024: Rochester hosting national thermal energy network symposium Recognizing the role that a downtown district energy system could have on realizing its energy consumption and carbon footprint reduction goals, DMCC authorized $2 million in the 2021 and 2022 Capital Improvement Program, building off prior investment in preliminary engineering studies in 2019 and 2020. Since 2007, the City of Rochester has made substantial gains toward meeting its climate goals and is on track to achieve a 50% reduction community-wide by 2030. That said, more focus is needed to achieve a 100% reduction by 2050. Electrification of heating systems for homes and buildings and electrifying car and truck fleets are critical to achieving this next stage of reduction. District Energy helps achieve this goal by connecting buildings to the system that already has an electrified heating and cooling source, allows this to happen at scale, and at the pace of private development. The more who connect, the lower the utility rate and efficiency of the system. The DMC EDA and City staff leading this project believe this will also help attract private developers to our market aligned with the sustainability approach, and goal of realizing additional housing affordability for rent and ownership in the downtown. 80 Equitable Economic Development To: DMCC Board of Directors From: DMC EDA Date: January 26, 2024 Request of the board of directors: No action requested. Workplan Update: 1.Community Co-Design Updates: a.We started the third cohort of Community Co-design Facilitator Training in December,2023. The participants who are receiving this training are from the following organizations: United Way of Olmsted County, Olmsted County, Cradle 2 Career, Rochester Public Schools, IMAA, Mayo Clinic, and NAACP. The training is 25 hours total over the next four months. The graduation or cohort 3 will be in May 2024. b.We offered the Community Co-design Leadership Training in October 2023. This was the third cohort where we trained a total of 24 community and organization leaders from City of Rochester, Rochester Public Schools, Olmsted County, Mayo Clinic, Three Rivers Community Action, Rochester Art Center, and many other organizations. The total number of community leaders who received the training so far is 68. c.We are continuing with the community co-design bi-monthly meetings to inform the community about co-design efforts, projects, reports, and all the resources to ensure the success of community co-design. All the information related to community co-design can be found in the Rochester co- design page on the DMC website. 2.Equity Alliance Updates: a.Equity Series: We will be presenting the Equity Series on the second Wednesdays of every month beginning January 2024. The series will be an opportunity to introduce diversity, equity, and inclusion best practices, build sustainable DEI community strategies, and build advocacy and allyship within the Rochester community. 3.DEI Best Practices: a.Goodenough Consulting DEI Partnership: In July, DMC EDA formed a partnership with Goodenough Consulting to complete the following items: i.DMC EDA Diversity, Equity, and Inclusion Assessment- 2023 ii.Provide a report and recommendations-2023. iii.Asist in creating DEI implementation plan-2024. iv.Provide DEI training and consultation for DMC EDA staff-2024. 81 Update: Goodenough Consulting will provide the DMC EDA staff with the final report on the Diversity, Equity, and Inclusion assessment on the 24th of January. The report will include an assessment of the HR practices, Stakeholder Dialogues, Environment Scan, and Anonymous Feedback. On March 5th, 2024, Goodenough Consulting will begin the Diversity, Equity, and Inclusion professional training for the DMC EDA staff. b.Community Connections and Capacity Building: We are continuing to work with grass root organizations and BIPOC led nonprofits to build relationships with the communities they work with. We established monthly check-ins with the following organizations to build trust with BIPOC and unrepresented communities and provide resources and capacity building opportunities: i.NAACP ii.Community Mobilization Resource Coalition iii.Cradle 2 Career iv.Pamoja Women v.Rochester Downtown Mosque vi.Sports Mentorship Academy/Andre Crockett vii.Rochester Public Schools. viii.ACHLA c.Black History Traveling Museum: The Rochester Black Legacy exhibit is a traveling museum to honor local and regional black history. Andre Crockett Sr. and Nicole Asong Nfonoyim-Hara are the organizers for this exhibition. The City of Rochester, Olmsted County, and DMC Eda partnered to host the kickoff of the traveling museum in the City Hall early February 2024 to honor the observation of Black History Month. 4.Affordable Housing Updates: a.Housing Developers Monthly Check-ins: We are continuing our monthly check-ins with 10 developers who are interested in the Rochester community. We provide the developers monthly updates about the following sites: Riverfront, West Transit, and Kmart. We will continue to provide DMC district site opportunities and City of Rochester opportunities to housing developers, and emerging/BIPOC developers. b.Real Estate Summit: We began the preparation for the Real Estate Summit we will host on April 24th, 2024 in partnership with ULI. We are working on including BIPOC communities and emerging developers to have inclusive attendance of the event. 82 Housing To: DMCC Board of Directors From: DMC EDA Date: January 26, 2024 Request of the board of directors: No action requested. Workplan Update: To meet the downtown housing demands outlined in the background section of this update, the DMC EDA has developed a housing strategy within the 2024 workplan, we are working collaboratively with City, County, non-profit and private development partners to develop an implementation toolkit to begin rolling out. Background: The downtown housing market demand for market rate units, affordable and subsidized units, and senior housing units by 2030 totals 3,972 housing units needed by 2030 (22% of county-wide housing market demand). The last housing project to be delivered in the DMC District was Bryk, 180 units that opened in March 2023. Several other multifamily housing projects have been floated but none have yet committed to breaking ground. It is typically 18 months from when a project breaks ground to units being open and available for move-in. Therefore, we can anticipate it will be 18-24 months at the earliest that any new units of housing will open in the District. If no project can commit to breaking ground in 2024, then that timeline gets pushed out another 12 months. At the same time, we are in a very different point in the market cycle than any time previously since DMC was established, and since 2019 the costs of construction and interest rate environment has shifted significantly: Fulfilling the DMC Vision, Mission, and/or Goals: To support the economic growth and new jobs that will be generated within the DMC District, there must be sufficient housing opportunities at a wide range of price points. Denser development in the downtown core also supports the DMC and City GHG reduction goals and mobility strategies as well, and highly efficient from a tax perspective. Current Status: In collaboration with City and other partners, a public facing presentation (for DMCC Q1 meeting and City Council Feb. 26 study session) is being developed to surface and showcase the housing data and current costs, as well as proposed new tools for consideration. We are at a unique moment where the market is facing stronger headwinds than ever before (during DMC’s existence) while the community will also be experiencing unprecedented growth and construction activity in the next 5 years. Therefore staff will posit some new opportunities in order to spur more housing construction. 83 Next Steps: Communication Digital and Print Communication Strategies: • Create digital campaigns on the DMC website and social media platforms to ensure visibility to DMC’s housing priority. • Create a housing prospectus that outlines the DMC’s development process, Rochester community housing funding resources, sustainability goals, and equity in the built environment goals. • Update the current development application. Engagement Share market needs and recruit developers to deliver the various housing products needed within downtown. Community Housing Partnerships Collaborate with public and private partners to realize the downtown and community-wide outcomes: • Rochester Housing Coalition Leadership Council Member. • Collaborate with Rochester financial institutions to research the opportunity to create a coalition for community reinvestment act to secure additional funding for Rochester community housing needs. Housing Data Analysis: • Analyze promising housing approaches: • Cooperative Housing. • Rent to Ownership Models. • Accessory Dwelling Units. • Prefabricated construction methods. • Assess current vacant office spaces and hotels. • IRA related opportunities. • Research Development & Housing Grants to Identify Additional Funding Sources 84 Mobility To: DMCC Board of Directors From: DMC EDA Date: January 26, 2024 Request of the board of directors: No action requested. Background: A multi-modal mobility strategy for the DMC has been developed that includes the implementation of a Rapid Transit Circulator, which is the current focus of DMC’s mobility infrastructure investments. Bus Procurement − Estimated RFP Closing Date: Wednesday, January 24, 2024 − Estimated Interview Dates: Week of February 5, 2024 − Estimated Council Approval of RFP: March 2024 Right of Way (ROW) / Land Acquisition − Request to begin ROW / Land Acquisition negotiations: January 22, 2024 City Council Meeting − Initial Offers sent to property owners following Council approval − Negotiation with Property Owners: January 2024 thru March 2024 − Closing & Recording of Properties: August 2024 Vehicle Design: Goals: - High amenity to provide a unique experience. - Futuristic and innovative visual features. - Experience equal to or better than driving. Areas of influence: - Exterior design - Interior layout, materials, amenities, air quality - Technology utilization - Safety features Fulfilling the DMC Vision, Mission, and/or Goals: DMC EDA Staff are working in collaboration with the City staff and the consultant team, SRF, with a continued focus on the goal of creating a world-class experience that centers equity of access and foregrounds BRT as a desirable consumer choice. 85 Current Status: Next Steps: 86 Discovery Walk To: DMCC Board of Directors From: DMC EDA Date: January 26, 2024 Request of the board of directors: No action requested. Background: Discovery Walk is a linear parkway along 2nd Avenue SW in downtown Rochester that will serve pedestrians as well as vehicle access. Discovery Walk will connect Heart of the City to Soldiers Memorial Field and will create a high amenity pedestrian experience while also maintaining flexibility for bike and vehicular access, civic events, and future development. Updates: • Construction is anticipated to be complete in spring 2024, including final planting, road striping, site element placement, and installation of the climate accommodating structures. • Pedestrian lighting art and the snowmelt system is installed and will be operational this winter. • The 200 block of 2nd Ave. SW is closed to vehicular through-traffic but open for Mayo Clinic’s blood donor center. Fulfilling the DMC Mission, Vision, and/or Goals: Discovery Square is a new address for the future of bio-medical, research and technology innovation and a keystone to the DMC economic development strategy. The sub-district borrows from Mayo Clinic’s integrated care model to create an integrated district founded in the principles of translational medicine. Work plan or capital improvement budget implications: Completion of Discovery Walk has been budgeted for within the DMC CIP. 87 Heart of the City To: DMC EDA Board of Directors From: DMC EDA Date: January 26, 2024 Request of the board of directors: No action requested. Background: Heart of the City Phase 1: - Construction Update: o Catenary lighting system poles were installed in early October 2023 o Catenary lights are anticipated to be installed in spring 2024. - Paver Performance Update: o A formal review of the performance of different paver sections is now complete  Some pavers have shifted due to unknown underground issues  A workgroup including designers, engineers, and city staff is in place to address findings in the report - Raiser Letter Art Pavers: o Concerns have been raised by community members regarding their experience related to the raised letter pavers within the Peace Plaza (Art Installation). o DMC is working closely with city colleagues to develop a strategy to review concerns and developing a plan to address them. Fulfilling the DMC Vision, Mission, and/or Goals: Heart of the City subdistrict is a long-standing priority for the DMCC board. It is home to many hotels, restaurants, entertainment venues, and medical facilities, many of which have been undergoing reinvestment. Transformation of the public realm, Peace Plaza, is an asset to the downtown core, improve the patient, visitor and resident experience, and help spur future investment. Work plan or capital improvement budget implications: This project is funded via state GSIA funds generated through the DMC initiative, approved by both DMCC and Rochester City Council. 88 Soldiers Memorial Field To: DMCC Board of Directors From: DMC EDA Date: January 26, 2024 Request of the board of directors: No action requested. Project Update: Construction activities continue at Soldiers Field Memorial Park. The construction team has mobilized for winter conditions. The aquatics area is progressing as scheduled. The tile work has started on the new 50-meter lap pool, and the concrete foundations for the water slides have been poured. The exterior walls of the new mechanical building are in place, which will house the pumps, filters, and chemicals for the new aquatics center. Background: Soldiers Field Memorial Park is 150 acres in size with 4,000 feet of riverfront. It is currently comprised of memorials, active recreation space, an 18-hole golf course, aquatic amenities, a track and field facility (with winter skating), tennis courts, a baseball field, playgrounds, hockey rinks in winter, and trails. Project improvements underway include a new aquatics area with a lazy river, 3 waterslides, 50-meter lap pool, a renovated bathhouse, a shallow pool, and a splash pad. Additional improvements also include an inclusive playground and shelter at Roy Sutherland Park (east side), new basketball courts, and a SW trail connection. Work plan or capital improvement budget implications: Included in the 2023 Capital Improvement Budget: $10,000,000. In 2020, Rochester voters approved a referendum for park investment, with $7M allocated towards Soldiers Field Memorial Park. In 2022, the City of Rochester Parks & Recreation Department was awarded a Federal Land and Water Conservation Fund (LWCF) grant for the redevelopment of the recreation facilities at Soldiers Field Memorial Park. Additional funding is approved by the Destination Medical Center (DMC) Board, with a total budget of $18.5 Million. Approvals, milestones, and decision points: 2014 City Council apprved past Soldiers Field Master Plan 2022 Park Board approval of short-term Soldiers Field Master Plan 2023 Construction begins 2024 Substantive completion 89 Private Development Previews To: DMCC Board of Directors From: DMC EDA Date: January 26, 2024 Request of the board of directors: No action requested. Background: While all private development projects submitted to DMC must meet the “but for” test, DMC EDA staff evaluates each submitted project against the priorities set by the Board before developing a recommendation for the Board. Below is a summary of Board priorities as staff understand them: •Geographic priorities: Heart of the City, Discovery Square, TOD corridor •Product Type: Preferencing med-tech and workforce housing development •Prioritize projects most likely to achieve DMC goals: private investment, job creation, tax base growth •Validate market demand; support first-in-market opportunities •Meet or exceed Sustainability targets •Contribution to City of Health experience goals Areas of focus adopted as part of the Phase 2 development update (Nov. 2020 adoption): •Economic diversification •Housing affordability •Mainstreet innovation •Local entrepreneurs •Local minority and women-owned business capacity Below is a summary of the active conversations underway with private developers within the DMC District. Inclusion on this list does not mean that these projects will ultimately apply for DMC funding, but rather is included to give you an overview of what kinds of projects are currently being contemplated within the district that may come forward in the future for a funding request. HOUSING Civic Center North Lot In fall 2021, The City of Rochester issued an RFP to developers for the parking lot across from the Civic Center. The City elected to enter exclusive negotiations with Sherman Associates as the preferred development partner, and are in the midst of those negotiations. Potential alignment with the District Energy system under development in downtown is also being explored with this project. Due to the current interest rate environment and continued high costs of construction, the project gap on this project has grown significantly. City and DMC EDA staff are working closely with the developer to scenario plan what options are possible to keep this project advancing forward. Staff anticipates advancing this project for consideration by this Board in 2024. 90 Gerrard 2nd Street Proposing a mid-to-large apartment building (~150 units) with ground floor commercial space on 2nd Street near 6th. A smaller (4-6 unit) building planned as affordable for-sale units, and a mid-block pedestrian path are also part of the project. This project is currently waiting for market conditions to improve before proceeding (specifically lower interest rates). In the meantime, First Homes received an Economic Development and Housing Challenge Grant in the amount of $502,000 for the Gerrard Condos (the smaller building referenced above). West Transit Village (WTV) The western terminus of the LINK Rapid Transit line is envisioned as a transit village that will accommodate several hundred units of housing and amenity retail in addition to the transit and parking infrastructure needed on the site. Mayo Clinic is in active negotiations with Kraus Anderson as their developer partner and has refined the project vision to two options that include +/- 300 units of housing, retail, parking and public realm. It is expected that this project will come before the Board for action in 2024. CityWalk Apartments This is an approximately 140-unit market rate apartment building on the south side of 2nd Avenue and 6th Street. They have received Main Street grant funding. YMCA Development Redevelopment of the downtown YMCA site into approximately 215 units of multifamily housing including some ground floor live-work spaces. Thoughtful integration of the project into the adjacent Soldier’s Field and the approach to affordability levels are main topics of discussion. Demolition is currently underway on the existing building and permits are filed and proceeding, so our expectation is that construction will commence at the conclusion of demolition. HOSPITALITY Olmsted Bank Building 14 units of residential on top of an adaptive reuse of the existing bank building for a restaurant/cafe use on the ground floor. Opportunity to show potential of adaptive reuse above an existing building and revitalization of a central location that can leverage existing parking infrastructure. The project was awarded $200,000 in Main Street Grant funds and then received additional Main Street grant funds. However it is likely this project site will be put up for sale. 91 Post Office The Post Office building on Broadway is owned by a Utah-based hospitality developer with local ties. Owners of the building are proposing a 140-key boutique hotel for longer- term travelers. The developer is interested in sustainability and considering a flag that aligns with this environmental approach. This project has submitted a TIF application to the City of Rochester. However, currently interest rate environment has added additional project costs and widened the gap for feasibility, so the project is under continued review for possible solutions. There are several hurdles the developer has outlined (access to a long-term parking agreement, TIF) that need to be crossed for this project to proceed. Fulfilling the DMC Vision, Mission, and/or Goals: DMC aims to support private investment that is in line with the overall mission of the DMC Initiative. The 20-year goal is to attract more than $2.1B of non-Mayo private investment. Approvals, milestones, and decision points: As projects further develop their plans we will continue to update the Board and if an application for funding is submitted the formal review process will begin. Currently Discovery Square 3 is an active application under review. 92 Rochester Downtown Task Force Grow Downtown Together Workgroup To: DMCC Board of Directors From: DMC EDA Date: January 26, 2024 Request of the board of directors: No action requested. Background: In early 2023, the Downtown Rochester Task Force was established to help accelerate Rochester’s path forward and build a more resilient downtown. DMC took the lead in focusing on growth strategies related to task force priorities. DMC developed the “Grow Downtown Together” strategy that focuses on strengthening the demand drivers of downtown which include workforce, education, downtown housing, cultural anchors (Mayo Civic Center, Art Center, Civic Theatre, Chateau Theatre), and catalytic retail This work leads to the most impactful work DMC and downtown stakeholders can do together: attracting people downtown. DMC EDA staff are gathering information and exploring tools to support this work, including developing strategies to manage data related to available space downtown, determining demand drivers and identifying specialized recruitment services. Progress: -Mayo Clinic o Team members from Bold. Forward. Unbound. and DMC meet regularly to align strategies and are actively building work plans -University of Minnesota Rochester o Members of the DMC team have continued to attend community sessions and meet with UMR Campus and Climate Action Plan (CCAP) planning team -Improved communications o Feedback out of the working sessions with downtown business stakeholders asked for clearer communications to better understand topics impacting the downtown o With the Rochester Downtown Alliance taking the lead, task force members are now sending a bi-monthly update to downtown stakeholders -City Permit Improvements o Council approval of simplifications to business licensing 12/11/24 93