HomeMy WebLinkAbout5/23/2024 DMCC Board of Directors Meeting - Agenda and Meeting PacketDestination Medical Center Corporation
Board of Directors Meeting
Thursday, May 23, 2024
9:30 A.M.
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DESTINATION MEDICAL CENTER CORPORATION (DMCC)
SPECIAL BOARD MEETING
Thursday, May 23, 2024
9:30 A.M.
Hilton Hotel, Dr. John H. Noseworthy Hall 2-3, & Foyer
10 E Center St, Rochester, MN 55904
Remote Viewing: https://us02web.zoom.us/j/86751135351
AGENDA
PAGE
I. Call to Order
II. Roll Call
III. Approval of Agenda 1
IV. Approval of Minutes: February 1, 2024 5
V. Public Comment
VI. Chair’s Report
VII. Election of Officers and Appointments
A. Election by Board:
1. Chair
2. Vice Chair
3. Treasurer
B. Appointment by Chair:
1. Secretary
2. Assistant Treasurer
VIII. Consent Agenda
A. DMCC 2024 Budget Year-to-Date Update 9
B. 2024 Capital Improvement Plan (CIP)
True-Up and Update 13
IX. DMCC Audit for Year Ending December 31, 2023
(Presenter: Craig Popenhagen, CliftonLarsonAllen) 15
X. DMC EDA Board President Comments
XI. DMC Metrics
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XII. Housing
Resolution A : Approving Further Revisions
to the Bryk on Broadway Apartments Project 45
Resolution B: Approving Civic Center North Apartments Project 51
Resolution C: Approving the West Transit Village Liner Housing Project 63
XIII. Supporting Transformation
Resolution D: Approving Amendment to the 2024 Five Year
Capital Improvement Plan as to the City DMC Project Management Team 81
XIV. Commercial Historic District
Resolution E: Approving Downtown Property Preservation Program 85
XV. Business Development and Lead Generation 97
XVI. 2025 DMC Work Plan and Budget: Priorities/Points of Emphasis 98
XVII. Status Reports 99
A. 2025 DMC Development Plan Update
B. Chateau Theatre
C. Discovery Square: Shared Lab
D. District Energy
E. Equitable Economic Development
F. Minnesota MedTech 3.0
G. Mobility/ LINK Bus Rapid Transit
H. Public Realm Projects
1. Discovery Walk
2. Downtown Riverfront
3. Heart of the City
4. Soldiers Memorial Field
I. Private Development Project Previews
J. Rochester Downtown Task Force
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XVIII. Meeting Schedule
A. Next Regular Meeting: September 26, 2024 at 9:30 A.M.
XIX. Adjournment
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DESTINATION MEDICAL CENTER CORPORATION (DMCC)
SPECIAL BOARD MEETING
THURSDAY, FEBRUARY 1, 2024
MINUTES
I.Call to Order. Vice Chair Kim Norton called meeting to order at 9:30 A.M.
II.Roll Call. Doug Baker, James Campbell, Council President Brooke Carlson, Mayor Kim
Norton, R.T. Rybak, Commissioner Mark Thein, Chair Pamela Wheelock, and Paul Williams
were present. Mr. Baker, Mr. Campbell, and Chair Wheelock participated via interactive
technology because they were out of town.
III.Approval of Agenda. Council President Carlson moved to approve the agenda. Mr. Williams
seconded the motion.
Ayes: Mr. Baker, Mr. Campbell, Council President Carlson, Mayor Norton, Commissioner
Thein, Chair Wheelock, and Mr. Williams. Nays: None.
IV.Approval of Minutes: November 17, 2023. Mr. Williams moved to approve the November
17, 2023 minutes. Commissioner Thein seconded the motion.
Ayes: Mr. Baker, Mr. Campbell, Council President Carlson, Mayor Norton, Commissioner
Thein, Chair Wheelock, and Mr. Williams. Nays: None.
V.Public Comment. John Kruesel, Rochester resident, spoke in support of the City of
Rochester’s recent creation of a historic landmark district.
Loring Stead, Rochester resident, spoke in favor of efforts to improve the patient, resident,
and visitor experience.
VI.Chair’s Report. Chair Wheelock reported that she has appointed Brian Anderson, City of
Rochester Finance Director, as DMCC Assistant Treasurer. She thanked Aaron Parrish, City
of Rochester Deputy Administrator, for his interim service in that position. She also noted that,
similar to the request for proposals process for auditing and tax services, which resulted in an
agreement, the DMCC has issued a request for proposals for legal services.
VII.Consent Agenda.
A.DMCC 2023 Budget: Year to Date Update.
B.EDA 2023 Budget Encumbrance Request.
Mr. Rybak moved to approve the consent agenda. Commissioner Thein seconded the motion.
Ayes: Mr. Baker, Mr. Campbell, Council President Carlson, Mayor Norton, Mr. Rybak,
Commissioner Thein, Chair Wheelock, and Mr. Williams. Nays: None.
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VIII.Annual Report to the Legislature. Kaela Brennan, DMCC General Counsel, provided an
overview of the proposed DMCC – City report to the legislature. She noted that the Rochester
City Council is scheduled to consider the report on February 5, 2024.
Resolution A: Approving February 15, 2024 Report to the Legislature. Mr. Rybak moved to
approve the resolution. Council President Carlson seconded the motion.
Ayes: Mr. Baker, Mr. Campbell, Council President Carlson, Mayor Norton, Mr. Rybak,
Commissioner Thein, Chair Wheelock, and Mr. Williams. Nays: None.
IX.EDA Board President Comments. Clark Otley, M.D., President of the EDA Board of Directors,
noted the recent announcements of Mayo Clinic’s “Bold. Forward. Unbound. in Rochester.”
capital plan and the Minnesota MedTech 3.0 initiative.
X.Metrics. Patrick Seeb, EDA Executive Director, and Michael Flynn, EDA Senior Director of
Economic Development, presented an update on multi-family residential development in the
DMC development district. Mr. Flynn described market challenges, including interest rates,
increased costs of construction, and increased operating costs. The Board expressed support
for identifying new tools and strategies to meet housing demand, including financial
incentives, regulatory efficiencies, and marketing.
XI.Discussion Items.
A.Minnesota MedTech 3.0. Peter Frosch, Chief Executive Officer of GreaterMSP,
provided an update regarding Minnesota MedTech 3.0, an economic development
collaboration spanning healthcare, medical devices, and technology innovation, which
earned federal designation as a med-tech hub. Supporters of the effort are working
together to apply for federal funding. The Board expressed support for the initiative.
B.Supporting Transformation.
1.City of Rochester Report. Alison Zelms, City of Rochester Administrator,
presented City priorities, programs, and process planning intended to implement
and sustain community transformation efforts. Board members commended the
City’s work.
2.DMC Development Plan Update. Mr. Seeb described the immediate next steps
related to the 2025 Development Plan update, including data collection.
C.Progress on pre-authorized DMC Capital Priorities.
1.Discovery Square Med-Tech Infrastructure. Chris Schad, EDA Director of
Business Development, discussed med-tech infrastructure in the DMC
development district, including the development of a shared wet laboratory. noted
that a preferred location has been identified in Two Discovery Square and that
EDA and Mayo Clinic staff have vetted a possible operating partner. Board
members directed staff to provide additional information, including regarding: the
market viability of a shared wet lab; the experience of local companies who
benefited from a similar shared space; best use of funds; interest expressed by
potential users, including the perspective of Mayo Clinic and local bio-med-tech
businesses; advice on how the Board might measure a return on investment; and
assessing comparable properties around the country.
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2.Downtown Property Support. Jamie Rothe, EDA Director of Community
Engagement and Experience, and Allison Bowman, EDA Program Manager, led
the Board in a discussion of ways it could support downtown properties,
considering recommendations of the Rochester Downtown Task Force, outcomes
of the Minnesota Department of Employment and Economic Development (DEED)
Main Street Economic Revitalization Program, and the City of Rochester’s recent
designation of a downtown historic landmark district. In support of the historic
district designation, City staff are preparing a summary of financial incentives and
a streetscape study. The Board directed staff to evaluate and recommend
strategies to support the rehabilitation and repair of downtown properties.
3.Riverfront Reimagined. Cindy Steinhauser, City of Rochester Deputy
Administrator, provided an update on riverfront redevelopment, including project
phasing, state and federal funding opportunities, regulatory reviews, and upcoming
developer outreach.
XII.Status Reports. Board members inquired about the status of the West Transit Village
development and the Heart of the City public realm project. Mr. Seeb noted that the West
Transit Village development team continues to advance predevelopment planning. As to the
Heart of the City, Mr. Seeb discussed the planned installation of catenary lights, ongoing
evaluation of the settlement of the paver system, and efforts to improve navigation to and
through the raised lettering art found on portions of Peace Plaza.
XIII.Adjournment. Mayor Norton adjourned the meeting.
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May 23, 2024
Re: April 2024 DMCC Budget Summary
Dear Mr. Mark Thein, Treasurer,
The attached budget summary through April 2024 reflects DMCC operating expenditures
totaling $864,228 of its $4,218,891 budget for 2024. Thus far, the remaining amount unspent is
80% of the total budget. As previously presented, in 2023 there was approximately 22% of the
total budget that went unspent.
The second page of this summary provides an outline of DMCC Projects by Category managed
by the City of Rochester and categorized by program budgets. Approximately $5,252,431 has
been spent on these projects in 2024 with slightly less than 50% of that being spent on Transit
projects. Total life-to-date expenditures on all projects are approximately $183,129,133.
Moving forward, I will continue to work with the finance team in providing additional information
that will be beneficial to the DMCC Board and team.
Please contact me with any questions or concerns.
Brian J. Anderson
Brian J. Anderson
Director of Finance
City of Rochester
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2024 APRIL 2024 APRIL 2024 AMOUNT PERCENT
BUDGET ENTITY APPROVED BUDGET CURRENT MONTH YEAR TO DATE REMAINING REMAINING
DMCC Corporation:
Rents and Leases 36,607$ 5,675$ 14,346$ 22,261$ 61%
Professional Services 165,000 2,118 20,498 144,502 88%
Travel/Training 6,000 - - 6,000 100%
Insurance and Bonds 11,323 - 8,492 2,831 25%
Interest / Other Administrative - 4 14 (14)
Subtotal DMCC 218,930 7,797 43,350 175,580 80%
DMC EDA - Third Party Costs
Employee Services 1,714,702 64,527 398,327 1,316,375 77%
Operating Expenses 64,079 1,429 10,746 53,333 83%
Economic Development Outreach & Support 535,826 5,000 8,714 527,112 98%
Professional Services 467,900 4,086 112,363 355,537 76%
Miscellaneous Expenses 60,000 - - 60,000 100%
Subtotal DMC EDA 2,842,507 75,042 530,151 2,312,356 81%
City of Rochester Project Management Budget - Third Party Costs
Employee Services 1,032,543 72,534 290,138 742,405 72%
Contractual Maint and Repair 38,760 70 300 38,460 99%
Expert and Professional Services 8,160 - - 8,160 100%
Travel/Training/Memberships 12,547 - 25 12,522 100%
Operations Expenses 48,482 181 99 48,383 100%
Miscellaneous/Other 16,962 - 165 16,797 99%
Subtotal City Project Management 1,157,454 72,785 290,727 866,727 75%
Total DMCC Operations 4,218,891$ 155,624$ 864,228$ 3,354,663$ 80%
Destination Medical Center Corporation
Financial Budget Summary
April 30, 2024
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PROJECT STATUS
YTD
REVENUES
YTD
EXPENSES
PROJECT
BUDGET
LTD
EXPENSES
LTD
ENCUMBRANCES
Administration
C.8601 - COR Administrative Costs-DMCC 5,995$ 213,818$ 4,392,347$ 3,866,948$ -$
C.8602 - Contributions to DMC Corporatn - 613,383 30,285,846 29,681,588 -
C.8603 - Comprehensive Plan Update - -- 1,350,508 -
C.8604 - Roch/DMCC Preservatn Planning - -- 140,000 -
C.8606 - City Staff Costs-DMCC 2,702 2,702 - 445,969 -
C.8607 - County Staff Costs-DMCC Complete - - - 168,754 -
C.8629 - Development Plan Update Complete - - - 154,960 -
C.8632 - Downtown Changes COVID-19 Complete - - - 43,524 -
C.8902 - FestivalAreaStdy&ConceptDesign Complete - - - 84,133 -
Total Administration 8,697 829,903 34,678,193 35,936,385 -
Econ Development/Public Realm
C.8613 - ChateauTheatrePre-OccupancyM&O - - 4,926,802 541,032 -
C.8624 - ChateauTheatreBldgImprov/Purch - 917,129 2,350,000 10,711,716 740,667
C.8625 - Heart of the City - 19,768 18,248,940 21,382,973 314,001
C.8627 - Property & ROW Acquisition - -- - -
C.8633 - Strategic Development - -16,000,000 2,200,000 -
C.8634 - Riverfront Reimagined - 24,600 2,000,000 956,148 -
C.8904 - Discovery Walk - 68,331 15,720,000 14,888,688 2,987,605
C.8905 - CnstrctSnSwCpBys3AveSWfr2StSW - 1,218 - 27,033 -
Total Econ Development/Public Realm - 1,031,046 59,245,742 50,707,590 4,042,273
Infrastructure
C.8611 - Sn/S12AvSW/NW<2StSW>2StNW - 169 2,850,000 6,164,150 -
C.8612 - WZmbrRvrSn/SRlfLin<CookPk>CCDr Complete - - 950,000 46,592
C.8626 - Sn/SUpsize1Av&3AvSE<4StS>1StN Complete - - 8,500,000 8,635,287 -
C.7326 - Reconst 4th St. SW from 1st to 6th Ave. Complete - - - 6,436,218 -
C.7319 - Reconst 7th Ave NW from 2nd St NwW to 4st NW - - 1,250,000 9,383,953 -
C.7318 - Reconst North Broadway 4,000,000 10,125 300,000 22,673,446 -
C.1037 - Steam Replace/District Energy - 626,411 - 11,190,384 2,146,817
C.4716 - Downtown Sidewalk Experience Enhancement - -- 2,192,186 23,472
C.7344 - Reconstruct 3rd Avenue NW Between 4th St. SW and 5th St SW - -- 405,733 27,915
C.7830 - 1st Stret NW San. Sewer Diversion from 1st Ave to Broadway - 173 - 2,171,651 -
C.7919 - 6th Street Bridge over Zumbro River - 310,388 - 803,879 -
Total Infrastructure 4,000,000 947,266 13,850,000 70,103,480 2,198,204
Transit
C.8614 - DMCTransit&InfrastrctrPgrmMgmt Complete - - 3,956,739 1,826,262 -
C.8617 - Broadway @ Center Parking Ramp Complete 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.8702 - RPTSolarPwrdBusFleetGrntApp - - - 51,333 -
C.8703 - FTA TOD Pilot PrgmGrntApplctn - - - 26,058 -
C.8704 - FTA Low-NoEmissions PrgGrntApl - - - 1,140 -
C.8705 - TransitCrcltr-FTAGrntBus&Faclt - - - 19,258 -
C.8706 - DMCTransitCirculatorTODPlnStdy Complete - - - 829,414 -
C.8707 - Rapid Transit Projects - 2,433,507 77,007,083 13,841,535 -
C.8708 - Transit Villages 1&2 - --29,321 -
C.8709 - Arrive Rochester Implementatn - 10,710 300,000 174,147 -
C.8804 - TH 52 LID Bld GrantApplication - --22,145 -
C.8901 - TH 14/52 InterchangeBldGrntApp - --36,331 -
C.8903 - DedctdBikeLns-3rd/4thAve&CtrSt Complete - --1,745,083 -
Total Transit - 2,444,217 100,394,854 26,381,678 -
Total Project Costs 4,008,697$ 5,252,431$ 208,168,789$ 183,129,133$ 6,240,477$
City of Rochester, MN
DMCC Projects by Category
Through April 2024
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DMC Capital Improvement Plan (CIP) True-Up and Update
To: DMCC Board of Directors
From: DMC EDA
Date: May 16, 2024
Request of the board of directors:
No action requested.
Background:
DMC EDA and City staff have reviewed the project budgets approved in the DMC Capital Improvement
Program. Staff reconciled expenses and identified approved projects that have not fully expended their
allocated budgets. In some cases, project costs were lower than budgeted. In others, annual changes to
the DMC capital improvement program, DMC Corp. board priorities, or less-than-favorable project bids
resulted in projects being postponed, redefined, or cancelled.
The reconciled balance of project budgets is presented in the table below:
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Board of Directors
Destination Medical Center Corporation
Rochester, Minnesota
We have audited the financial statements of the governmental activities and the general fund of
Destination Medical Center Corporation (the Corporation) as of and for the year ended December 31,
2023, and have issued our report thereon dated . We have previously communicated to you information
about our responsibilities under auditing standards generally accepted in the United States of America
and Government Auditing Standards, as well as certain information related to the planned scope and
timing of our audit in our engagement agreement dated January 30, 2024. Professional standards also
require that we communicate to you the following information related to our audit.
Significant audit findings or issues
Qualitative aspects of accounting practices
Accounting policies
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by the Corporation are described in Note 1 to the financial statements.
The Corporation changed accounting policies related to information technology subscriptions by adopting
Governmental Accounting Standards Board (GASB) Statement No. 96, Subscription Based Information
Technology Agreements (SBITA), effective January 1, 2023. There was no material impact on the
Corporation’s financial position and results of operations as a result of the adoption of this accounting
standard.
We noted no transactions entered into by the Corporation during the year for which there is a lack of
authoritative guidance or consensus. All significant transactions have been recognized in the financial
statements in the proper period.
Accounting estimates
There were no accounting estimates affecting the financial statements which were particularly sensitive
or required substantial judgments by management.
Financial statement disclosures
Certain financial statement disclosures are particularly sensitive because of their significance to financial
statement users. There were no particularly sensitive financial statement disclosures.
The financial statement disclosures are neutral, consistent, and clear.
Significant unusual transactions
We identified no significant unusual transactions.
Difficulties encountered in performing the audit
We encountered no significant difficulties in dealing with management in performing and completing our
audit.
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Board of Directors
Destination Medical Center Corporation
Page 2
Uncorrected misstatements
Professional standards require us to accumulate all misstatements identified during the audit, other than
those that are clearly trivial, and communicate them to the appropriate level of management.
Management did not identify and we did not notify them of any uncorrected financial statement
misstatements.
Corrected misstatements
Management did not identify and we did not notify them of any financial statement misstatements
detected as a result of audit procedures.
Disagreements with management
For purposes of this communication, a disagreement with management is a disagreement on a financial
accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be
significant to the financial statements or the auditors’ report. No such disagreements arose during our
audit.
Management representations
We have requested certain representations from management that are included in the management
representation letter dated .
Management consultations with other independent accountants
In some cases, management may decide to consult with other accountants about auditing and accounting
matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application
of an accounting principle to the Corporation’s financial statements or a determination of the type of
auditors’ opinion that may be expressed on those statements, our professional standards require the
consulting accountant to check with us to determine that the consultant has all the relevant facts. To our
knowledge, there were no such consultations with other accountants.
Significant issues discussed with management prior to engagement
We generally discuss a variety of matters, including the application of accounting principles and auditing
standards, with management each year prior to engagement as the Corporation’s auditors. However,
these discussions occurred in the normal course of our professional relationship and our responses were
not a condition to our engagement.
Required supplementary information
With respect to the required supplementary information (RSI) accompanying the financial statements, we
made certain inquiries of management about the methods of preparing the RSI, including whether the
RSI has been measured and presented in accordance with prescribed guidelines, whether the methods
of measurement and preparation have been changed from the prior period and the reasons for any such
changes, and whether there were any significant assumptions or interpretations underlying the
measurement or presentation of the RSI. We compared the RSI for consistency with management’s
responses to the foregoing inquiries, the basic financial statements, and other knowledge obtained during
the audit of the basic financial statements. Because these limited procedures do not provide sufficient
evidence, we did not express an opinion or provide any assurance on the RSI.
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Board of Directors
Destination Medical Center Corporation
Page 3
Other information included in annual reports
Other information (financial or nonfinancial information other than the financial statements and our
auditors’ report thereon) is being included in your annual report and is comprised of the listing of the
board of directors. Our responsibility for other information included in your annual report does not extend
beyond the financial information identified in our opinion on the financial statements. We have no
responsibility for determining whether such other information is properly stated and do not have an
obligation to perform any procedures to corroborate other information contained in your annual report.
We are required by professional standards to read the other information included in your annual report
and consider whether a material inconsistency exists between the other information and the financial
statements because the credibility of the financial statements and our auditors’ report thereon may be
undermined by material inconsistencies between the audited financial statements and other information.
If, based on the work performed, we conclude that an uncorrected material misstatement of the other
information exists, we are required to describe it in our report. Our auditors’ report on the financial
statements includes a separate section, “Other Information,” which states we do not express an opinion
or any form of assurance on the other information included in the annual report. We did not identify any
material inconsistencies between the other information and the audited financial statements.
* * *
This communication is intended solely for the information and use of the board of directors and
management of the Corporation and is not intended to be, and should not be, used by anyone other than
these specified parties.
CliftonLarsonAllen LLP
Rochester, Minnesota
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DESTINATION MEDICAL CENTER CORPORATION
(A COMPONENT UNIT OF THE CITY OF
ROCHESTER, MINNESOTA)
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2023
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DESTINATION MEDICAL CENTER CORPORATION
TABLE OF CONTENTS
YEAR ENDED DECEMBER 31, 2023
INTRODUCTORY SECTION
BOARD OF DIRECTORS (UNAUDITED) 1
SECTION I – FINANCIAL SECTION
INDEPENDENT AUDITORS’ REPORT 2
FINANCIAL STATEMENTS
STATEMENT OF GOVERNMENTAL FUND BALANCE SHEET AND NET
POSITION 5
GOVERNMENTAL FUND REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCE AND STATEMENT OF ACTIVITIES 6
NOTES TO FINANCIAL STATEMENTS 7
REQUIRED SUPPLEMENTARY INFORMATION
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND
BALANCE – BUDGET AND ACTUAL – GENERAL FUND 13
SECTION II – COMPLIANCE LETTERS
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 14
INDEPENDENT AUDITORS’ REPORT ON MINNESOTA LEGAL
COMPLIANCE 16
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DESTINATION MEDICAL CENTER CORPORATION
BOARD OF DIRECTORS (UNAUDITED)
AS OF DECEMBER 31, 2023
(1)
BOARD OF DIRECTORS (UNAUDITED)
Pamela Wheelock Chair
Kim Norton Vice Chair
Paul Williams Secretary
Mark Thein Treasurer
James Campbell Director
R.T Rybak Director
Brooke Carlson Director
Doug M. Baker Director
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SECTION I – FINANCIAL SECTION
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INDEPENDENT AUDITORS’ REPORT
Board of Directors
Destination Medical Center Corporation
Rochester, Minnesota
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities and the general
fund of the Destination Medical Center Corporation (the Corporation), a component unit of the City of
Rochester, Minnesota, as of and for the year ended December 31, 2023, and the related notes to the
financial statements, which collectively comprise the Corporation’s basic financial statements as listed
in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities and the general fund of the Corporation, as
of December 31, 2023, and the respective changes in financial position for the year then ended in
accordance with accounting principles generally accepted in the United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States
of America (GAAS) and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States. Our responsibilities under those
standards are further described in the Auditors’ Responsibilities for the Audit of the Financial
Statements section of our report. We are required to be independent of the Corporation, and to meet
our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our
audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinions.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with accounting principles generally accepted in the United States of America, and for the
design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, management is required to evaluate whether there are conditions
or events, considered in the aggregate, that raise substantial doubt about the Corporation’s ability to
continue as a going concern for twelve months beyond the financial statement date, including any
currently known information that may raise substantial doubt shortly thereafter.
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Board of Directors
Destination Medical Center Corporation
Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that
includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance
and therefore, is not a guarantee that an audit conducted in accordance with GAAS and Government
Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Misstatements are considered material if there is a substantial likelihood that, individually or in the
aggregate, they would influence the judgment made by a reasonable user based on the financial
statements.
In performing an audit in accordance with GAAS and Government Auditing Standards we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error, and design and perform audit procedures responsive to those risks. Such
procedures include examining, on a test basis, evidence regarding the amounts and disclosures
in the financial statements.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Corporation’s internal control. Accordingly, no such opinion is
expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of the
financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate,
that raise substantial doubt about the Corporation’s ability to continue as a going concern for a
reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit, significant audit findings, and certain internal control related
matters that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the budgetary
comparison information be presented to supplement the basic financial statements. Such information is
the responsibility of management and, although not a part of the basic financial statements, is required
by the Governmental Accounting Standards Board who considers it to be an essential part of financial
reporting for placing the basic financial statements in an appropriate operational, economic, or historical
context.
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Board of Directors
Destination Medical Center Corporation
We have applied certain limited procedures to the required supplementary information in accordance
with GAAS, which consisted of inquiries of management about the methods of preparing the
information and comparing the information for consistency with management’s responses to our
inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic
financial statements. We do not express an opinion or provide any assurance on the information
because the limited procedures do not provide us with sufficient evidence to express an opinion or
provide any assurance.
Management has omitted the Management’s Discussion and Analysis that accounting principles
generally accepted in the United States of America requires to be presented to supplement the basic
financial statements. Such missing information, although not a part of the basic financial statements, is
required by the Governmental Accounting Standards Board, who considers it to be an essential part of
financial reporting for placing the basic financial statements in an appropriate operational, economic, or
historical context. Our opinions on the basic financial statements are not affected by this missing
information.
Other Information
Management is responsible for the other information included in the annual report. The other
information comprises the listing of the board of directors but does not include the basic financial
statements and our auditors’ report thereon. Our opinions on the basic financial statements do not
cover the other information, and we do not express an opinion or any form of assurance thereon.
In connection with our audit of the basic financial statements, our responsibility is to read the other
information and consider whether a material inconsistency exists between the other information and the
basic financial statements, or the other information otherwise appears to be materially misstated. If,
based on the work performed, we conclude that an uncorrected material misstatement of the other
information exists, we are required to describe it in our report.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
REPORT DATE, on our consideration of the Corporation’s internal control over financial reporting and
on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant
agreements and other matters. The purpose of that report is solely to describe the scope of our testing
of internal control over financial reporting and compliance and the results of that testing, and not to
provide an opinion on the effectiveness of the Corporation’s internal control over financial reporting or
on compliance. That report is an integral part of an audit performed in accordance with Government
Auditing Standards in considering the Corporation’s internal control over financial reporting and
compliance.
CliftonLarsonAllen LLP
Rochester, Minnesota
REPORT DATE
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26
DESTINATION MEDICAL CENTER CORPORATION
STATEMENT OF GOVERNMENTAL FUND BALANCE SHEET AND NET POSITION
DECEMBER 31, 2023
See accompanying Notes to Financial Statements.
General Statement of
Fund Adjustments Net Position
ASSETS
Cash 879$ -$ 879$
Advances to DMC EDA 100,000 - 100,000
Due from Other Governments 323,682 - 323,682
Prepaids 51,854 - 51,854
Total Assets 476,415$ - 476,415
LIABILITIES
Accounts Payable 323,561$ - 323,561
Due to Other Governments 101,000 - 101,000
Unearned Revenue 51,854 - 51,854
Total Liabilities 476,415 - 476,415
FUND BALANCE
Fund Balance:
Nonspendable 51,854 (51,854) -
Unassigned (51,854) 51,854 -
Total Fund Balance ---
Total Liabilities and Fund Balance 476,415$
NET POSITION
Unrestricted --
Total Net Position -$-$
27
DESTINATION MEDICAL CENTER CORPORATION
GENERAL FUND REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCE AND STATEMENT OF ACTIVITIES
YEAR ENDED DECEMBER 31, 2023
See accompanying Notes to Financial Statements.
General Statement of
Fund Adjustments Activities
PROGRAM REVENUES
Intergovernmental:
Local Government 2,402,468$ -$2,402,468$
Contributions and Donations -- -
Total Program Revenues 2,402,468 -2,402,468
EXPENDITURES/EXPENSES
Economic Development:
Building and Equipment Rent 35,688 -35,688
Legal Consultants 106,706 -106,706
Other Professional Services 11,798 -11,798
Travel and Training 1,857 -1,857
Insurance 9,699 -9,699
Program Costs 2,236,793 -2,236,793
Total Expenditures/Expenses 2,402,541 -2,402,541
Net Program Revenues (73)- (73)
GENERAL REVENUES
Investment Earnings 73 -73
Total General Revenues 73 -73
CHANGE IN FUND BALANCE/NET POSITION -- -
Fund Balance/Net Position - Beginning of Year -- -
FUND BALANCE/NET POSITION - END OF YEAR -$-$-$
28
DESTINATION MEDICAL CENTER CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2023
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Destination Medical Center Corporation (the Corporation) is a component unit of the
City of Rochester, Minnesota, and was incorporated on July 23, 2013. The Corporation was
established by the City of Rochester, Minnesota pursuant to Minnesota Statutes
Section 469.41 as a Minnesota nonprofit corporation. The Corporation was established to
benefit the city, and more broadly, Olmsted County and the state of Minnesota by
researching, preparing, and implementing a master development plan, including facilitating
public infrastructure projects and a variety of development and redevelopment projects, all
to promote and provide for the establishment of the city, the County, and the state as a
world destination medical center.
The Corporation is governed by a board of directors consisting of eight directors. The
composition of the board of directors includes the Mayor of the City of Rochester or the
Mayor’s designee, the City of Rochester Council President or the President’s designee, the
Chair or another member of the County Board of Olmsted County, a representative of Mayo
Clinic, and four directors appointed by the Governor of Minnesota.
Basis of Presentation
The financial statements of the Corporation have been prepared in conformity with
accounting principles generally accepted in the United States of America. (GAAP) as
applied to governmental units. The Governmental Accounting Standards Board (GASB) is
the accepted standard setting body for establishing governmental accounting and financial
reporting principles. The GASB pronouncements are recognized as generally accepted
accounting principles in the United States of America for state and local governments.
Financial Reporting Entity
The Corporation was established to oversee the planning and implementation of the
Destination Medical Center initiative. The Corporation works with the City of Rochester,
Minnesota and the Destination Medical Center Economic Development Agency to prepare
and adopt a development plan.
Component units are legally separate entities for which the Corporation (primary
government) is financially accountable, or for which the exclusion of the component unit
would render the financial statements of the primary government misleading. The criteria
used to determine if the primary government is financially accountable for a component unit
include whether or not the primary government appoints the voting majority of the potential
component unit’s governing body, is able to impose its will on the potential component unit,
is in a relationship of financial benefit or burden with the potential component unit or is
fiscally depended upon by the potential component unit.
Based on these criteria, there are no organizations considered to be component units of the
Corporation.
29
DESTINATION MEDICAL CENTER CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2023
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Basic Financial Statement Presentation
The General Fund of the Corporation meets the definition of a Special-Purpose government
and is involved in only one program, as specified in Minnesota Statutes, Sections 469.40 -
469.47. Accordingly, the Corporation is allowed to combine its government-wide statements
with the fund statements. At December 31, 2023, and for the year then ended, there were
no reconciling items between the two types of statements.
The government-wide financial statements (i.e., the statement of net position and the
statement of activities) display information about the reporting government as a whole.
These statements include all financial activities of the Corporation.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment is offset by program revenues. Direct expenses are those that are
clearly identifiable with a specific function or segment. Program revenues include charges to
customers or applicants who purchase, use or directly benefit from goods, services or
privileges provided by a given function or segment and grants and contributions that are
restricted to meeting the operational or capital requirements of a particular function or
segment. Other items not properly included among program revenues are reported instead
as general revenues.
Measurement Focus and Basis of Accounting
The accounting and financial reporting treatment applied is determined by its measurement
focus and basis of accounting. The government-wide financial statements are reported
using the economic resources measurement focus and the accrual basis of accounting.
Revenues are recorded when earned and expenses are recorded when a liability is
incurred, regardless of the timing of the related cash flows. Grants and similar items are
recognized when all eligibility requirements imposed by the provider have been met.
Government fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Under this basis of
accounting, transactions are recorded in the following manner:
1.Revenue Recognition – Revenue is recognized when it becomes measurable and
available. “Measurable” means the amount of the transaction can be determined and
“available” means collectible within the current period or soon enough thereafter to be
used to pay liabilities of the current period. State revenue is recognized in the year to
which it applies according to Minnesota Statutes and U.S. generally accepted
accounting principles.
2.Recording of Expenditures – Expenditures are generally recorded when a liability is
incurred. However, expenditures are recorded as prepaid for approved disbursements in
advance of the year in which the item is to be used.
30
DESTINATION MEDICAL CENTER CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2023
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Budgets and Budgetary Accounting
The Corporation adopts an annual budget, which is adopted on a basis consistent with
U.S. generally accepted accounting principles (GAAP). Reported budget amounts represent
the original adopted budget as amended by the board.
Assets, Liabilities, and Fund Balance/Net Position
Cash
Cash consist of deposits in a checking account and a repurchase agreement account for
any available deposits at the end of the business day.
Advances
Advances consist of monies advanced to the Destination Medical Center Economic
Development Agency to fund operational expenses.
Due from Other Governments
Due from other governments consists of program costs receivable from the City of
Rochester, Minnesota.
Prepaids
Certain payments to vendors reflect costs applicable to future accounting periods and
are recorded as prepayments. Prepaid items are expensed during the periods benefited.
Unearned Revenues
Unearned revenue is prepaid insurance and unspent dollars that were advanced to the
Destination Medical Center Economic Development Agency.
Fund Balance
In the fund financial statements, governmental funds report fund balances as
nonspendable, restricted, committed, assigned, or unassigned. The Corporation
currently only reports nonspendable and unassigned fund balance. Restricted fund
balances are constrained by outside parties (statute, grantors, bond agreements, etc.).
Committed fund balance represents constraints on spending that the Corporation
imposes upon itself by high-level formal action prior to the close of the fiscal period. The
board of directors authorizes all assigned fund balances and their intended uses.
Unassigned fund balances are considered remaining amounts.
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DESTINATION MEDICAL CENTER CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2023
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Assets, Liabilities, and Fund Balance/Net Position (Continued)
Fund Balance (Continued)
When an expenditure is incurred for which both restricted and unrestricted fund balance
is available, it is the Corporation’s policy to use restricted fund balance first, then
unrestricted fund balance. When an expenditure is incurred for purposes for which
committed, assigned, and unassigned cash fund balance is available, it is the
Corporation’s policy to use committed first, then assigned and finally unassigned fund
balance.
Revenues
Intergovernmental revenues are reported under the legal and contractual requirements
of the individual programs. Generally, grant revenues are recognized when the
corresponding expenditures are incurred. The intergovernmental revenues are entirely
provided by the City of Rochester, Minnesota.
Investment income is recognized when earned, since it is measurable and available.
Expenditures
Expenditure recognition in the general fund includes only amounts represented by
current liabilities. Noncurrent liabilities are not recognized as governmental fund type
expenditures or fund liabilities.
Net Position
Net position represents the difference between assets and liabilities in the government-
wide financial statements. Net position is reported as restricted in the government-wide
financial statements when there are limitations imposed on their use through external
restrictions imposed by creditors, grantors, laws, or regulations of other governments.
NOTE 2 DEPOSITS AND INVESTMENTS
Deposits
In accordance with Minnesota Statutes, the Corporation maintains deposits at depository
banks as authorized by the Corporation’s board of directors.
Custodial Credit Risk – Custodial credit risk is the risk that in the event of a bank failure,
the Corporation’s deposits may not be returned in full. The Corporation’s deposit policy for
custodial credit risk follows Minnesota Statutes for deposits.
Minnesota Statutes require that all deposits be protected by insurance, surety bond, or
collateral. The market value of collateral pledged must equal 110% of the deposits not
covered by insurance or corporate surety bonds.
32
DESTINATION MEDICAL CENTER CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2023
NOTE 2 DEPOSITS AND INVESTMENTS (CONTINUED)
Deposits (Continued)
The Corporation’s deposits in banks at December 31, 2023 were entirely covered by federal
depository insurance or by surety bonds and collateral in accordance with Minnesota
Statutes.
Investments
The Corporation may also invest idle funds as authorized by Minnesota Statutes as follows:
Direct obligations or obligations guaranteed by the United States or its agencies.
Shares of investment companies registered under the Federal Investment Company
Act of 1940 and received the highest credit rating, is rated in one of the two highest
rating categories by a statistical rating agency, and all of the investments have a final
maturity of 13 months or less.
General obligations rated “A” or better; revenue obligations rated “AA” or better.
General obligations of the Minnesota Housing Finance Agency rated “A” or better.
BANKER’S acceptances of United States banks eligible for purchase by the Federal
Reserve System.
Commercial paper issued by United States banks corporations or their Canadian
subsidiaries, of highest quality category by a least two nationally recognized rating
agencies and maturing in 270 days or less.
Guaranteed investment contracts guaranteed by United States commercial banks or
domestic branches of foreign banks or United States insurance companies if similar
debt obligations of the issuer or the collateral pledged by the issuer is in the top two
rating categories.
Repurchase or reverse purchase agreement and securities lending agreements
financial institutions qualified as a “depository” by the government entity, with banks
that are members of the Federal Reserve System with capitalization exceeding
$10,000,000, a primary reporting dealer in U.S. government securities to the Federal
Reserve Bank of New York, or certain Minnesota securities broker-dealers.
The Corporation’s investments consisted of a repurchase agreement with Wells Fargo Bank,
N.A. having a balance of $879 at December 31, 2023. The securities sold to the Corporation
include U.S. Agency Bonds with an AAA rating. The repurchase agreement bears interest at
.01% and matures overnight. As such, the repurchase agreement is presented as a cash
and investments in the financial statements.
Interest Rate Risk – This is the risk that arises because potential purchasers of debt
securities will not agree to pay face value for those securities if interest rates subsequently
increase. The Corporation’s investment policy limits investments to a maturity of one year, or
lesser period that coincides with expected disbursements by the Corporation. Operating
reserves may be invested in securities with a maximum maturity of up to three years.
33
DESTINATION MEDICAL CENTER CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2023
NOTE 2 DEPOSITS AND INVESTMENTS (CONTINUED)
Investments (Continued)
Custodial Credit Risk – Investments – For an investment, this is the risk that, in the event
of a failure by the counterparty, the Corporation will not be able to recover the value of its
investments or collateral securities that are in the possession of an outside party. The
Corporation follows state statutes which require that investment balances be fully
collateralized. As of December 31, 2023, the securities underlying the repurchase
agreement are held by the counterparty in the Corporation’s name.
At December 31, 2023, the Corporation had the following deposits and investments:
Repurchase Agreement - Wells Fargo Bank, N.A.879$
Total Cash and Investments 879$
NOTE 3 RISK MANAGEMENT
The Corporation is exposed to various risks of loss related to torts, theft of assets, or errors
and omissions. The Corporation purchases commercial insurance coverage for such risks.
There has been no significant reduction in insurance coverage from the previous year in any
of the Corporation’s policies. In addition, there have been no settlements in excess of the
Corporation’s insurance coverage in any of the prior three fiscal years.
NOTE 4 RELATED ORGANIZATION
The Destination Medical Center Economic Development Agency (DMC EDA), a related
Minnesota nonprofit corporation, was established by the Mayo Clinic pursuant to Minnesota
Statutes Section 469.43. The Corporation does not have a voting majority of the board of
directors of DMC EDA, which is considered a stand-alone entity apart from the Corporation
and thus, is excluded from the Corporation’s financial statements. Separate financial
statements are issued for the DMC EDA.
NOTE 5 CONTINGENT LIABILITIES AND COMMITMENTS
The Corporation receives financial assistance from state and local governmental agencies.
The disbursement of funds received under these programs generally require compliance
with the terms and conditions specified in the agreements and are subject to audit by the
funding agencies, regulators, and other oversight agencies. Any disallowed claims resulting
from such audits could become a liability of the Corporation. Management is not aware of
any disallowed claims at this time.
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REQUIRED SUPPLEMENTARY INFORMATION
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DESTINATION MEDICAL CENTER CORPORATION
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCE – BUDGET AND ACTUAL – GENERAL FUND
YEAR ENDED DECEMBER 31, 2023
Actual Over (Under)
Original Final Amounts Final Budget
REVENUES
Intergovernmental:
Local Government 2,855,845$ 2,855,845$ 2,402,468$ (453,377)$
Investment Earnings - - 73 73
Total Revenues 2,855,845 2,855,845 2,402,541 (453,304)
EXPENDITURES
Current:
Building Rent 34,017 34,017 35,688 1,671
Legal Consultants 150,000 150,000 106,706 (43,294)
Other Professional Services 22,300 22,300 11,798 (10,502)
Travel and Training 6,000 6,000 1,857 (4,143)
Insurance 20,000 20,000 9,699 (10,301)
Program Costs 2,623,528 2,623,528 2,236,793 (386,735)
Total Expenditures 2,855,845 2,855,845 2,402,541 (453,304)
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES -$ -$ - -$
Fund Balance - Beginning of Year -
FUND BALANCE - END OF YEAR -$
Budgeted Amounts
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SECTION II – COMPLIANCE LETTERS
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INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Board of Directors
Destination Medical Center Corporation
Rochester, Minnesota
We have audited in accordance with the auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards
issued by the Comptroller General of the United States, the financial statements of the governmental
activities and the general fund of the Destination Medical Center Corporation (the Corporation), a
component unit of the City of Rochester, Minnesota, as of and for the year ended December 31, 2023,
and the related notes to the financial statements, which collectively comprise the Corporation’s basic
financial statements, and have issued our report thereon dated REPORT DATE.
Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Corporation’s
internal control over financial reporting (internal control) as a basis for designing audit procedures that
are appropriate in the circumstances for the purpose of expressing our opinions on the financial
statements, but not for the purpose of expressing an opinion on the effectiveness of the Corporation’s
internal control. Accordingly, we do not express an opinion on the effectiveness of the Corporation’s
internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control, such that there is a reasonable possibility that a material
misstatement of the Corporation’s financial statements will not be prevented or detected and corrected
on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal
control that is less severe than a material weakness, yet important enough to merit attention by those
charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any
deficiencies in internal control that we consider to be material weaknesses. However, material
weaknesses or significant deficiencies may exist that were not identified.
41
Board of Directors
Destination Medical Center Corporation
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Corporation’s financial statements are
free from material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts and grant agreements, noncompliance with which could have a direct and
material effect on the financial statements. However, providing an opinion on compliance with those
provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The
results of our tests disclosed no instances of noncompliance or other matters that are required to be
reported under Government Auditing Standards.
Purpose of This Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of the
Corporation’s internal control or on compliance. This report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the Corporation’s internal control and
compliance. Accordingly, this communication is not suitable for any other purpose.
CliftonLarsonAllen LLP
Rochester, Minnesota
REPORT DATE
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INDEPENDENT AUDITORS’ REPORT ON
MINNESOTA LEGAL COMPLIANCE
Board of Directors
Destination Medical Center Corporation
Rochester, Minnesota
We have audited, in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States, the financial statements of the governmental
activities and the general fund of the Destination Medical Center Corporation (the Corporation), as of
and for the year ended December 31, 2023, and the related notes to the financial statements, which
collectively comprise the Corporation’s basic financial statements, and have issued our report thereon
dated REPORT DATE.
In connection with our audit, nothing came to our attention that caused us to believe that the
Corporation failed to comply with the provisions of the depositories of public funds and public
investments, conflicts of interest, claims and disbursements, and miscellaneous provisions sections of
the Minnesota Legal Compliance Audit Guide for Other Political Subdivisions, promulgated by the State
Auditor pursuant to Minn. Stat. § 6.65, insofar as they relate to accounting matters. However, our audit
was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had we
performed additional procedures, other matters may have come to our attention regarding the
Corporation's noncompliance with the above-referenced provisions, insofar as they relate to accounting
matters.
The purpose of this report is solely to describe the scope of our testing of compliance relating to the
provisions of the Minnesota Legal Compliance Audit Guide for Other Political Subdivisions and the
results of that testing, and not to provide an opinion on compliance. Accordingly, this report is not
suitable for any other purpose.
CliftonLarsonAllen LLP
Rochester, Minnesota
REPORT DATE
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44
Housing: Bryk on Broadway
To: DMCC Board of Directors
From: DMC EDA
Date: May 16, 2024
Request of the board of directors:
Adopt a resolution authorizing the City to amend the Developer Assistance Agreement (DAA) with Bryk
Apartments Rochester, LLC that would adjust the income eligibility requirements for a portion of the units within
the building.
Background:
On March 23, 2021, the DMCC Board approved a Resolution between the DMCC Board and the Bryk Apartments
Rochester, LLC to provide up to $2.2M of public infrastructure funding to support the project. The project
consists of a 6-story, 180-unit workforce residential apartment building with approximately 7,260 square feet of
commercial/retail space, underground and surface parking, and indoor and outdoor community spaces. The
project is located along North Broadway Avenue between Civic Center Drive NW and 5th Street NW.
The project provides the following mix of units:
•30% of the units (54 units) are affordable at 50% area median income and rents. Current income limits
put the income limits at $39,050 for a 1-person family (max rent $976), and $55,750 for a 4-person family
(max rent $1,394).
•10% of the units (18 units) are affordable at 60% area median income and rents. Current income limits
put the income limits at $46,850 for a 1-person family (max rent $1,171), and $66,990 for a 4-person
family (max rent $1,673).
•60% of the units (108 units) are affordable at 80% area median income and rents. Current income limits
put the income limits at $62,450 for a 1-person family (max rent $1,561), and $89,200 for a 4-person
family (max rent $2,230).
The project is complete and just over a year into the lease-up. With the slower than expected lease up of the
80% units, in addition to the increase in project costs, in March 2023 DMCC and City Council approved an
amendment adjusting the income limits for 54 of the 108 units priced at 80% AMI rents for a period of 6
months. This modification did not alter the rental rate of the units, but only broadened the income eligibility of
potential renters for 54 of the 180 units in the building up to 110% AMI. There were no changes to the 50% and
60% AMI rental units.
The 2023 amendment expired in October 2023. Since then, the developer has continued to experience
challenges finding enough income qualified renters for the 80% AMI units. In consultation with City staff, DMC
staff is recommending extending the same income qualification of up to 110% AMI (with no change in the rents,
which will stay tied to 80% AMI levels) for a period of 12 months for all 108 of the 80% AMI units to allow the
project to gather data and align with the workforce housing needs within the 80 – 110% AMI ranges. Up to
three (3) one-year extensions of this amendment could be exercised by the developer automatically, subject to
evidence of mutually agreed upon good faith efforts by Project to attract applicants at 80% AMI qualifications.
Fulfilling the DMC Vision, Mission, and/or Goals:
The project aligns with the following DMC and City priorities as follows:
•Workforce housing project within the City, Transit-Oriented Development (TOD) and DMC zones.
•Revitalizes blighted site
•Provides a balanced and sustainable housing stock
•Promotes neighborhood stabilization and revitalization in coordination with the North Broadway
reconstruction project
•Increase to the city’s tax base
45
46
A.
MN 991185.1
DESTINATION MEDICAL CENTER CORPORATION
RESOLUTION NO. __-2024
Approving Further Revisions to the Bryk on Broadway Apartments Project
BACKGROUND RECITALS
A.In Resolution 113-2021, the Destination Medical Center Corporation (“DMCC”)
approved the Bryk on Broadway Apartments Project as presented therein (the “Project”) as
a public infrastructure project within the meaning of Minnesota Statutes, Section 469.40,
subdivision 11 and as consistent with the Development Plan adopted by the DMCC on April
23, 2015, as amended (the “Development Plan”). The Project included a range of housing
choices affordable to persons and families who comprise the Development District’s
workforce, with 30% of units at 50% of Adjusted Median Income (AMI), 10% of the units
at 60% AMI, and 60% of the units at 80% AMI.
B.The DMCC further approved the Project for the purposes of Minnesota Statutes,
Section 469.47, subdivision 3, of up to $2,200,000 in funding through general state
infrastructure aid, and for purposes of Minnesota Statutes, Section 469.47, subdivision 4,
and supported the City of Rochester’s (the “City’s”) expenditures of up to $2,237,354 in tax
increment financing.
C.The DMCC approvals in Resolution 113-2021 were expressly contingent upon an
agreement by the parties to a development assistance agreement as to both tax increment
funding and general state infrastructure aid that secured public f u n d s and enforced the
income- affordability criteria for a period of at least thirty years, requiring repayment for
breach or default.
D.The Project experienced difficulties in renting units at the 80% AMI level. DMCC
Resolution 51-2017 provides that the DMCC Board of Directors or the DMCC Executive
Committee will reconsider a prior approval of a project upon a finding presented to
the DMCC from either the City or the Destination Medical Center Economic Development
Agency Board of Directors (“EDA”) of a significant change in the essence or character of
the project as approved. On March 17, 2023, the City and the EDA staff recommended a
six-month revision in the income eligibility requirements for one-half of the units available
at 80% AMI (54 units) of up to 110% AMI.
E.On March 23, 2023, in Resolution No. EC-9-2023, the Executive Committee of the
DMCC Board approved certain modifications to the development assistance agreement,
including income eligibility changes for 54 units of the Project at the 80% AMI of up to
110% AMI, for a period of six months. The DMCC Board ratified and confirmed this action
on May 25, 2023 by Resolution 127-2023. The revisions specified in these Resolutions
expired on October 1, 2023.
F.The Project continued to experience difficulties in renting units at the 80% AMI
level. By correspondence dated May16, 2024, and attached hereto as Exhibit A, EDA
staff has considered the Project and the income eligibility requirements in light of current
47
market conditions. As set forth in Exhibit A, staff have found a significant change and
recommend amending the development assistance agreement and related documents by a
temporary revision in the income eligibility requirements, as follows:
•Allowing all of the Project’s 80% AMI units (108 units) to be available to
prospective tenants with income up to 110% or less of current AMI, without
revising rental rates; and
•Continuing this revised income eligibility for a period of one year from the
date of approval by the DMCC and the City. Thereafter, absent further
approvals, any of these units that are or become vacant shall automatically convert
to income eligibility of 80% AMI.
RESOLUTION
NOW, THEREFORE, BE IT RESOLVED, by the Board of Directors of the
Destination Medical Center Corporation, that it approves, contingent upon approval by the
City, the request of the EDA as set forth in Exhibit A to modify the development assistance
agreement and related documents to permit all of the Project’s 80% AMI units (108
units) to be available to tenants with income of up to 110% or less of current AMI for a
period of one year, without revising the rental rate. The Board finds that these revisions are
consistent with the Development Plan.
BE IT FURTHER RESOLVED, that the City is authorized to extend the approvals
within this Resolution for up to three additional twelve-month periods, under appropriate
circumstances, including financial needs demonstrated by the Project.
BE IT FURTHER RESOLVED, that DMCC Resolution No. 51-2017 is
incorporated fully herein by reference.
BE IT FURTHER RESOLVED, that City and EDA staff are requested to provide
updates with respect to the Project.
BE IT FURTHER RESOLVED, that the Chair or the Treasurer of the DMCC is
authorized to take such actions as are necessary and appropriate to effectuate the findings
and approvals of this Resolution.
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Bryk on Broadway Apartments Project
DMC Economic Development Agency and
City of Rochester Administration
May 16, 2024
STATEMENT OF RECOMMENDATION:
Adopt a resolution authorizing the City to amend the Developer Assistance Agreement (DAA) with Bryk Apartments
Rochester, LLC that would adjust the income eligibility requirements for a portion of the units within the building.
Based on our discussions with the developer, we support amending the Development Agreement to include the following:
1.Allow all of the units (108 units) restricted to 80% AMI to be rented by persons or families whose income is 110% or less of the
area median income until June 15, 2025. The rents for these units will remain at 80% AMI levels. Up to three (3) one-year
extensions of this higher AMI limit of 110% are also available providing the Project provides evidence of good faith efforts to
attract income-qualified candidates that would meet the 80% AMI threshold. At the end of this modification period these
units would convert back to 80% units for the remainder of the Qualified Project Period.
2.In situations where two or more unrelated adult occupants and at least as many bedrooms as occupants are living together,
allow for each occupant’s income will be looked at separately in determining if they meet the 80% area median income
restriction.
PROJECT SUMMARY:
On March 23, 2021, the DMCC Board approved a Resolution (Resolution 113-2021) between the DMCC Board and the Bryk Apartments
Rochester, LLC to provide up to $2.2M of public infrastructure funding to support the project. The project consists of a 6-story, 180-
unit workforce residential apartment building with approximately 7,260 square feet of commercial/retail space, underground and
surface parking, and indoor and outdoor community spaces. The project is located along North Broadway Avenue between Civic Center
Drive NW and 5th Street NW.
The project provides the following mix of units:
•30% of the units (54 units) are affordable at 50% area median income and rents. Current income limits put the income limits
at $39,050 for a 1-person family (max rent $976), and $55,750 for a 4-person family (max rent $1,394).
•10% of the units (18 units) are affordable at 60% area median income and rents. Current income limits put the income limits
at $46,850 for a 1-person family (max rent $1,171), and $66,990 for a 4-person family (max rent $1,673).
•60% of the units (108 units) are affordable at 80% area median income and rents. Current income limits put the income limits
at $62,450 for a 1-person family (max rent $1,561), and $89,200 for a 4-person family (max rent $2,230).
When the project was shared with the DMCC Board in 2021, the Bryk project was presented to the DMCC Board along with its
community benefits which still remain in place. These community benefits are included below.
•Mixed Income Workforce Housing: There remain different income levels within the building, allowing for people to remain in
the building if they make more money each year and providing a diversity of units at different income levels that more closely
match the income makeup of Rochester.
•Neighborhood Stabilization and Revitalization: Investment in a proximate downtown area and prominent intersection with
housing at various affordability levels
•Designed to meet Sustainability Performance Goals: The project is tracking to receive Green Communities Certification
•Transit Corridor Density: The Bryk project is located along a primary transit corridor as identified in the City’s comprehensive
plan and provides 180 housing units along this corridor
•Walkability to downtown and employment: The project is located along the transit corridor, proximate to the bike trail, and 6
blocks away from downtown, a major employment center
As outlined above, there are many community benefits to the project that remain for the occupants and City of Rochester.
In March of 2023 DMCC and City Council approved an amendment adjusting the income limits for 54 of the 108 units priced at 80%
AMI rents for a period of 6 months. This modification did not alter the rental rate of the units, but only broadened the income
eligibility of potential renters for 54 of the 180 units in the building up to 110% AMI. There were no changes to the 50% and 60% AMI
rental units.
49
The developer reported in March of 2023 had they not received the 110% AMI qualification 6-month special agreement, they would
only have 29 out of 108 80% units rented today. They were able to rent an additional 41 units with the special agreement. The 2023
amendment expired in October 2023. During the period from the expiration in October 2023 until early March 2024, the developer
was only able to lease an additional 7 units of the 80% AMI pool of apartments. They had to turn away 26 applicants with incomes
that fall between 80% AMI and 110% AMI during that same period.
The developer advertises units in the following places and feels like these are the channels for reaching potential renters:
rent.com
zillow.com
rentcafe.com
brykonbroadway.com
apartmentfinder.com
apartments.com
facebook
instagram
The developer’s goal with targeting 80% AMI levels is to provide workforce housing for Rochester’s large population of residency
program students, nurses, and other service industry positions. Based on current income verifications, those positions earn over the
2022 HUD income restrictions for 80% AMI. This is causing a gap in the developer’s ability to lease units between 60% and 80% AMI
levels. The Bryk is a unique housing product type by targeting 80% AMI levels. Typically, affordable housing projects include a mixture
of market rate and 60% or below units. A reason for this is there are no Property Tax breaks for housing units above 60% AMI.
Therefore, even though the Bryk is required per the DAA to provide rents at 80% AMI, they are taxed at the full market rate for those
units. This coupled with the escalating costs of construction and interest rates has made it very difficult for the developer.
With the slower than expected lease up of the 80% units, in addition to the increase in costs, staff recommend adjusting the income
limits for all 108 units priced at 80% AMI rents. Increasing the rent eligibility for all units will help the build leasing process and fill the
building, while also providing financial relief to the developer. Through this income change, the pool of potential eligible renters will
increase by about 15% or close to 14,000 workers using average wage data provided by the Minnesota Department of Employment
and Economic Development (MN DEED).
Please note that this recommendation will not alter the rental rate of the units, but only broaden the income eligibility of potential
renters for the 180 units in the building. There are no recommended changes to the 50% and 60% AMI rental units. This will allow for
a full year of additional income data to be gathered and inform the future income qualifications for this pool of units when this
project is revisited on a regular basis by staff and good faith efforts are documented.
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Housing: Civic Center North
To: DMCC Board of Directors
From: DMC EDA
Date: May 16, 2024
Request of the board of directors:
The DMC EDA board of directors recommends that the DMCC designate the proposed development as a
Public Infrastructure Project and provide $3 million in DMC General State Infrastructure Aid. Also, the DMC
EDA endorses City plans to finance up to $13,000,000 in project expenditures from tax increment financing
bonds authorized under DMC statute, without seeking credit to the City’s $128,000,000 local contribution.
A resolution to this effect has been prepared by staff and is included in the DMC Corp. board meeting
materials for your consideration.
Background:
Site: The site is located at 217 E Center Street, directly north of the Mayo Civic Center and along the
Zumbro River as it runs through downtown Rochester. The site comprises a total of 1.78 acres, or
approximately 77,537 square feet, is generally level, and has frontage along the north side of E Central
Street and the south side of 1st Street NE. The site is currently a paved parking lot owned by the City of
Rochester, which will be razed prior to the construction of the Subject.
The site was the subject of an RFP released by the City of Rochester in which this project team was selected
to advance into further exclusive negotiations as the preferred development partner. That agreement,
which has been extended, is due to expire in August 2024 if no development agreement is reached.
Team:
•Developer: Sherman Associates
•Design: ESG Architects
•Engineer: Kimley Horn
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Project Objectives:
The project is a residential development consisting of both
market-rate and affordable housing units.
The market-rate building is 243 units, 14-story structure and
the affordable building is a 76 unit, 5-story low-rise building.
The buildings surround a 348-stall structured parking facility.
The roof of the parking garage will include a mix of landscaping and amenity spaces such a swimming pool
and areas for cooking, dining, lounging and recreation. The buildings contain exercise facilities, indoor and
outdoor community spaces. Outdoor space along the river includes a public pedestrian trail along the river
connecting East Center Street and 1st Street NE.
The project will provide 76 units at varying rent levels as outlined below. For reference, the 2024 Area
Median Income (AMI) for Rochester for a single-person household is $82,100. Typically, affordable housing
cost is considered to be 30% of gross income.
•13 units (17% of total) @ 30% AMI
•38 units (50% of total) @ 50% AMI
•25 units (33% of total) @ 60% AMI
The overall unit count and affordability targets are aiming to provide affordable housing opportunities in
the downtown that are a quick walk to the downtown core, as well as build the amount of market rate
housing available in the downtown core.
DMC/City Priority Alignment:
The project aligns with the following DMC and City priorities as follows:
•Mixed-income housing project within the Downtown Waterfront subdistrict of the DMC
•Revitalizes underutilized site
•Provides a balanced and sustainable housing stock
•Promotes neighborhood stabilization and revitalization
•Increase to the city’s tax base.
•First private development customer on the downtown Thermal Energy System
•Project is being designed to meet City and DMC Sustainable Design Requirements which will also
benefit occupants in terms of lowering their monthly utility costs via improved building efficiency
Financing:
The project is utilizing the following sources of funding:
-First Mortgage (project team is meeting with multiple lenders)
-Equity (from Development team)
-Public Infrastructure funding (City TIF + DMC proposed funding)
-45L Tax credit equity
-IRA Funding
-MHFA
-TIF Loan
52
Following this is a memo from the City of Rochester further describing the proposed project and our
financial evaluation.
53
54
B.
DESTINATION MEDICAL CENTER CORPORATION
RESOLUTION NO. -2024
Approving the Civic Center North Apartments Project,
Contingent Upon Evidence of Financing and Certain Conditions
BACKGROUND RECITALS
A.Under Minnesota Statutes, Section 469.41 Subdivision 13, a project must be
approved by the Destination Medical Center Corporation (“DMCC”) before it is proposed
to the City of Rochester (the “City”). The DMCC must review the proposed project for
consistency with the Development Plan, adopted by the DMCC on April 23, 2015, as
amended (the “Development Plan”).
B.The Development Plan established certain goals and objectives of economic
development, which include creating approximately 35,000 – 45,000 new jobs, attracting
new business, and expanding existing business, as well as implementing strategies to attract,
retain, and foster the development of a highly skilled workforce. The Development Plan
also directed a comprehensive strategy to address all facets of building and sustaining the
development district boundaries as adopted in the Development Plan (the “Development
District”).
C.The Development Plan also pursued a housing mix that includes affordable and
workforce units, as well as market-rate housing. The Five-Year Update to the Development
Plan, adopted by the DMCC on November 19, 2020 in Resolution No. 109-2020, further
emphasized the need for housing, particularly with a range of income accessibility,
workforce housing, and housing near public transit. The DMCC has determined that
affordable and workforce housing within the Development District forms a necessary
component of workforce development to support the overall economic development goals
and strategies.
D.The DMCC has directed the Destination Medical Center Economic Development
Agency (the “EDA”) to be proactive and creative in generating new housing at all income
levels. Accordingly, the EDA staff is recommending projects at an earlier stage in the
development process to build more market support and enable developers to secure
additional funding.
E.By correspondence to the DMCC dated May 16, 2024, and attached hereto as
Exhibit A, staff from the City and the EDA have requested approval of the
Civic Center North Apartments Project (the “Proposed Project”) as a public infrastructure
project. The City undertook a request for proposals process to determine a preferred project
team for the site, currently a paved parking lot owned by the City. The Proposed Project is
located at 217 E Center Street, directly north of the Mayo Civic Center and along the
Zumbro River. The site comprises a total of 1.78 acres, or approximately 77,537 square
feet.
55
F.The Proposed Project is a residential development consisting of both market-rate
and affordable housing units nearby downtown employers. As further detailed in Exhibit
A, the Proposed Project contemplates 243 market-rate units in a 14-story structure and 76
units of affordable housing in a 5-story, low-rise building. The buildings surround a 348-
stall parking facility. The Proposed Project is designed to connect to the City’s downtown
thermal energy network. The outdoor space includes a public pedestrian trail along the
Zumbro River connecting East Center Street and 1st Street NE. The high-density housing
of the Proposed Project is hoped to spur restaurants and other retail uses nearby.
G.The Proposed Project advances a range of housing choices affordable to persons
and families who comprise the Development District’s workforce – with 13 units at 30%
Adjusted Median Income (AMI), 38 units at 50% of AMI, and 25 units at 60% AMI –
supporting the expansion of new jobs and economic development goals of the Development
Plan.
H.Pursuant to Minnesota Statutes, Section 469.45, subdivision 4, the City may elect
to establish one or more redevelopment tax increment financing districts within the
Development District to fund public infrastructure projects.
I.The City plans expenditures and financing of up to $13,000,000 in funding from tax
increment financing bonds, without seeking credit to the City’s $128,000,000 local
contribution. In addition, the City and the EDA request approval of up to $3,000,000 in
funding through general state infrastructure aid under Minnesota Statutes, Section 469.47,
subdivision 3.
J.Minnesota Statutes, Section 469.40, subdivision 11, defines “public infrastructure
project” as “a project financed in part or in whole with public money in order to support
the medical business entity's development plans, as identified in the DMCC development
plan” and expressly includes, among other items, the ability to
(3) remediate land and buildings as required to prepare the property for
acquisition or development;
(4) install, construct, or reconstruct elements of public infrastructure
required to support the overall development of the destination medical
center development district including, but not limited to, streets,
roadways, utilities systems and related facilities, utility relocations
and replacements, network and communication systems, streetscape
improvements, drainage systems, sewer a nd water systems, subgrade
structures and associated improvements, landscaping, facade construction
and restoration, wayfinding and signage, and other components of
community infrastructure; . . .
(5) acquire, construct or reconstruct, and equip parking facilities and other
facilities to encourage intermodal transportation and public transit;
(7)make related site improvements including, without limitation,
excavation, earth retention, soil stabilization and correction, and site
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3
B. DMCC Resolution -2024 Approving Civic Center North Project(991088.2) - 5/17/2024
1:39 PM
improvements to support the destination medical center development district
. . . .
(8) prepare land for private development . . . . [and]
(10) construct and equip all or a portion of one or more suitable structures on
land owned by the city for sale or lease to private development . . . .
K.The site of the Proposed Project is located in the Development District and
within the Downtown Waterfront District described in the Development Plan
L.On April 27, 2017, the DMCC approved Resolution No. 51-2017, which requires
additional review of projects upon material deviation from the approvals granted, to
ensure that “as-built” projects are consistent with approvals that have been granted.
M.The City and the EDA have examined the Proposed Project, applying the
evaluation factors contained in the Development Plan, and now recommend the Proposed
Project for approval.
RESOLUTION
NOW, THEREFORE, BE IT RESOLVED, by the Destination Medical Center
Corporation Board of Directors, that the DMCC finds that the Proposed Project is a
public infrastructure project within the meaning of Minnesota Statutes, Section 469.40,
subdivision 11, which provides for: installing or constructing elements of public
infrastructure required to support the overall development of the destination medical center
development district including, but not limited to, streets, roadways, utilities systems
and related facilities, streetscape improvements, drainage systems, sewer and water
systems, landscaping, facade construction, and other components of community
infrastructure; acquiring or constructing parking facilities and other facilities to encourage
intermodal transportation and public transit; making related site improvements, excavation,
and earth retention; and remediating land and prepare the property for private
development; and constructing suitable structures on land owned by the city for sale to
private development; and that the DMCC approves the Proposed Project as consistent
with the Development Plan.
BE IT FURTHER RESOLVED, that the DMCC approves the Proposed Project
for the purposes of Minnesota Statutes, Section 469.47, subdivision 3, of up to $3,000,000
in funding through general state infrastructure aid, upon final approval by the City, to
reimburse eligible public infrastructure expenses.
BE IT FURTHER RESOLVED, that the DMCC approves the Proposed Project
for the purposes of Minnesota Statutes, Section 469.47, subdivision 4, and supports the
City’s expenditures of up to $13,000,000 in tax increment financing identified in the
Proposed Project, upon final approval by the City.
BE IT FURTHER RESOLVED, that the approvals contained herein are expressly
contingent upon: 1) an agreement by the parties to the development assistance agreement
as to both tax increment funding and general state infrastructure aid that secures public
57
funds and enforces the income-affordability criteria set forth in the agreement for a period
of at least thirty years, requiring repayment for breach or default; and 2) evidence of
financing satisfactory to the Board, such evidence to be presented within 90 days concurrent
with the 90 day period set forth in the City’s approved development assistance agreement.
BE IT FURTHER RESOLVED, that DMCC Resolution No. 51-2017 is
incorporated fully herein by reference.
BE IT FURTHER RESOLVED, that City and EDA staff are requested to provide
updates with respect to financing, schedule, and other elements of the Proposed Project.
BE IT FURTHER RESOLVED, that the Chair or the Treasurer of the DMCC is
authorized to take such actions as are necessary and appropriate to effectuate the findings
and approvals of this Resolution.
58
Memo
To: DMCC Board of Directors
From: Strategic Initiative Team
Date: May 16, 2024
Subject: Use of DMC-enabled Tax Increment Financing District for Sherman Associates
proposed Civic Center North Project
The City of Rochester provides the following information relating to the Sherman Project for your
consideration. If this meets with DMCC Board approval, the next step would be a City Council
request for action.
1.DMCC Board action requested. Grant approval of the prepared resolution to approve the
Sherman Associates proposed Civic Center North Project (herein after “Project”) as a DMC
Public Infrastructure Project that is consistent with the DMC Development Plan. The
approval as a DMC public infrastructure project by the DMCC Board is required before the
City Council can act to approve it as a DMC Public Infrastructure Project. Such approval
would need to be made contingent upon the City of Rochester’s subsequent approval of
the Project as a DMC Public Infrastructure Project and of the Development Assistance
Agreement (DAA) for the Project.
2.Current project status/schedule. The City of Rochester has land use, planning and zoning
authority for all projects in the City including within the DMC Development District. In
addition, the City has the authority to provide financial assistance, if needed, to assist in the
development of projects through Tax Increment Financing (TIF) including the authority to
establish TIF districts within the DMC Development District.
a.Land Use and Zoning Status. The City’s Community Development Team has been
working with the Sherman Team regarding the Site Development Plan approval
process and requirements. The Site Development Plan application was submitted on
May 23, 2023, for approval by the Community Development Team. The current
application is waiting on revisions.
b.Establishment of Tax Increment Financing (TIF) District and Development Assistance
Agreement (DAA) and Approval as a Public Infrastructure Project as identified in the
DMC Framework Plan. The land use approvals would allow the Project to proceed to
construction by the developer and are independent of any financial assistance
considerations or approval as a DMC Public Infrastructure Project. However, the
59
Memo
Developer has indicated the Project would not be able to proceed to construction and
be financially feasible without or “but for” some financial assistance from the City or the
DMCC. The developer has provided detailed financial information to document the
need for $18.5 Million in assistance to help close the financial “gap” for this Project. The
City is recommending that $13 Million in PAYGO TIF assistance be provided and $3
Million DMC funding be provided to help the developer close a portion of the financial
gap related to the increased infrastructure costs for District Energy. A public hearing on
the establishment of a Tax Increment Financing District will be scheduled for a later
date.
c.The City EDA will consider this as a component of the Development Assistance
Agreement (DAA) at a future meeting. It should be noted that the City team has been
working closely with the DMC EDA team in the review of all aspects of this Project
including the proposed amount of financial assistance that is recommended for the
Project. The DMC EDA and City teams are in agreement regarding the recommended
amount of assistance. Approval by the DMCC Board of the Sherman Project as a DMC
Public Infrastructure Project will also mean that DMC provisions relating to prevailing
wage rates, women- and minority-owned business contracting and workforce
requirements, and American-made steel will also apply for the construction of the
Project, as well as meeting the sustainably goals of the DMC.
The City’s review of the financial information provided by the developer which showed a
financing gap, was based on a financial analysis of the submitted developer information by
Baker Tilly, the City’s financial consultant, which performs such reviews for many
communities. The TIF assistance is estimated to equate to approximately 95% of the
available annual tax increments for 25 years.
3.Summary of the Proposed Project.
•The project is a residential development consisting of both market-rate and
affordable housing units. The market-rate building is 243 units, 14-story structure
and the affordable building is a 76 unit, 5-story low-rise building. The buildings
surround a 348-stall structured parking facility. The roof of the parking garage will
include a mix of landscaping and amenity spaces such a swimming pool and areas
for cooking, dining, lounging and recreation. The buildings contain exercise facilities,
indoor and outdoor community spaces. Amenity space along the river which
includes a public pedestrian trail along the river connecting East Center Street and 1st
Street NE.
60
Memo
4.How does the proposed Project address the DMC Development Plan goals and
objectives?
a.The Project is within the DMC Downtown Waterfront subdistrict and the proposed
development will provide opportunities for persons to reside in close proximity to
downtown employers. More households in this district will attract other commercial
investment near and around the Mayo Civic Center to create more restaurant and retail
options.
b.The Project will provide a capital investment of nearly $130 million within the DMC
Development Plan area and will increase tax base by over $816,000 annually, based
upon existing tax rates.
c.The Project develops a surface municipal parking lot in a manner that is consistent with
the Rochester Downtown Master Plan and the City’s Comprehensive Plan. Infill
development along the Zumbro river will enhance the public space for people using the
trail network and adds to the character of the downtown waterfront.
d.The project incorporates various sustainability elements, which is consistent with the
DMC vision. The project is being designed to connect to the planned district energy
system.
e.The project construction will be subject to the prevailing wage rates, WMBE and
American made steel provisions. Construction will create approximately 500 jobs.
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Memo
62
Housing: West Transit Village
To: DMCC Board of Directors
From: DMC EDA
Date: May 16, 2024
Request of the board of directors:
The DMC EDA board of directors recommends that the DMCC designate the proposed development as a Public
Infrastructure Project and provide $3.9 million in DMC General State Infrastructure Aid. A resolution to this
effect has been prepared by staff and is included in the DMC Corp. board meeting materials for your
consideration.
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 the selected developer team of
Kraus Anderson (master developer and market rate housing) and Aeon (affordable housing developer) have
worked in collaboration for over a year. The parties have agreed to a public-private partnership approach and
are also driven by the FTA transportation funding schedule for the transit elements of the site as well. A master
plan has been developed by the development team in close coordination and partnership with Mayo Clinic,
DMC, and the City of Rochester:
To realize this vision will require additional infrastructure outside of the Federal BRT project scope as well as
support for the housing components of the project.
At this juncture there are over 42 different major components of the site that need to come together to realize
63
the above vision. Partners are working together to fully develop a detailed matrix of those responsibilities and a
schedule in order to maintain the overall project schedule which is built off of the expected opening day of the
BRT system in 4Q2026.
While the overall WTV project is not yet developed enough to submit a complete application, there are important
funding deadlines for the affordable housing developer (Aeon) that are driving that component of the project to
come before the DMCC and City Council in advance of other components of the overall site, namely the annual
July deadline for MHFA (Minnesota Housing Finance Agency) funds. If Aeon does not submit this year for those
funds they would have to wait another full year to submit, which would make it extremely unlikely that the
affordable housing could meet the overall site design and construction schedule, as this component is tightly
aligned with the Mayo Parking Ramp schedule.
WTV Aeon 1, or the “Liner” building, is planned to be a 100% Senior (55+) affordable housing project. Aeon is
planning on submitting the project to the 2024 Minnesota Housing RFP, due July 11th, 2024. The anticipated mix
of housing is as follows:
Current Unit Mix
Unit Type
Count Affordability (Rent) Projected Tenant
Rents
1 bedroom 12 30% AMI $603
2 bedroom 7 30% AMI $831
1 bedroom 46 50% AMI $1,065
2 bedroom 29 50% AMI $1,267
Total 94
This building is a critical component of the overall goal of creating a transit village, as the housing will screen the
large parking ramp on the eastern edge of the site and contribute to the overall sense of place needed to
differentiate a transit village from a park and ride facility.
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 inclusion of affordable and market rate housing, as well as amenity
and service retail is critical for this site if it is to realize the DMCC Board vision.
Approvals, milestones, and decision points:
-Request for DMC funds to bolster Aeon application to MHFA for July 11 application deadline
-If approved by DMCC, moves to City Council in June
-Partners continue to develop and refine the overall site infrastructure and market rate housing needs
-Anticipate a full WTV plan presentation and financial analysis by 3Q or 4Q 2024
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C.
DESTINATION MEDICAL CENTER CORPORATION
RESOLUTION NO. -2024
Approving the West Transit Village Liner Housing Project,
Contingent Upon Evidence of Financing
BACKGROUND RECITALS
A.A critical component of the development plan adopted by the Destination Medical
Center Corporation (“DMCC”) on April 23, 2015, as amended (the “Development Plan”)
concerned mobility, transformative transportation strategies, and related development. The
Development Plan highlighted the goal of a mode shift in which a significant portion of
commuting trips downtown shifts away from single occupant vehicle trips and towards other
modes.
B.To implement these goals, the DMCC has reached significant approvals concerning
mobility and transportation. By Resolutions 87- and 89-2019, the DMCC adopted a local
preferred alternative for the route alignment and transit mode for the downtown bus rapid
transit project now known as “LINK.” The DMCC has consistently emphasized the
importance of a transit village destination anchoring LINK at its terminus. In Resolution
79-2019, the DMCC approved the location of mobility hubs and park and ride facilities, on
the western end of the route now known as the West Transit Village. By Resolution 100-
2020, the DMCC approved a boundary modification to adjust the development district, the
geographic area in the City identified in the Development Plan in which public infrastructure
projects are implemented (“the Development District”) to include the route and transit
village location for Phase 1 of the locally preferred alternative. By Resolution 104-2020,
the DMCC approved an application for funding to the Federal Transit Agency Small Starts
Program for the LINK project.
C.The Development Plan also highlighted the need for senior housing, with both
market rate and affordable housing options. The Five-Year Update to the Development
Plan, adopted by the DMCC on November 19, 2020 in Resolution No. 109-2020 (the “2020
Update”), further emphasized the need for housing, particularly with a range of income
accessibility and housing near public transit.
D.Under Minnesota Statutes, Section 469.41 Subdivision 13, a project must be
approved by the DMCC before it is proposed to the City of Rochester (the “City”). The
DMCC must review a proposed project for consistency with the Development Plan.
E.By correspondence to the DMCC dated May 16, 2024, and attached hereto as
Exhibit A, staff from the Destination Medical Center Economic Development Agency (the
“EDA”) has requested approval of the West Transit Village Liner housing project (the
“Proposed Project”) as a public infrastructure project.
F.The Proposed Project is a residential development consisting entirely of senior (55+)
affordable housing. The Proposed Project contemplates 94 housing units. It plans to seek
additional funding from the Minnesota Housing Finance Agency.
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G.The Proposed Project advances a range of housing choices affordable to seniors,
including:
•Twelve one-bedroom units and seven two-bedroom units at 30% Adjusted
Median Income (AMI); and
•Forty-six one-bedroom units and twenty-nine two-bedroom units at 50%
AMI.
H.Minnesota Statutes, Section 469.40, subdivision 11, defines “public infrastructure
project” as “a project financed in part or in whole with public money in order to support
the medical business entity's development plans, as identified in the DMCC development
plan” and expressly includes, among other items, the ability to
(3) remediate land and buildings as required to prepare the property for
acquisition or development;
(4) install, construct, or reconstruct elements of public infrastructure
required to support the overall development of the destination medical
center development district including, but not limited to, streets,
roadways, . . . and other components of community infrastructure; . . .
(5) acquire, construct or reconstruct, and equip parking facilities and other
facilities to encourage intermodal transportation and public transit;
(7)make related site improvements including, without limitation,
excavation, earth retention, soil stabilization and correction, and site
improvements to support the destination medical center development district
. . . .
(8) prepare land for private development . . . .
I.The site of the Proposed Project is located in the Transit Village and Station
Areas subdistrict described in the 2020 Update.
J.The DMCC Board approved the 2024 Five Year Capital Improvement Plan (the
“2024 CIP”) on September 28, 2023 and approved the projects set forth in the first year of
the 2024 CIP as public infrastructure projects within the meaning of Minnesota Statutes
Section 469.40, subdivision 11, and consistent with the Development Plan. The 2024 CIP
was later approved by the City.
K.The 2024 CIP provided funding for the Strategic Redevelopment Fund, which was
first approved in the 2021 Five Year Capital Improvement Plan. Staff has informed the
DMCC that a portion of the funds from the Strategic Redevelopment Fund is available for
reallocation. As set forth in Exhibit A, EDA staff requests that the DMCC amend the 2024
CIP to reallocate funds in an amount not to exceed $3,900,000 from the Strategic
Redevelopment Fund to the Proposed Project.
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L.The EDA has examined the Proposed Project, applying the evaluation factors
contained in the Development Plan, and now recommend the Proposed Project for approval.
RESOLUTION
NOW, THEREFORE, BE IT RESOLVED, by the Destination Medical Center
Corporation Board of Directors, that the DMCC finds that the Proposed Project is a
public infrastructure project within the meaning of Minnesota Statutes, Section 469.40,
subdivision 11, which provides for: constructing and equipping parking facilities and other
facilities to encourage intermodal transportation and public transit; installing or constructing
elements of public infrastructure required to support the overall development of the
destination medical center development district including, but not limited to, streets,
roadways, and other components of community infrastructure; making related site
improvements, excavation, and earth retention; and remediating land and prepare the
property for private development; and that, subject to approval by the City, the DMCC
approves the Proposed Project as consistent with the Development Plan.
BE IT FURTHER RESOLVED, that the DMCC amends the 2024 CIP by
reallocating funds reserved for the Strategic Redevelopment Fund to the Proposed Project
in an amount not-to-exceed $3,900,000, subject to approval by the City.
BE IT FURTHER RESOLVED, that the approvals contained herein are expressly
contingent upon: 1) evidence of financing for the Proposed Project from the Minnesota
Housing Finance Agency; and 2) evidence of long-term income-affordability criteria and
appropriate enforcement as agreed in the Project’s development assistance agreement with
the City.
BE IT FURTHER RESOLVED, that the EDA staff are requested to provide
updates with respect to financing, schedule, and other elements of the Proposed Project.
BE IT FURTHER RESOLVED, that the Chair or the Treasurer of the DMCC is
authorized to take such actions as are necessary and appropriate to effectuate the findings
and approvals of this Resolution.
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DESTINATION MEDICAL CENTER
ECONOMIC DEVELOPMENT AGENCY
West Transit Village (WTV) - Aeon Phase 1
Evaluation Report
May 16, 2024
EXECUTIVE SUMMARY / RECOMMENDATION
STATEMENT OF RECOMMENDATION:
Based on information provided by Aeon (the “Applicant”), WTV - Aeon Phase 1 (the “Proposed Project”) aligns with the
Destination Medical Center (“DMC”) vision and is consistent with the DMC goals, objectives, and values. Development of
affordable housing units is among the highest priorities for the DMCC Board of Directors.
The following report evaluates the Proposed Project on all criteria as required by the Development Plan. Based on these
criteria, the Destination Medical Center Economic Development Agency (“DMC EDA”) would categorize the Proposed Project
as a high priority DMC project that has immense potential to help realize the vision, goals and objectives of the DMC initiative.
DMC EDA recommends DMC support for the project in the amount of $3.9 million, using the DMC general state aid
infrastructure dollars provided by the State of Minnesota.
We further recommend an on-going financial audit to ensure the project built is consistent with the project proposed and approved
and to confirm the costs of the relevant public infrastructure components of the project. It is understood that the applicant will
provide all requested documentation to facilitate this audit and work in good faith with representatives of the DMCC and DMC EDA,
or their consultants, in this process.
STATEMENT OF ELIGIBILITY:
Based upon information provided by the Applicant the Proposed Project meets the definition of “public infrastructure
project” under the DMC Act, is consistent with the DMC Development Plan, and falls within the DMC Development District
boundaries (Central Station).
PROJECT SUMMARY:
WTV - Aeon Phase 1 will consist of 92 affordable senior (55+) residential apartments and potentially up to 12,000 sq ft of
commercial/retail space (pending feasibility study). A mixed income approach has been accessed and the following housing units will
be provided: 50% AMI- 75 units; 30% AMI- 19 units. Amenities within the proposed project include: exercise facility; board room;
community space; rooftop community space; library and flexible work from home space and an exterior green space with
community interaction. The proposed project is to be 1 floor below grade, 4 floors above grade and XX parking stalls are included
in the project for commercial and occupant use. The project is an essential component of the West Transit Village project site at
the western terminus of the DMC Development District and along a zoned TOD Corridor.
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DESTINATION MEDICAL CENTER
ECONOMIC DEVELOPMENT AGENCY
RELEVANT PROJECT HIGHLIGHTS:
The following list outlines relevant project highlights for consideration:
•General Project Information
o Located in the TOD corridor of the DMC District
o Affordable housing targeting seniors as part of a larger mixed-income and multi-generational community
o 12,000 rentable square feet of commercial space
o Activates the southern and western facades of the 2,500 car parking ramp structure to spur the village component of
this important node of transit infrastructure
o Provides direct access for residents to the LINK Bus Rapid Transit system and well as the Cascade Lake trail system
•Job Creation
o Approximately 5 long-term jobs just for the housing; dependent on the commercial user could be an additional 5
o Approximately 50-100 construction jobs
•Energy & Sustainability
o Project projected to meet Sustainable Building 2030 targets and have an energy use intensity target of 24-25 kBtu/SF
o Project will pursue and complete certification of Green Communities Tier 2
o Project projected to meet waste diversion, water reduction targets, electric vehicle readiness, bike facilities, among
other sustainability approaches
o Project committed to sharing utility data and participate in Rochester’s Energy Benchmarking Program for a period of
3 years
•Financial Details
o Total project cost: $43.7 million
o Financial gap identified by the developer is $14.85 Million
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DESTINATION MEDICAL CENTER
ECONOMIC DEVELOPMENT AGENCY
EVALUATION REPORT
SECTION 1.0 PROJECT OVERVIEW
WTV - Aeon Phase 1 will consist of 92 affordable senior (55+) residential apartments and potentially up to 12,000 sq ft of
commercial/retail space (pending feasibility study). A mixed income approach has been accessed and the following housing units will
be provided: 50% AMI- 75 units; 30% AMI- 19 units. Amenities within the proposed project include: exercise facility; board room;
community space; rooftop community space; library and flexible work from home space and an exterior green space with
community interaction. The proposed project is to be 1 floor below grade, 4 floors above grade and XX parking stalls are included
in the project for commercial and occupant use. The project is an essential component of the West Transit Village project site at
the western terminus of the DMC Development District and along a zoned TOD Corridor.
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DESTINATION MEDICAL CENTER
ECONOMIC DEVELOPMENT AGENCY
SECTION 2.0 MINIMUM ELIGIBILITY REQUIREMENTS OF DMC ACT
Check the following that apply to the Project:
"Public Infrastructure Project"
General Infrastructure Project or
Within DMC Development District Boundaries
For a project to be eligible for DMC Funding, the project must be (1) a “public infrastructure project” and (2) within the DMC
Development District Boundaries.
Per Minnesota Statutes, Section 469.40, Subdivision 11, a “Public Infrastructure Project” is described as a project financed in part or
in whole with public money to support Mayo Clinic’s development plans, as identified in the DMCC Development Plan, the Proposed
Project would qualify as a “Public Infrastructure Project” as required by the DMC Act.
The Applicant provided a detailed list of eligible infrastructure related improvements including:
Site preparation and remediation, utility connections, streetscape improvements (sidewalk, landscaping and
public elements), vacation and utility relocations, parking infrastructure, site clean-up, DMC goal of energy
efficiency, and community accessible amenity spaces. The total cost for these improvements is in excess of the
total amount requested public assistance.
The Proposed Project is within the DMC Development District Boundaries.
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DESTINATION MEDICAL CENTER
ECONOMIC DEVELOPMENT AGENCY
SECTION 3.0 EVALUATION CRITERIA
The DMC EDA’s recommendation for the project outlined herein was formed in consideration of the following criteria:
3.1 DMC Vision, Goals and Objectives / Development Plan Strategies
3.2 Consistency with Development Plan and Other Planning Documents
3.3 Financial Viability
3.4 Consistency with Adopted Strategies, Phasing and Capital Improvement Planning
3.5 Targeted Business Enterprise Strategies
3.6 Compliance with Economic---Fiscal Goals and Objectives
3.7 Other Project Policy Considerations
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DESTINATION MEDICAL CENTER
ECONOMIC DEVELOPMENT AGENCY
SECTION 3.1 DMC VISION, GOALS AND OBJECTIVES / DEVLOPMENT PLAN STRATEGIES
Does the project include a plan for achieving the DMC vision, goals and objectives and is it critical to
driving the strategies included in the Development Plan?
Is the project consistent with the stated DMC Goals & Objectives and specifically contributing to job
creation?
•Does the project meet one or more of the goals and objectives established for the Development
Plan?
The Proposed Project is a mixed income affordable housing project located in a DMC sub-district
and within the City of Rochester transit-oriented development zoning district. Second Street is a
major future transit corridor within the City when the LINK BRT system commences operations in
2026. Senior affordable housing is needed to support the growth resulting from the DMC project.
The project provides housing near downtown retail and services, transit access, while offering
units at a variety of deeper-need income levels.
Is the project consistent with the DMC Vision?
•Is the project part of a bold and aspirational concept for the future?
The Proposed Project is consistent with the DMC vision of creating a place to Live, Work, Play and
Thrive. Based on an economic analysis of housing needs for Rochester, the City needs over XXXX units
of housing for individuals earning between 30-50% AMI by 2040. The 92 units incorporated in this
project will help build toward meeting this demand.
•Does the project fit with the principles of the vision?
With Mayo Clinic at its heart, the Destination Medical Center (DMC) initiative will be the catalyst to
position Rochester, MN as the world’s premier destination center for health and wellness; attracting
people, investment and jobs to America’s City for Health and supporting the economic growth of
Minnesota and its biosciences sector.” We believe the proposed project aligns with this core principle
as it will provide a key piece of infrastructure for growth; an affordable place to live.
•Does the project provide a framework for growth in this sub---district?
The vision for the West Transit Village has been refined over several years and this project is the first
residential component of the site coming forward alongside the transit infrastructure that has already
been approved for funding by the DMCC Board. Further, constructing units along a transit corridor,
provides an opportunity for residents to live in Rochester without depending on a vehicle. This
development revitalizes a surface parking lot and provides opportunities to live adjacent to a high
frequency mobility option that connects directly to all the major downtown assets of Rochester.
Does the project build infrastructure to support growth and drive investment?
•Would the investment occur without the public infrastructure to be funded?
The Applicant states they would not be able develop this project without public assistance. Based
on our own independent analysis, we concur. As stated above, the mixed income approach of this
project helps provide affordable units for seniors connected to the downtown and community.
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DESTINATION MEDICAL CENTER
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•Is the proposed public infrastructure solely for the benefit of the project or does it also support
the broader vision of the DMC District?
As identified in the Infrastructure Master Plan, there are six (6) key areas of infrastructure
requirements: (1) public utilities, (2) bridges, subways and skyways, (3) shared parking, (4) parcel
development, (5) civic uses, cultural uses and public amenities, and (6) technology improvement.
The Proposed Project includes elements encouraging pedestrian engagement, alternative modes
of transportation, promotes sustainable building practice, is connected to a major mobility
investment, and will provide much-needed housing for seniors which is in undersupply.
•Will the public funding accelerate private investment in the Development District or applicable
sub district?
The Proposed Project contributes 92 units of housing ranging between 30-50% AMI units. To meet
the needs of renters – the majority of whom live in Rochester – Olmsted County needs to build
1,274 affordable housing units by 2030 (Olmsted County, 2020). Additionally, an October 2023
report commissioned by Aeon found significant demand for senior housing projects, affirming that
new, 55 plus senior housing developments have been well-received in Rochester, with strong
absorption in their first years (Cadence Marketing Solutions, LLC, 2023).
The Project is meant to act as the catalyst for future development and job growth within the
district as well as the first step in evolving the West Transit Village site beyond the mobility
infrastructure already planned.
Does the project provide a catalyst for/or anchor for an approved strategy?
•Can the project reasonably be expected to catalyze or anchor development in one of the six sub
districts?
The Proposed Project will be the catalyst for the TOD corridor and provide a key piece of housing
infrastructure. Its location is an example of how complex TOD development can happen in
Rochester and the state of Minnesota, and will generate momentum for other developments –
residential and otherwise.
•Can the project reasonably be expected to catalyze necessary transportation/transit
strategies?
The Proposed Project will encourage the use of alternate means of transportation with the
availability of bike storage and electric vehicle chargers. Moreover, the project is located at the
west hub of the LINK BRT project, the largest single investment in public transportation in
Rochester to date and the first Bus Rapid Transit system in the State of Minnesota outside of the
Twin Cities metro area. Between the facility amenities that foster alternative transportation
possibilities and its adjacency to a transit hub the Project will provide a range of options for the
residents to move throughout the district and City.
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DESTINATION MEDICAL CENTER
ECONOMIC DEVELOPMENT AGENCY
SECTION 3.2 CONSISTENCY WITH DEVELOPMENT PLAN, OTHER PLANNING DOCUMENTS
Does the project include a plan for achieving consistency with the Development Plan (and any updates
thereto) and other relevant planning documents?
Is the project consistent with the DMC Planning Documents?
•Is the project consistent with the current DMC Master Plan, Transportation Master Plan, and/or
Infrastructure Master Plan?
The Proposed Project fits well with the vision and principles of the DMC Master Plan. It’s also consistent
with the transportation and infrastructure master plans.
•Is the project consistent and/or supportive of the Finance Plan, Business Development Plan and
other Implementation strategies of the DMC?
Yes, a key strategy of these plans is to develop places for people to live that are affordable. This
project expands on this possibility by providing units at a range of income levels. Further, its energy
efficiency approach will minimize the utility costs for the building occupants.
Is the project consistent with the City/County Planning Documents?
•Is the project consistent with the RDMP Plan or City Comprehensive Pan?
Yes, the proposed project is consistent with the City Comprehensive Plan as a block suitable for
redevelopment in the hopes of achieving higher density in the transit-oriented development
zoning district, and repurposing blighted downtown lots.
•If a Transit/Transportation project, is the project consistent with the ROCOG long---range
Transportation Plan?
The ROCOG model was utilized for DMC to determine the effects of development and
transportation system changes. One main area of the model considers the trips generated by land
uses and activities. The Proposed Project will have limited impact on the current traffic flow, in
addition the project is designed to incorporate various options for alternate transportation to
reduce the single-vehicle traffic flow in the Development District.
The Proposed parking structure, bike parking facilities, location at the major transit hub on the
western end of LINK BRT, and the retail and service options within walking distance help reinforce
and carry the vision of the DMC Integrated Transit Studies.
Does the project support sustainability principles as a core objective in the development and operations
of the project?
As part of the project’s Application for Funding, relative to Sustainable Elements, our team
acknowledges and is working towards the (9) listed goals of the DMC Plan below, including a whole-
building energy performance evaluation process.
•The WTV - Aeon Phase 1 project incorporates the Destination Medical Center Design Guidelines and
Destination Medical Center Development Plan.
•The SB2030 EUI target for the building, calculated based on the conceptual design, is estimated at 23
KBtu/sq.ft.-yr. Costs and impacts of various systems including geothermal energy are being studied.
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DESTINATION MEDICAL CENTER
ECONOMIC DEVELOPMENT AGENCY
•The General Contractor will develop a Construction Waste Plan.
•The percent of water reduction is still being calculated. The intent is to use low flow WaterSense
fixtures. Meeting the requirement of a 20% reduction seems likely based on the project’s current
approach.
•The percent irrigation reduction is still being calculated. Given the building footprint, the amount of
outdoor irrigated area is limited. The irrigation system will be efficient, incorporating WaterSense
labeled weather-based irrigation controllers.
•The site for this project was based on an overall vision and master plan for the West Transit Village.
The covered parking area of this building will provide the infrastructure for a select number of future
EV charging stations as well as house tenant bike storage.
•Green Communities Tier 2 has been selected as the third-party green building rating system. After
multiple rounds of design and analysis, and according to Aeon’s standard level of design, construction,
and operation, we expect this project will perform well above the minimum level of compliance.
•Ownership has agreed to participate in the City of Rochester’s Voluntary Energy Benchmarking
Program.
•Ownership is also interested in pursuing all utility incentive programs through RPU and MERC.
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DESTINATION MEDICAL CENTER
ECONOMIC DEVELOPMENT AGENCY
SECTION 3.3 FINANCIAL VIABILITY [Form may vary based on size/scope of project]
Does the project include a plan that is financially viable?
Project Summary (e.g. concepts, detailed program, project team, etc.)
Total Project Budget
Sources of funding, demonstrating a verifiable gap that justifies DMC Funding
Project Operating Pro Forma including an overview of any operations and maintenance funding that
may be required
A Project Plan and/or Market Study supporting the demand/need for the project
Demonstration of financial capacity to support the project
Is the project supported by current market conditions and comprehensive feasibility studies?
Yes. The applicant has shared its data with the DMC EDA staff.
Does the project leverage additional private funds, maximizing the use of DMC Funds?
Yes, the proposed project leverages multiple sources of funds, including philanthropic and other public sources.
Is the preliminary project finance plan comprehensive and viable based upon Project Team and financial
capacity?
Yes. The financial plan presented is comprehensive and viable but only with the proposed DMC assistance of $3.9
million.
Is the project inclusive of an Operation and Maintenance pro forma?
Yes. The project proforma accounts for estimates of operating costs and maintenance expenses.
Is there a verifiable gap for funding based upon a reasonable return on private investment?
Yes. One key driver of the gap is that this development is a key component of a highly complex and visionary
master plan and is essential for screening the transit infrastructure on the site to catalyze the “village” in West
Transit Village.
Is the proposed operating structure sustainable?
Yes, we believe the operating structure is sustainable due to Aeon’s strong standing and track record in affordable
housing.
Does the Project impose any financial obligations on the DMC or City for ongoing operational or maintenance
support?
No. The City and DMC would have no on-going responsibilities for operational or maintenance support.
Has the project applicant agreed to execute the DMC Development Agreement?
If awarded all sources of funding needed for successful realization of this project, the applicant has stated that they
will agree to execute the DMC Development Agreement consistent with all expectations of the City and DMC.
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DESTINATION MEDICAL CENTER
ECONOMIC DEVELOPMENT AGENCY
SECTION 3.4 CONSISTENCY WITH ADOPTED STRATEGIES, PHASING, AND CAPITAL IMPROVEMENT PLANNING
Is the project consistent with adopted strategies and/or one or more projects for the current implementation phase of the DMC
initiative?
Is the project part of an approved strategy and current focus? Is the project outlined as an approved strategy for the project within the
Development Plan?
The proposed project is consistent with the DMC priority surrounding transit-oriented housing development to support housing at a variety of
price points.
Is the project recommended as a focus for the particular phase of the project in the Development Plan?
The Proposed Project aligns with the needs Olmsted County has identified for various tiers of affordability for housing and is
located within the DMC District.
Is the project consistent with the DMC CIP?
•If public, is the project specifically listed in the DMC---CIP? Or is the project necessary to facilitate a DMC related
strategy?
N/A
•If private, is the project otherwise compatible with the planned public improvem ents in the DMC---CIP?
Yes, this project is part of a larger investment known as the West Transit Village component of the LINK BRT project.
SECTION 3.5 TARGETED BUSINESS ENTERPRISE STRATEGIES [Form may vary based on size/scope of project]
Does the project include a plan for achieving Local Business, S/M/WBE Project Requirements and other project
requirements, as applicable?
Has the applicant agreed to execute the DMC Development Agreement? (The terms of which are provided in form to all
applicants)?
Yes, the Applicant has agreed to execute the DMC Development Agreement, understanding DMC goals for targeted business, and
S/M/WBE requirements.
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DESTINATION MEDICAL CENTER
ECONOMIC DEVELOPMENT AGENCY
SECTION 3.6 COMPLIANCE WITH ECONOMIC---FISCAL GOALS AND OBJECTIVES
Does the project include a plan to comply with or support the economic---fiscal goals and objectives of the DMC initiative?
Does the project generate substantial econom ic-fiscal gain based upon job projections?
Yes. The project is anticipated to provide 50-100 temporary construction jobs and 5-10 new permanent jobs.
Does the project maximize the opportunity for investment by attracting other private capital?
To meet the needs of these renters – the majority of whom live in Rochester – Olmsted County needs to build 1,274 affordable
housing units by 2030 (Olmsted County, 2020). Additionally, an October 2023 report commissioned by Aeon found
significant demand for senior housing projects, affirming that new, 55 plus senior housing developments have been well received
in Rochester, with strong absorption in their first years (Cadence Marketing Solutions, LLC, 2023).
Is the project required (e.g. public works) to continue to seed investment in the DMC District?
The project will add to the overall eligible costs that are certified by DEED each year, increasing the amount of available public
investment.
Does the project support the economic strategies of the project by providing civic/cultural uses and/or public amenities that
support strategic growth in the DMC Development District and/or specific business development and economic development
strategies that are adopted as part of the DMC Development Plan?
The project will add new, diverse income level housing, contribute to the sense of place at West Transit Village and meet DMC
design guidelines. It is designed to meet different income levels for jobs available within downtown Rochester.
SECTION 3.7 OTHER PROJECT POLICY CONSIDERATIONS
Is the project inside the DMC Development District?
Yes.
If the project is not inside the DMC Development District, are they asking for a boundary change?
N/A
Does the project include any distinctive social and/or community benefits that are not specifically required by the DMC Act?
WTV - Aeon Phase 1 is consistent with the DMC vision of a mixed use walkable and transit-oriented downtown, diversifying the
housing options available within the district, densifying at a critical transportation node, and leveraging transportation
investments. It is being delivered by a developer with a strong track record in affordable housing.
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D.
DESTINATION MEDICAL CENTER CORPORATION
RESOLUTION NO. -2024
Approving an Amendment to the 2024 Five Year Capital Improvement Plan as to
the City DMC Project Management Team
BACKGROUND RECITALS
A.The Destination Medical Center Corporation (“DMCC”) and the City of Rochester
(the “City”) annually approve a five-year capital improvement plan. Starting with the 2020 Five
Year Capital Improvement Plan, the DMCC and the City have included a category for City staff
overseeing and managing projects approved by the DMCC and the City (“City DMC Project
Management”).
B.The DMCC approved the 2024 Five Year Capital Improvement Plan (the “2024
CIP”) on September 28, 2023 and approved the projects set forth in the first year of the 2024 CIP
as public infrastructure projects within the meaning of Minnesota Statutes Section 469.40,
subdivision 11, and consistent with the development plan adopted by the DMCC on April 23,
2015, as amended (the “Development Plan”). The 2024 CIP was later approved by the City. The
2024 CIP provided funding for the City DMC Project Management category in the amount of
$1,157,454.
C.The DMCC, the City, and the EDA have considered additional resources and staff
necessary to support significant DMC-related development projects, including Mayo Clinic’s
Bold. Forward. Unbound. in Rochester. initiative. To allow additional staff to support the City
DMC Project Management team, staff from the City and the EDA request that the DMCC amend
the 2024 CIP to increase the funding for this category by an amount not to exceed $67,000. This
increase will support Deputy City Administrator Cindy Steinhauser’s assuming new
responsibilities for coordinating construction activities within the development district – the
geographic area in the City identified in the Development Plan in which public infrastructure
projects are implemented – and overseeing the City DMC project managers. Staff has reasoned
that this increase is intended to encompass fifty percent of all costs related to this position,
effective July 1, 2024, and that the source of funding for this increase is expected to be the local
sales tax related to the DMC initiative.
RESOLUTION
NOW, THEREFORE, BE IT RESOLVED, by the Destination Medical Center
Corporation Board of Directors, that the DMCC approves, subject to approval by the City, an
amendment to the 2024 CIP by increasing the amount budgeted for City DMC Project
Management by an amount not to exceed $67,000.
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BE IT FURTHER RESOLVED, that the Chair or the Treasurer of the DMCC is
authorized to transmit this Resolution to the City of Rochester, and to take such actions as are
necessary and appropriate to effectuate the findings and approvals of this Resolution.
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Destination Medical Center
Economic Development Agency
May 16, 2024
TO: DMCC Board of Directors
FROM: DMC EDA
RE: 2024 DMC CIP Budget Amendment
In February 2019, the DMCC approved a recommendation from the DMC EDA
and City staff to create a DMC Project Management team within the City of Rochester.
The team focuses on DMC plan implementation and project delivery, and the costs
associated with these services are included in the DMCC’s annual funding request.
As the City prepares to support the development associated with Mayo Clinic’s
“Bold. Forward. Unbound. in Rochester.” program, Deputy City Administrator Cindy
Steinhauser will be assuming new responsibilities for coordinating these construction
activities within the DMC development district and overseeing the City DMC project
managers. The DMC EDA is proposing that the 2024 DMC CIP be amended so that,
effective July 1, 50% of this position (salary, benefits, work-related travel and
professional development) can be considered a DMC expenditure and paid from the
City’s DMC sales tax revenue.
The increase to the 2024 budget is $67,000. Any future cost-sharing related to
this position will be incorporated into the annual funding request.
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Historic District DMC Funding
To: DMCC Board of Directors
From: DMC EDA
Date: May 16, 2024
Request of the board of directors:
To designate the Downtown Historic District as public infrastructure and advances a
program of financial support of up to $5 million for eligible capital improvements to
properties within the district.
Overview:
With direction for the DMCC board, DMC EDA staff have worked in collaboration with the
DMC EDA board, DMCC legal counsel, the City of Rochester, and other downtown
stakeholders, to conduct further due diligence regarding a downtown property support
program, including program parameters, funding application process, and goals. Staff
continue to evaluate similar programs, including the DMC EDA-administered Main Street
Economic Revitalization Program and the Rochester Downtown Alliance Facade
Improvement Grant Program, as well as past historic property investments, to affirm the
demonstrated need and applicability of this proposed program. Additional detail will be
provided for the board discussion.
The Rochester City Council, after considerable deliberation, established a Downtown
Historic District, a 32-property district (28 contributing buildings).
After significant evaluation, DMC EDA staff recommend directing support to the newly
established downtown historic district. The framework for this approach is described in
detail in the attached memo.
In summary:
1.Support for property rehabilitation, repair, and reuse within the Downtown Historic
District is consistent with the DMC enabling legislation;
2.Investment in historic properties is contemplated in the DMC Development Plan;
3.A program which supports and incentivizes private investment in properties will
advance DMC goals related to job growth, capital investment, tax base enhancement,
and visitor/resident experience;
4.Resources of such a program were noted when the 2024 CIP budget was established
under the line-item Strategic Redevelopment;
5.These resources will complement other programs and strategies to ensure a successful
downtown historic district;
6.The impact of this program is predictable and measurable; progress will be reported
annually.
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E.
DESTINATION MEDICAL CENTER CORPORATION
RESOLUTION NO. -2024
Approving Downtown Property Preservation Program to Address Public Infrastructure
Projects within the City of Rochester’s Downtown Commercial Historic District, and
approving Amendments to the 2024 Five Year Capital Improvement Plan
BACKGROUND RECITALS
A.The Destination Medical Center Corporation (“DMCC”) established five long-
term goals for the Destination Medical Center (“DMC”) initiative, including creating a
comprehensive and strategic plan, new jobs, tax revenues, and achieving the highest quality
patient, companion, visitor, employee, and resident experience.
B.The DMCC has long recognized the important role of historic preservation to
achieve these goals. The Development Plan adopted by the DMCC on April 23, 2015, as amended
(the “Development Plan”) recommended strategies and programs to encourage preservation
efforts: “The preservation of historic landmarks and districts is an important part of a City’s
historic fabric. . . . As the DMC implementation process moves forward, we recommend the EDA
work with federal agencies, state agencies and local organizations to evolve strategies and
programs to incent historic preservation [in the] DMC District.”
C.On January 22, 2024, the City of Rochester (the “City”) established a downtown
commercial historic district of thirty-two properties (the “Commercial Historic District”) located
within the development district boundaries as adopted in the Development Plan (the
“Development District”).
D.By correspondence to the DMCC dated May 16, 2024, and attached hereto as
Exhibit A, staff from the City and the Destination Medical Center Economic Development
Agency (the “EDA”) recommend establishing a downtown property preservation program (the
“Program”). The Program would provide an application and general state infrastructure aid
funding process for public infrastructure projects within the Commercial Historic District.
E.Under the recommended Program:
1.The City and the EDA staff will establish an application process and
deadlines;
2.Each eligible project is subject to specific approval by the DMCC and the
City;
3.The maximum amount of funding is $500,000 per property (according to
the property identification number) within the Commercial Historic
District;
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4.Multiple applications by one property identification number are permitted,
subject to the maximum amount of funding above;
5.General state infrastructure aid (Minnesota Statutes, Section 469.47) funds
approved by the DMCC and the City will not exceed fifty percent of any
eligible project expenditure; and
6.Funding will remain available until the earlier of December 31, 2029 or
action by the DMCC and the City, in accordance with the statutes.
F.The Program will require each applicant to demonstrate that the proposed project:
1.Satisfies the definition of a “public infrastructure project” under Minnesota
Statutes, Section 469.40, subdivision 11;
2.Lies within the Development District and is defined as a “contributing
property” within the Commercial Historic District;
3.Is consistent with the Development Plan;
4.Achieves a capital improvement that is intended to be a permanent asset of
the Commercial Historic District; and
5.Satisfies the statutory requirements, including prevailing wages,
American-made structural steel, as well as local requirements, such as
sustainable building standard, women- and minority-owned construction
contacting, and workforce development (collectively, “Program
Requirements”).
G.Minnesota Statutes, Section 469.40, subdivision 11, defines “public infrastructure
project” as “a project financed in part or in whole with public money in order to support the
medical business entity's development plans, as identified in the DMCC development plan” and
expressly includes, among other items, the ability to
(2) demolish, repair, or rehabilitate buildings; . . . .
(4) install, construct, or reconstruct elements of public
infrastructure required to support the overall development of the
destination medical center development district including but not
limited to: . . . utilities systems and related facilities; . . . streetscape
improvements; drainage systems; sewer and water systems;
subgrade structures and associated improvements; landscaping;
facade construction and restoration; design and predesign,
including architectural, engineering, and similar services; . . .
construction costs, including all materials and supplies; wayfinding
and signage; community engagement; . . . and other components of
community infrastructure;
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(5) acquire, construct or reconstruct, and equip . . .other facilities to
encourage intermodal transportation and public transit; [and]
(6) install, construct or reconstruct, furnish, and equip . . . facilities
to promote tourism and hospitality, conferencing and conventions.
. . .
H. The DMCC Board approved the 2024 Five Year Capital Improvement Plan (the
“2024 CIP”) on September 28, 2023 and approved the projects set forth in the first year of the
2024 CIP as public infrastructure projects within the meaning of Minnesota Statutes Section
469.40, subdivision 11, and consistent with the Development Plan. Final approval of each of the
capital projects remained subject to a later specific approval by the DMCC upon final
determination of scope, costs, and availability of funds. The 2024 CIP was later approved by the
City.
I. The 2024 CIP provided funding for the Strategic Redevelopment Fund, which was
first approved in the 2021 Five Year Capital Improvement Plan. Staff has informed the DMCC
that a portion of the funds from the Strategic Redevelopment Fund is available for reallocation.
As set forth in Exhibit A, attached, staff from the City and the EDA request that the DMCC amend
the 2024 CIP (1) to reallocate funds up to $5,000,000 from the Strategic Redevelopment Fund to
the Program; and (2) to approve the Program, subject to later specific approval of each project by
the DMCC and the City upon final determination of scope, costs, satisfaction of statutory criteria,
and availability of funds.
J. On April 27, 2017, the DMCC approved Resolution No. 51-2017, which requires
additional review of projects upon material deviation from the approvals granted, to ensure that
“as-built” projects are consistent with approvals that have been granted.
RESOLUTION
NOW, THEREFORE, BE IT RESOLVED, by the Destination Medical Center
Corporation Board of Directors, that the DMCC approves the creation of the Downtown Property
Preservation Program, subject to approval by the City, under the terms and conditions set forth in
this resolution as consistent with the Development Plan, satisfying the components of a public
infrastructure project within the meaning of Minnesota Statutes, Section 469.40, subdivision 11,
and located within the Development District, all subject to final approval by the DMCC and the
City of each proposed project under the Program upon final determination of scope, costs,
availability of funds, and statutory criteria.
BE IT FURTHER RESOLVED, that the DMCC amends the 2024 CIP by reallocating
funds reserved for the Strategic Redevelopment Fund, to the Program, in an amount not-to-exceed
$5,000,000, subject to approval by the City.
BE IT FURTHER RESOLVED, that in the expenditure of funds for the Program, the
City and EDA must comply with the following:
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1.Expenditures for the Program must satisfy the terms and conditions of this
Resolution, including, but not limited to, the parameters of the Program
and the Program Requirements as set forth in the Recitals, which are
incorporated herein.
2.Provide certification that the Program expenditures comply with this
Resolution and statutory requirements.
3.Provide annual reports to the DMCC Board concerning Program updates,
expenditures, metrics to evaluate the success of the Program, and
recommendations concerning future funding in the capital improvement
plan.
BE IT FURTHER RESOLVED, that DMCC Resolution No. 51-2017 is incorporated
fully herein by reference.
BE IT FURTHER RESOLVED, that the Chair or the Treasurer of the DMCC is
authorized to transmit this Resolution to the City of Rochester, and to take such actions as are
necessary and appropriate to effectuate the findings and approvals of this Resolution.
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May 16, 2024
TO: DMC Corp. Board of Directors
FROM: Destination Medical Center Economic Development Agency
RE: Historic District Analysis and Report
Background
On February 1, 2024, the DMCC board of directors directed the DMC EDA to prepare, and present at a
future DMCC board meeting, parameters and goals for a potential downtown property support
program.
In response to this direction, we engaged in due diligence informed by the following questions:
I.Under the DMC Law, can the DMCC approve the establishment of and funding for a downtown
property support program?
II.Given DMC’s development plan goals, should the DMCC approve the establishment of and
funding for a downtown property support program?
We have summarized our findings regarding each of these questions below. Following that, we
describe proposed program parameters and a recommended course of action for board consideration.
Due Diligence Analysis
I.Under the DMC Law, can the DMCC approve the establishment of and funding for a downtown
property support program?
A proposed project, public or private, may only receive DMC funding after three determinations
are made by the DMCC and Rochester City Council: first, that the proposed project is within the
DMC development district; second, that the proposed project meets one or more of the
definitions of “public infrastructure project” under the DMC law; and, third, that the proposed
project is consistent with the DMC Development Plan.
The DMC law prescribes that DMC funding may be approved for several uses, including:
A.Acquire real property and other assets associated with the real property;
B.Demolish, repair, or rehabilitate buildings;
C.Remediate…buildings as required to prepare the property for acquisition or development;
D.Install, construct, or reconstruct elements of public infrastructure required to support the
overall development of the destination medical center development district including, but
not limited to…streetscape improvements…landscaping, façade construction and
restoration, wayfinding and signage, and other components of community infrastructure;
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E.Make related site improvements including, without limitation, excavation, earth retention,
soil stabilization and correction, and site improvements to support the destination medical
center development district.
II.Given DMC’s development plan goals, should the DMCC approve the establishment of and
funding for a downtown property support program?
As we evaluated possible variations of a downtown property support program, the alignment
between the City of Rochester’s designation of a Downtown Commercial Historic District and
the DMC development plan increased the viability of a “historic property” funding program.
In January 2024, the Rochester City Council designated a downtown commercial historic district
comprised of thirty-two properties:
The DMC development plan recognizes the importance of historic preservation and suggests
possible means of support. From the plan:
“The preservation of historic landmarks and districts is an important part of a City’s historic
fabric. The City of Rochester is currently undertaking a study to better define policies and
ordinances around the City’s cultural assets. The DMC Master Plan (Section 6.0) and
Infrastructure Plan (Section 8.0) recognize this study is underway and assumes the Development
Plan will (defer) to City ordinances on this matter.
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As the DMC implementation process moves forward, we recommend the EDA work with federal
agencies, state agencies and local organizations to evolve strategies and programs to incent
historic preservation (in the) DMC District. A preliminary list of strategies that may be considered
includes:
A.Work with City and local organizations to identify historic assets, policies and ordinances
that recognize an economic and cultural balance between development and
preservation. Recommend policies and funding guidelines to support implementation of
the plan.
B.Identify federal, state and other resources such as Historic Tax Credits (HTC’s) that may
assist developers and private investors in preservation of key assets.
C.Assist developers and private investors in applications for grants and/or funding
proposals.”
In addition to the alignment between the City-designated historic district and the direction
provided in the DMC development plan, several other considerations bolstered the case for a
historic district support program:
A.A designated historic district provides an initial project evaluation framework that can
ensure that investments become permanent community assets, whether in a district-wide
investment like streetscape enhancement or a property-specific capital improvement.
B.A historic district support program can serve as an additional “tool” in the DMC toolbox,
alongside prior and ongoing investments in public realm; district energy; streets and
sewers; infrastructure supportive of specific workforce housing, bio-med-tech; bus rapid
transit; area planning; and other growth-driven needs.
C.Approving funds for investment in the historic district creates another promotional
incentive to include in DMC retail, dining, and entertainment business recruitment and
retention strategies.
Proposed Program
Following our due diligence analysis, we considered possible program parameters with a goal to address
the following questions and issue a recommended course of action:
I.What would qualify for DMC funding?
II.What legal requirements and policy standards need to be considered?
III.How much funding should be available for a proposed project?
IV.How would DMC direct funding to historic properties?
V.What would an application intake, review, consideration, and oversight process look like?
VI.How much DMC funding should be designated for this program?
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Addressing these questions has involved numerous informal discussions between DMC EDA and City
officials, property owners, community non-profit organizations, business owner-operators, downtown
residents, and others. The insights gleaned from these conversations have been invaluable and have
informed our recommended programmatic approach.
Our advisory recommendations related to the resolution of each of the above questions are below.
I.What would qualify for DMC funding?
We recommend that any project considered for DMC funding meet the following criteria:
A.Meet the DMC statutory definition of “public infrastructure project”.
B.A proposed project must result in a capital improvement that is intended to be a permanent
asset of the downtown historic district. Temporary or non-fixed assets would not be eligible
for DMC funding.
C.That the proposed project occur at a contributing property of the current downtown
commercial historic district.
We further recommend that, for reporting and program evaluation purposes, the board require
that projects be proposed and presented in four categories of investment:
A.Adaptive Reuse: Conversion of property use, such as office to retail or restaurant, or
renovating vacant second-story space for housing or commerce, etc..
B.Building System Upgrades: HVAC, electrical, plumbing, etc.
C.Building Safety and Preservation: Exterior envelope sealing, accessibility improvements, etc.
D.Code Modernization: Improvements made to legacied properties in relation to ADA or
other regulatory compliance, preparation of reuse, future reinvestment, sale, etc.
II.What legal requirements and policy standards need to be considered?
The DMC law requires that all projects financed with DMC funds must pay prevailing wage to
project contracting teams and, if applicable, utilize American-made structural steel. These legal
requirements must apply to any project approved under a historic district support program.
Additionally, the DMCC and Rochester City Council have adopted local policies related to
sustainable building standards and women- and minority-owner construction contracting and
workforce requirements. Unless waived or modified by the DMCC and City Council, these
policies would be applied to any project approved under a historic district support program.
III.How much funding should be available for a proposed project?
In addition to the program eligibility requirements described above, we recommend that
proposed project funding requests should be subject to funding requirements:
A.DMC funding covers fifty percent of any eligible expenditure.\
B.DMC funding be limited to a maximum of $500,000 per property, as determined by the
parcel identification number (PIN) of the eligible properties in the current City of Rochester
Downtown Commercial Historic District.
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C.To allow property owners and tenants maximum opportunity to prioritize capital
investments, funding may be applied for and received more than once, subject to the
$500,000 maximum described above.
D.To align historic district construction activity with other major downtown improvements,
including Link BRT and Bold. Forward. Unbound. in Rochester., program funding will remain
available for request through December 31, 2029 or until rescinded by action of the DMCC.
To determine the total amount of funding to recommend for designation to the proposed
historic district support program, we evaluated a selection of capital improvements made to
downtown historic properties in recent years. This evaluation reflected input provided by
property owners and tenants, who reported to us that building improvements are often reliant
on business cash flow, construction seasonality or contractor availability, supply chain
dependencies, and other determinants. The evaluated improvements involved expenditures in
all of the evaluation categories proposed above: adaptive reuse, building system upgrades,
building safety and preservation, and code modernization.
The evaluation provided us with an order-of-magnitude valuation of capital improvements
across time, project, and property types.
IV.How would DMC direct funding to historic properties?
In determining a recommended course of action for the administration of this proposed historic
district support program, we kept several considerations top-of-mind:
A.The review and approval process and practices should preserve all of the DMC-related
authorities and prerogatives currently held by the DMCC and Rochester City Council.
B.For each proposed project, DMC EDA and City staff should review each funding request for
program eligibility and provide a recommendation to the DMCC and City Council.
C.As it has for all prior DMC-funded capital projects, the City of Rochester would manage the
financial administration of the program, including ensuring project funding and
documentation meets audit and reporting standards. These administrative responsibilities
may result in additional staff costs for the City; if so, the City may request reimbursement of
these costs by the DMCC.
V.What would a proposed funding request intake, review, consideration, and oversight process
look like?
If this program is approved, we recommend creating a stand-alone, cost-free funding request
portal on the DMC website. The portal would collect proposed project details, including
location, description, and cost, and inform the applicant of any applicable DMC legal and policy
project requirements. Staff contact information would be provided to all applicants, as well as
an invitation to meet with staff to answer applicant questions.
The funding request portal would always remain open but, in order to provide time for staff
review and board material preparation, closing dates will be established ahead of each regular
DMCC board of directors meeting, where staff intend to present proposed projects.
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For example, if this program is approved by the DMCC on May 23, 2024 and by the Rochester
City Council on June 3, 2024, we anticipate being able to open the funding request portal by July
1, 2024 and follow the timeline below:
A.August 15, 2024: Application closing date for September 2024 DMCC consideration
B.Sept. 12, 2024:EDA board proposed project review.
C.Sept. 26, 2024:DMCC board meeting + proposed project consideration
D.Oct. 7, 2024:City Council meeting + proposed project consideration
This intake, review, and consideration cycle would be repeated prior to every regular DMCC
board of directors meeting until program conclusion. Additionally, we recommend providing
regular reports on the status of approved projects and the disposition of program funds.
VI.How much DMC funding should be designated for this program?
In full consideration of our due diligence analysis, recommended program eligibility and funding
requirements, and review of select historic property investments, we recommend that the
DMCC and Rochester City Council designate up to $5 million for qualifying public infrastructure
improvements within the City of Rochester Downtown Commercial Historic District, subject to
annual CIP authorization and the program eligibility and funding requirements described in this
memorandum and the associated board resolution. We further recommend that the funding be
sourced from the DMC General State Infrastructure Aid (GSIA) previously approved as “Strategic
Redevelopment” funding in the 2024 DMC Capital Improvement Program.
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Business Development Update
To: DMCC Board of Directors
From: DMC EDA
Date: May 16, 2024
Request of the board of directors:
No action requested.
AWARENESS
1.Mayo Clinic Innovation Exchange
a.MOU in progress between MCIE and DMC EDA with the objectives of:
i.Partner on programming designed to bring global innovation leaders together around topics
where Mayo Clinic and Rochester have expertise.
ii.Position each organization as an integral part of innovation ecosystem growth in Rochester.
iii.Leverage the brands, networks, and resources of both organizations to deliver on shared
objectives.
2.Investment in Healing Familiarization Tour, October 2-4
3.Retail, Dining, and Entertainment
a.Krueger Real Estate Advisors - Contracted with DMC effective April 1 to assist with the following
RDE activities:
i.Downtown real estate assessment
ii.Target retailer identification
iii.Downtown Rochester marketing and promotion
INFRASTRUCTURE
4.Shared Lab Update
a.Progress towards a solution has slowed in the negotiation phase and may require a reset.
b.Need for additional data and potential advisory support for staff.
c.Need to potentially redefine the scope, consider a small-scale prototype.
ECOSYSTEM
5.Ecosystem Strategy
a.To further DMC’s ecosystem objectives, an assessment needs to be completed that will:
i.Define specifics of each Ecosystem node, including geographies.
ii.Compile data on each Ecosystem node, complete with contact info, technology descriptions,
and lines of business.
iii.Analyze the Rochester Ecosystem against peer markets, identifying areas of strengths & gaps.
iv.Conduct primary research on each Ecosystem node to assess vertical specific gaps, desired
models of engagement, and KPI’s and metrics for success.
v.Develop a comprehensive engagement strategy complete with governance, staffing, budget,
and program implications.
b.DMC needs to identify the most effective path forward for completing this work, options include:
i.Build it internally.
ii.Partner with industry organizations suited to the task (Medical Alley Association/ Global
Institutes for Innovation Districts).
iii.Hire third party consultants to complete parts of the data gathering.
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2025 DMC CIP, Work Plan, and Operating Budget
To: DMCC Board of Directors
From: DMC EDA
Date: May 16, 2024
Request of the board of directors:
Identify 2-3 board volunteers to advise staff in preparation of 2025 DMC CIP, Work Plan, and Operating
Budget.
Background:
Each year, the DMCC must prepare and submit a DMC CIP, Work Plan, and Operating Budget to the DMC
Corporation. The submission includes a proposed:
•Capital Improvement Program (with five-year projections)
•Workplan and operating budget
•Operating budget for the City of Rochester’s DMC Project Management team
•Request for the extension of a working capital loan
This year, staff anticipate that capital and programmatic priorities will remain largely unchanged—except
for possible revisions to accommodate 2025 “Bold. Forward. Unbound. in Rochester” construction
activities—pending board consideration of the 2025 update to the DMC Development Plan.
Next Steps:
•May-August 2024: Staff and board members prepare the 2025 DMC CIP, Work Plan, and Operating
Budget
•September 26, 2024: DMCC board reviews the 2025 DMC CIP, Work Plan, and Operating Budget
•October 2024: Rochester City Council considers 2025 DMC CIP, Work Plan, and Operating Budget
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2025 DMC Development Plan Update
To: DMCC Board of Directors
From: DMC EDA
Date: May 16, 2024
Request of the board of directors:
No action requested.
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
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Next Steps:
Using the DMC Initiative goal of a world class downtown experience as our guidepost, staff proposes
developing a set of measurable data streams that provide proxies for a vital downtown experience, and to
either continue or begin tracking these metrics and use them to guide our strategic priorities in the
second half of the DMC Initiative. It is anticipated that this work will roll up to a set of metrics as follows:
Foot Traffic: Counting pedestrian volumes at different times of the day and year.
Dwell Time: Documenting how long people linger and engage in activities, such as shopping, dining,
socializing, or enjoying public spaces to help gauge the attractiveness and usability of the street
environment.
Retail Sales and Economic Activity: Monitoring retail sales, occupancy rates, and the presence of
businesses.
Public Space Utilization: Assessing the utilization of public spaces, such as parks, plazas, and seating
areas, through observation, surveys, or occupancy sensors, providing insights into how well these spaces
are meeting the needs of residents and visitors.
Community Engagement: Gathering feedback from residents, business owners, and visitors through
surveys, focus groups, or community meetings can help understand perceptions of street life and identify
areas for improvement.
Safety and Perception of Security: Monitoring crime rates, incidents, and perceptions of safety among
residents and visitors helps assess the overall quality of the street environment and the sense of security
it provides.
Accessibility and Mobility: Evaluating the ease of access for pedestrians, cyclists, and public transit users,
as well as the availability of amenities such as seating, shade, and restrooms, contributes to a more
inclusive and user-friendly street environment.
Environmental Quality: Assessing factors such as air and noise pollution, greenery, cleanliness, and the
presence of amenities like street trees and public art enhances the overall quality of the street life
experience.
Cultural and Social Diversity: Recognizing the presence of diverse communities, cultural activities, and
social interactions fosters a sense of inclusivity and belonging in the downtown area.
Timeline:
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.
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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)
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Chateau Theatre
To: DMCC Board of Directors
From: DMC EDA
Date: May 16, 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 HVAC system has been installed.
o All major planned construction is complete for this year.
-The historic Chateau Theatre is open daily for guests to explore the space and shop at Threshold Art’s art local
artist boutique. The Chateau holds many events for the community and visitors as well.
o Events include:
Theatre productions
•Absolute Theatre
Thaw Music Festival
Art Exhibitions
Burlesque Show
Puzzle nights
Poetry Events
Rochester Civic Music
Yoga
Concerts
Art and Food Market
•Nourish & Nurture: A Mother’s Day Market
Community events
•DMC hosted events along with We Bike Rochester, Henry Grabar
-Two notable events:
o Recently Gwen Westerman, Minnesota’s poet laureate and contributor the art A Song for Water in the
Peace Plaza, participated in a poet event in the Chateau
o DMC sponsored speaker, Henry Grabar events along with We Bike Rochester
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.
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Discovery Square – Shared Lab Project
To: DMCC Board of Directors
From: DMC EDA
Date: May 16, 2024
Request of the board of directors:
No action requested.
Background
•What it is: Community infrastructure of shared laboratory space for life sciences startups for technology, workforce,
and economic development
•Objectives of this infrastructure:
o Attract early-stage companies and the follow-on economic impacts.
o Advanced training for workforce development.
o Be a resource for businesses and the community.
o Market analysis and demand study (reported previously) identified opportunities around development of
affordable, flexible, wet lab space to support early-stage science companies.
Status
•Negotiations with potential operator are on pause, by mutual agreement. Real estate negotiations have not been
productive despite a highly competitive proposal. Absent progress, staff has begun exploring alternative
approaches.
Next Steps
•To move the project forward, there are some lines of inquiry DMC staff need to pursue, such as:
o What are the true demand drivers for how the space functions? We need to confirm whether this is a ‘dry lab’, a
‘wet lab’, or a hybrid of the two.
o We plan to convene an advisory group to help us better understand the kind of operator partner will best serve
our ecosystem.
•In the meantime, we are considering prototyping a shared lab with a smaller footprint to accomplish the following:
o Alleviate pent-up demand.
o Test out operating models.
o Be an asset that we can include in our business awareness and recruitment campaigns.
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District Energy
To: DMCC Board of Directors
From: DMC EDA
Date: May 16, 2024
Request of the board of directors:
No action requested.
Project Updates:
1.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. To create a Thermal Energy Network (TEN) and install the heating hot water and
chilled water pipes, DMC investment totaling $7.2 million was approved in the 2024 DMC CIP.
2.The City of Rochester is preparing for Phase 2 of the Downtown Building Energy Transition (DBET) project, which will
include Rochester Public Library, Rochester Art Center, Mayo Civic Center and the Civic Theater.
3.Phase 2 is designed with a connection point and infrastructure to support development on the adjacent Civic Center
Lot parcel. It will also support additional wells on site for a future TEN.
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
•2024: Downtown Building Energy Transition Phase 2
o January: Phase 2 budget approved
o March: Request for Qualifications for construction management services
o June/July: Phase 2 out for bid
o August: Phase 2 construction begins
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.
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Map: Thermal Energy Network 1
•Orange line: DBET Phase 2
•Green line: Future Thermal Energy Network (TEN) 1 (with proposed connection opportunities)
Map: Full proposed downtown Thermal Energy Network (TEN) System
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Equitable Economic Development
To: DMCC Board of Directors
From: DMC EDA
Date: May 16, 2024
Request of the board of directors:
No action requested.
Workplan Update:
1.Community Co-Design Updates:
a.DMC EDA hosted a graduation celebration for the third cohort of Community Co-design Facilitators
on May 15, 2024. The participants included United Way of Olmsted County, Olmsted County, Cradle 2
Career, Rochester Public Schools, IMAA, Mayo Clinic, and NAACP.
b.We will offer the Community Co-design Leadership Training in October 2024. The training will consist
of two sessions of over five hours total to provide leaders in our community with introductory
information about Community Co-design. The total number of community leaders who received the
training so far is 68.
c.Community Co-design Toolkit was featured in the City Nation Place’s Citizen Engagement Toolkit. City
Nation Place is an international forum “for cities, nations, and places to collaborate and share best
practice on place branding and place marketing strategies in order to generate sustainable economic
development, improve the quality of life for citizens, and encourage global cooperation.”
Here is the link to the toolkit: cnp-citizen-engagement-toolkit-v4.pdf
(dkf1ato8y5dsg.cloudfront.net)
2.Equity Alliance Updates:
a.Equity Series: We continue to host the Equity Series on the 2nd Wednesday of every month, and we
have been successful in convening leaders from City of Rochester, RAEDI, Rochester Area Foundation,
Mayo Clinic, United Way, Rochester Public Schools, Olmsted County, and many other organizations
and non-profits to attend the virtual series. The topics we covered so far in 2024 are: Advancing
Equity in the Built Environment, How We Rise: Lessons from Rochester’s Black History, Uncovering
Rondo Community Land Trust and the Reparative Framework, and Empowering Women in the
Workplace. Our next episode will be on May 8, 2024 from Noon to 1pm.
b.Equity Alliance Growth: City of Rochester and DMC EDA continue to share DEI best practices through
the Equity Alliance. We invited many organizations in Rochester to join this effort to collaborate and
partner in achieving the following initiatives:
i.Co-design (Use and Training).
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ii.Coalition Building (Interest in DEI, Community of Practice).
iii.Equitable Policy Transformation/Improvement & Change.
3.Community Connections and Capacity Building:
a.Black Excellence Expo: In partnership with the Rochester NAACP Branch, City of Rochester, Minority
Owned Business Network, we hosted the Black Excellence Expo in Two Discovery Square on February
24th, 2024. The expo aimed to support and promote local black-owned businesses, and to celebrate
achievement, creativity, and entrepreneurship.
b.Targeted Business/Targeted Workforce Goals and Reports: The recommended project cost
minimum threshold for 2024 is: $500,000.
Professional Technical & Construction Administration Projects
Goals Results on Active Projects (as of March 2024)
Targeted Business Contracts: 7% 6.7%
Workforce Participation (Women): 9% 34.2%
Workforce Participation (Minorities): 15% 14.2%
Construction Projects
Goals Results on Active Projects (as of March 2024)
Targeted Business Contracts: 7% Commercial 19%
Targeted Business Contracts: 4% Heavy Civil 5.3%
Workforce Participation (Women): 9% 5%
Workforce Participation (Minorities): 15% 8%
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 hosted the Real Estate Summit on April 24th, 2024, in partnership with ULI.
We curated a program that included a presentation from Mayo Clinic’s Bold Forward Unbound,
UMR’s Growth and Expansion, and City of Rochester’s Preparing for Transformation. We invited our
local partners (City of Rochester, Coalition of Rochester Area Housing, First Homes Program) to
discuss equity in development, sustainability, and the unified development code, and provide the
attendees with local resources and valuable information.
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Minnesota MedTech 3.0
To: DMCC Board of Directors
From: DMC EDA
Date: May 16, 2024
Request of the board of directors:
No action requested.
Background
•The U.S. Economic Development Agency 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.
•The grant opportunity is for $40-70M over 2-5 years for each of 5-10 regional tech hubs.
•The Minnesota Tech Hub, referred to Mn MedTech 3.0 (MMT3.0) is based on 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.
•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.
•Rochester representation in final grant application
o Final MN grant application includes the Northstar Data Alliance, featuring Mayo Clinic Platform
•DMC EDA commitments to MMT3.0
o Recruit technology and talent from international markets into the MMT3.0 ecosystem.
o Build market awareness in international markets.
o Participate in co-creating a new talent development strategy.
o Participate in the development of a shared MMT3.0 economic development strategy.
o Function as an official MMT3.0 embassy, including provision of meeting space for MMT3.0 members.
o Participate in the development of Minnesota’s first comprehensive Smart MedTech infrastructure plan.
o Sharing tools with and facilitating training to MMT3.0 project leaders for our ground-breaking Community Co-
Design engagement process.
Next Steps and Timelines
•Await Federal response to grant application, summer 2024.
•GMSP spearheading early launch activities around workforce development, capital development, early stage
company incubation, and data/AI. This aligns with the perspective that our region will pursue MMT3.0 with our
without Federal funding.
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Link Bus Rapid Transit
To: DMCC Board of Directors
From: DMC EDA
Date: May 16, 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.
Rapid Transit Vehicle Procurement
-City, DMC and Mayo Clinic staff are currently reviewing the proposal from New Flyer of America, the
only respondent to the city’s RFP for bus procurement.
-There are only two companies in the United States that meet the Federal requirements to respond.
-Negotiations to enter into a contact are on going and expected to be completed by May 2024.
-Once a contract is executed, vehicle design elements will be determined.
Vehicle Design Overview:
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
Timeline:
-Contract execution, June 2024
-Design and refinement, Summer – Fall 2024
-Vehicle production, Winter 2025
-First rapid transit vehicle delivery, Aug 2025
Budget:
-Link rapid transit vehicle budget $22,500,000
Right of Way (ROW) / Land Acquisition
-Negotiation with Property Owners is ongoing and expected to be completed this spring.
-Closing & Recording of Properties–August 2024
Construction Management Services Contract
-City Council authorized a contract with Kimley-Horn and Associates, Inc. for Construction Management
Services as a professional services agreement to review design documents, construction plans and
specifications, complete construction management services of contracts and close-out and deliver the
Link Rapid Transit Project
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Active Transportation Program Planning Assistance Grant
-Matt Tse, active transportation coordinator, working on DMC projects, is administering the grant which
focused on the 2nd street BRT corridor.
o Analyze existing conditions
o Engage the community
o Identify ways to improve infrastructure
o Identify ways to encourage active transportation
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.
Current Status:
Next Steps:
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Public Realm: Discovery Walk
To: DMCC Board of Directors
From: DMC EDA
Date: May 16, 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 summer of 2024 including final planting, road
striping, site element placement, and installation of the climate accommodating structures.
•The 200 block of 2nd Ave. SW is back under construction. Crews are finishing underground work
and will begin surface level improvements soon.
•Multiple community events are being planned for the summer including:
o Artist recognition events
o Opening of the food truck area
o The potential of a weekday farmers market
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.
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Public Realm: Downtown Riverfront
To: DMCC Board of Directors
From: DMC EDA
Date: May 16, 2024
Request of the board of directors:
No action requested.
Background:
To create a bold vision for future use of the Riverfront Small Area Plan site, it will be essential to leverage both
the east and west sites together. The east-side focus being higher density and the west-side focused on civic and
community engagement.
Update:
Gamble Associates continues to make progress on their current scope of work that includes:
-Working with the Army Corps of Engineers
-Advancing design of the site
-Evaluating the integrity of existing structures
-Pre-development investment strategy
City of Rochester in collaboration with Destination Medical Center is working with Hunden Partners to provide
preliminary market assessments and strategic advisory related to a developer RFQ/P solicitation and selection
process for the redevelopment/reuse of the two city-owned riverfront parcels. The assessment will offer
detailed information regarding the timing of the release of an RFQ/P and the current market environment.
.
Fulfilling the DMC Vision, Mission, and/or Goals:
DMC EDA staff worked in collaboration with City staff to select the consultant team, and staff will continue to
participate through the planning and development process. DMC is particularly focused on the public realm
experience and linkages between this site and the rest of the district.
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Approvals, milestones, and decision points:
When the 2023 CIP was presented for Board approval in fall 2022, the next steps required to advance riverfront
planning were adopted. The current status is shown below:
Steps adopted in 2023 CIP Current Status
Interim activation (in partnership with the Rochester
Downtown Alliance and other organizations)
Budget for 2024 pre-development infrastructure has
been adopted, City developing workplan for
implementation
Advance flood wall work with Army Corps of
Engineers
Multiple meetings with the Army Corps have led to
greater understanding of site needs and constraints,
consultant team will be packaging up the resulting
information before year end for presentation
Due diligence analysis of former Red Owl and Time
Theater buildings
Building condition assessment and cost estimation
are being finalized, consultant team will be packaging
up the resulting information before year end for
presentation
Continue discussions with Olmsted County regarding
county-owned portion of the site
Site has been purchased from the County for
$450,000
East site preparation Site survey, Geotech information is being finalized,
consultant team will be packaging up the resulting
information before year end for presentation
Prepare developer RFQ/RFP Concept plans are being finalized
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Public Realm: Heart of the City
To: DMCC Board of Directors
From: DMC EDA
Date: May 16, 2024
Request of the board of directors:
No action requested.
Background:
Heart of the City Phase 1:
-Construction Update:
o Catenary lights are now installed.
-Paver Update:
o 2 project teams are working together to address the condition of the pavers. The City and DMC are
expecting a report from Braun Intertec Corporation that identifies the issues where pavers are not
performing as expected. Fixing of these areas are expected to take place this spring.
o A workgroup with members from the design team has also been formed to identify solutions regarding
the community’s concerns related to the raised lettering. It is anticipated that a report will be available
for review at the summer.
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.
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Public Realm: Soldiers Memorial Field Park
To: DMCC Board of Directors
From: DMC EDA
Date: May 16, 2024
Request of the board of directors:
No action requested.
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.
Project Update:
Construction activities continue at Soldiers Field Memorial Park. The park improvements are on schedule as well as the
highly anticipated aquatics area. The contractor is prepping the east playground for the addition of new inclusive play
equipment and new surfacing throughout. On the west side of the park the new picnic shelter and restrooms are taking
shape with roofing to take place soon. The basketball court will be paved next week followed by fencing and striping.
Updates to the added and improved trails are also underway.
DMC EDA staff recently learned of the upcoming RPU duct bank project that will be starting construction on the far east
side of the park. This project was scheduled to start last year but was delayed due to another portion of the duct bank
project being impacted by an archaeological finding causing a pause in the project. Both project teams are working
closely together to create a phasing strategy to limit the impact of the project.
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
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Private Development
To: DMCC Board of Directors
From: DMC EDA
Date: May 16, 2024
Request of the board of directors:
No action requested.
Background:
DMC EDA staff evaluate submitted project proposals against the priorities set by the DMCC 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
•Leveraging existing infrastructure investments to catalyze more opportunity
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
A request for action on this project is scheduled for the May 2024 DMCC
meeting.
A request for action for this project is included in these meeting
materials.
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Gerrard 2nd Street
Proposing a mid-to-large apartment building (~125 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 and it is anticipated that there would be
a DMC request to support the land and construction of this public
connection, which would be deeded to the City while the developer
would oversee ongoing maintenance for a term of at least 20 years.
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.
A request for action on the first phase of affordable housing within this
project is included in these meeting materials.
CityWalk Apartments
This is an approximately 400-unit market rate apartment building on the
south side of 2nd Avenue and 6th Street. They have received Main Street
grant funding for the enhanced public realm space on the corner.
YMCA Development
Redevelopment of the downtown YMCA site into approximately 215
units of multifamily housing including some ground floor live-work
spaces.
Demolition is complete and construction currently underway.
HOSPITALITY
Olmsted Bank Building
The project was awarded $300,000 in Main Street Grant funds.
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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.
OFFICE/LAB
Three Discovery Square An application has been submitted for Mortenson’s DS3 project that
proposes a 7-story speculative building that is half lab space half CGMP
space (clean manufacturing). DMC EDA staff is in early review of the
submitted materials along with City staff.
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.
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Downtown Task Force Update
Grow Downtown Together Workgroup
To: DMCC Board of Directors
From: DMC EDA
Date: May 16, 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.
Task Force Progress:
City Updates
-RPD is once again launching its Downtown Summer Safe Zone initiative to enhance safety
throughout the warmer months during weekend bar closing time. In 2023, the initiative included
downtown coverage amounting to more than 2,000 hours by Downtown Resource Officers and
reallocated staff.
-The City has added 2 landscape techs in 2024 to support the downtown area.
-There is several million dollars in improvement work happening at the Center Street and 2nd
Street ramps including aesthetic improvements.
-Parking has updated their security contract for overnight hours and it is in the ongoing operating
budget.
-LINK Rapid Transit is adding 6 officers and a sergeant focused on the route and the walkshed.
The COPS grant allows for that to start before the route is operational. We still need to finalize
the COPS grant agreement and go through hiring.
Awareness Campaign
-The task force is working with Twin Cities Business Journal Magazine to create an insert about
the opportunities for growth in Rochester. It is expected to be the June/July issue.
Grown Downtown Together
-DMC and RAEDI continue to host the Grow Downtown Workgroup on a monthly basis. The
workgroup provides feedback and guides related to the Grow Downtown Effort.
-Mike Flynn is now leading the recruitment strategy for Retail, Entertainment and Dining (see
one-pager)
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