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Home My WebLink About9/26/2024 DMCC Board of Directors Meeting - PresentationDMC Corporation Board of Directors Meeting Thursday, September 26, 2024 ©2024 CliftonLarsonAllen LLP. CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer. Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor. September 2024 Destination Medical Center Corporation ©2024 CliftonLarsonAllen LLP Form 990 Overview –Key Areas 2 ©2024 CliftonLarsonAllen LLP 3 Part III – Mission and Program Service Accomplishments •The Form 990 is the annual tax return filed with the IRS for organizations that have been granted tax-exempt status o It tells the organization’s story (mission, financial, leadership, funders, and community it serves) •Part III – Question 1: (page 3) – statement of DMCC’s organizational purpose •Part III – Question 4a: (page 3) – annual program service accomplishments o Narrative can be updated each year to list what activities were conducted. o Can go into specifics (number of projects, communities service, etc.) ©2024 CliftonLarsonAllen LLP 4 Part VI – Governance, Management, and Disclosure •Section A & B (page 6) – describes what type of governance the organization has, and oversight conducted o Question 11a/b – describes the process for board review of the 990 prior to submission o Question 12a/b/c – describes the organization’s conflict of interest policy and how that is monitored ©2024 CliftonLarsonAllen LLP 5 Part VII – Board Listing & Independent Contractors •Section A (page 7) – lists all board members that served in a voting board member capacity during 2023 o No individual was compensated for their time as a board member •Section B (page 8) – lists any independent contractor that was paid more than $100,000 for services during 2023 ©2024 CliftonLarsonAllen LLP 6 Part VIII, IX and X – Financial Information •Part VIII (page 9) – Statement of Revenue •Part IX (page 10) – Statement of Functional Expenses o Program expenses = 93.10% o Management expenses = 6.89% •Part X (page 11) – Balance Sheet ©2024 CliftonLarsonAllen LLP 7 Schedule A – Public Support Test & Schedule B – Contributor Information •Schedule A, Part II (page 2) – shows the organization’s support from the public over a 5 year historic period o DMCC is 100% supported by funds from the City of Rochester o Public Support Percentage test for 2023 (line 14) = 100% must be at least 33% to pass test o Other revenue minimal (line 9) – interest income •Schedule B, Part I (page 2) – lists revenue received from donors o DMCC is 100% supported by funds from the City of Rochester o Historical context – creation of DMCC/funding process ©2024 CliftonLarsonAllen LLP 8 Schedule O – Narratives to Form 990 •Schedule 0 – continuation of narratives from questions throughout Form 990 o Examples: How the executive committee is comprised How the board of directors are appointed How the board reviews a draft of the 990 ©2024 CliftonLarsonAllen LLP 9 Schedule R – Related Organizations •Schedule R, Part II – lists the related organization to DMCC: Destination Medical Center Economic Development Agency •Schedule R, Part V – lists the types of transactions between DMCC & DMCEDA ©2024 CliftonLarsonAllen LLP 10 IRS Form 990 - Summary •Filing deadline is November 15, 2024 •Once board approves, CLA will gather signatures and electronically file the 990 with the IRS ©2024 CliftonLarsonAllen LLP 11 Minnesota Charitable Organization Annual Report •Page 1, Line 6 – no changes to tax exempt status •Page 1, Line 7 – no changes to purpose or programs •Page 2, Line 8 – no changes in ability to solicit contributions •Page 2, Line 11 – no compensation paid in excess of $100,000 •Page 3, Line 13 – new in 2023 – organizations are required to disclose all banks where funds are deposited ©2024 CliftonLarsonAllen LLP 12 Minnesota Charitable Organization Annual Report - Summary •Filing deadline is November 15, 2024 •Once board approves, signatures needed on page 5 of the report, and then organization to submit (paper) & pay $25 registration fee ©2024 CliftonLarsonAllen LLP •Filed online with Minnesota Secretary of State •In good standing through December 31, 2024 •Annual renewal to be filed (online) for 2025 Minnesota Secretary of State – Annual Renewal 13 ©2022 CliftonLarsonAllen LLP. Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor. CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer. CLAconnect.com CPAs | CONSULTANTS | WEALTH ADVISORS ©2024 CliftonLarsonAllen LLP. CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer. Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor. THANK YOU Craig Popenhagen, CPA Principal Craig.Popenhagen@claconnect.com 507-280-2327 Katherine Lutzke, CPA Director Katherine.Lutzke@claconnect.com 507-280-2314 14 DMC Corporation Board of Directors Meeting Thursday, September 26, 2024 September 2024 METRICS: Job Growth 1.COMPREHENSIVE STRATEGIC PLAN: Create a comprehensive strategic plan with a compelling vision that harnesses the energy and creativity of the entire region. 2.ATTRACT PRIVATE INVESTMENT: Leverage public investments to attract more than $5 billion in private investments to Rochester. 3.CREATE JOBS: Create more than 30,000 new jobs, with workforce development strategies that support that growth. 4.GENERATE ADDITIONAL NET TAX REVENUE: Generate approximately $7.5–$8.0 billion in new net tax revenue over 35 years. 5.BECOME THE DESTINATION FOR HEALTH & WELLNESS: Achieve the highest quality patient, visitor, and community member experience both now and in the future. DMC GOALS THE PATH TO 30,000 JOBS OVER 20 YEARS 1,500 3,000 4,500 6,000 7,500 9,000 10,500 12,000 13,500 15,000 16,500 18,000 19,500 21,000 22,500 24,000 25,500 27,000 28,500 30,000 2,300 4,200 4,900 6,000 7,700 0 5,000 10,000 15,000 20,000 25,000 30,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Target Actual WHERE ARE WE AT TODAY - ORGANIC •3.7% job growth between January 2020 and July 2024 in the MSA •6.5% in the past 24 months •“The Rochester MSA has added nearly 5,700 jobs since July 2023 for a job growth rate of 4.7%” •Average annual job growth over the past 10 years is ~1,600 in the MSA Source: Census Seasonally Adjusted Monthly Employment by Industry, Rochester MN MSA COMPONENTS OF JOB GROWTH Induced Job Growth Notes: Mayo Clinic job growth above 2014 baseline with the City of Rochester; Organic and Recruited job growth annually counted within the DMC District Organic Job Growth (non-Mayo) LIMITATIONS WITH DATA COLLECTION 1.Data Lag 2.Access to private employer job data 3.Geographic units (MSA/County/City/DMC) BUILD AWARENESS •Mayo Clinic •Medical Alley •DMC BUILD ECOSYSTEM •Define •Engage •Improve BUILD INFRASTRUCTURE •Turn -key lab •10-year plan •Industry association. HOW WE INDUCE JOB GROWTH •Ensure we achieve the goal of 1,500 new jobs per year •Diversify Rochester’s local economy •Respond to the local desire for more employment options •Retain locally created innovations WHY BUSINESS DEVELOPMENT? MEDTECH & LIFE SCIENCES ECOSYSTEM 15 LG CAMPAIGNS 1,000 COMPANY’S PITCHED 250 LEADS GENERATED 30 INDUSTRY EVENTS 100 AMPLIFIER VISITS 200+ ECOSYSTEM PARTNER CONNECTS 6 ECOSYSTEM EDUCATION EVENTS 3 ECOSYSTEM AWARENESS EVENTS 2 ECOSYSTEM RESEARCH PROJECTS 2025 ACTIVITY METRICS EARLY SUCCESSES 132 LEADS 800 PITCHES 30 EVENTS 15 CAMPAIGNS TECHNOLOGY AREAS •Regenerative Medicine: biomanufacturing, biopharma, transplants •Diagnostics: tests, devices, processes •Medical Device: implantable, tech enabled, AI enabled •Drug Discovery: cancer, immunotherapies, CAR-T •Automation and Operational Tech: healthcare automation, “not enough hands” JOB PROFILES & CHARACTERISTICS •Scientific and business roles •MD/PhD/MBA for senior roles •BS/MS in Engineering/Biology/Chemistry •Research/Lab Technician roles at various levels (bench skills) •Quality Assurance and Quality Control •Fractional management •Strategy support, product design/engineering, manufacturing, IT •Non-technical service and support jobs •Continue to develop BD processes to increase induced job growth •Expand key Mayo Clinic partner relationships •Build the necessary job growth infrastructure •Expand local talent pipeline partnerships •Build a better regional higher education network to connect employers and talent NEXT STEPS DMC Corporation Board of Directors Meeting Thursday, September 26, 2024 Housing as Infrastructure September 2024 DMC Development Plan Goals for Residential 2015-2019 2020-2024 2025-2029 2030-2035 •A total of 1,200 units by the end of 2024 to be on track with the DMC Development Plan •The Olmsted County Housing Needs Assessment points towards revised goal of 4,000 units (for this Board to consider as part of 2025 update) Community Priorities 1.Create new homeownership opportunities 2.Increase homeownership for People of Color 3.Create housing for people at 50% AMI or less 4.Enhance housing options for seniors 5.Preserve our affordable housing stock Downtown Housing since 2015 Year Project Units Rent Restricted Ground floor commercial TIF DMC GSIA public $/unit 2017 Lofts at Mayo Park 29 No No $350,000 $0 $12,069 2017 1st Avenue Flats 68 Yes all 60% AMI units No $435,421 $0 $6,403 2018 501 on First 84 No Yes $1,718,046 $0 $20,453 2018 Flats on Fourth 92 Yes 19 units at 50%AMI Yes $1,725,000 $0 $18,750 2018 Riverwalk 152 No No $1,575,000 $0 $10,362 2018 Avani Living 107 Yes 22 units at 60% AMI Yes $3,564,728 $0 $33,315 2019 Ronald McDonald House 32 Yes Philanthropic No $0 $0 $0 2019 The Maven 155 No Yes $3,800,000 $0 $24,516 2020 Residences at Discovery Square 138 Yes 29 units at 60% AMI Yes $1,950,000 $0 $14,130 2020 The Berkman 347 No Yes $10,500,000 $0 $30,259 2020 The Hue 50 No Yes $0 $0 $0 2023 Bryk on Broadway 180 Yes 54 units @ 50% AMI, 18 units @ 60% AMI and 108 units @ 80% AMI Yes $2,237,354 $2,200,000 $24,652 2025 Enclave Project (YMCA)219 No No $0 $0 $0 TOTAL 1,653 $27,855,549 $2,200,000 $18,182 Project pipeline Project Name Type Units Planned Occupancy Civic Center North Multifamily 243 2026 Affordable 76 2027 West Transit Village Multifamily 276 2027 Affordable 92 2028 Affordable 94 2027 Citywalk Multifamily 400 2027 R&R Properties Multifamily 94 2026 Confidential Multifamily 200 Planning Confidential Multifamily 125 Planning Confidential Affordable 250 Planning subtotal 1,850 Today’s Discussion •Take Action on Submitted Project Application R&R Properties of Mankato Request Requesting $8.44 million of DMC funds plus $3+ million of city Tax Increment Financing. •New construction of 94 units of rental housing with parking •Blighted parcel improvement •Commitment to meet Sustainability Goals •Commitment to meet Targeted Business Requirements •Walkability to downtown and employment •Woman-owned development company Project Details Project Funding Sources Requested $17.4M HUD Loan (51%) $3.4M City TIF (10%) $8.44M DMC GSIA (25%) $4.9M Developer Land Equity + fee (15%) Project Review – Baker Tilly Guidance Consideration Baker Tilly guidance on Municipal Best Practices Project Request Public to private investment ratio Public Participation limit of 10% as generally acceptable level 35% Subsidy per unit Determine if reasonable At $120,000/unit it is multiple times higher per unit than any precedent Other identified public improvements Identify and quantify costs None Developer Cash Equity contribution Minimum of 10% is often used Developer is contributing only land and fee, not cash Purchase price and other development costs Determine if reasonable Land costs per unit are quite high – appraisal still underway Leveraged and Unleveraged IRR Benchmark Projections are higher than benchmarks Extraordinary costs Evaluate Market conditions are the indicated main driver + parking Operating Assumptions Rental rates, operating costs Reducing vacancy rates, operating costs would impact feasibility •Market rate housing project in well-established area •Design does not yet meet City guidelines at street level •No commercial space included along Discovery Walk •Parking is almost 1:1 ratio per unit Additional Considerations While this project aligns with market needs, it does not rise to the level of extraordinary or catalytic development to merit DMC Infrastructure dollars - Project-specific review - Opportunity costs - DMCC practice and priorities - Prior infrastructure investment DMC EDA Recommendation: DMC Corporation Board of Directors Meeting Thursday, September 26, 2024 DMC HISTORIC PROPERTY SUPPORT DMCC Board Meeting Sept 2024 TODAY Background1 Community Response2 Project Review3 Discussion + Recommendation 4 Recommendation to: •Designate the proposed development as a DMC “public infrastructure project” •Approve the recommended project as consistent with the DMC Development Plan •Allocate DMC-requested funding to the project Requested Action 216 1st Ave SW: Bebap Korean Eats, 1928 Cocktails + Bites Project Consideration City Council Oct HISTORIC DISTRICT TIMELINE DMCC •5+ property owners submitted intake forms •1 funding application ready for DMCC board consideration Community Response © 2017 DMC Funding Application If approved for funding, the project will be required to meet DMC development requirements, including: •Prevailing wage •American-made steel •Targeted business and workforce utilization •Sustainable building standards Address Project Description Category of Investment Total Project Cost Recommended DMC Funding 216 1st Ave. SW Roof Replacement Building Safety & Preservation $168,824 $84,912 Discussion … Recommendation to approve : •Designate the proposed development as a DMC “public infrastructure project” •Approve the recommended project as consistent with the DMC Development Plan •Allocate DMC funding to the project DMC Corporation Board of Directors Meeting Thursday, September 26, 2024 2025 DMC CIP, Work Plan, and Operating Budget SEPTEMBER 2024 REQUESTED ACTION •Approve proposed: •Capital Plan •Work Plan •Operating Budgets •Working Capital Loan TIMELINE •May 23: DMCC board and joint meeting •June-July: Staff preparation •August 7: Board working group meeting 1 •August 21: Board working group meeting 2 •September 12: DMC EDA board consideration •September 26: DMCC board consideration •October 7: City Council consideration DMC FUNDING BALANCE Source Total Available 2015-2024 Total Committed Proposed 2025 Capital Plan Amount Remaining General State Infrastructure Aid $327,000,000 $133,292,308 $7,600,000 $186,107,692 * City DMC Aid $128,000,000 $68,385,646 $4,675,660 $54,938,694 ** State Transit Aid $69,600,000 $28,190,758 $21,162,437 $20,246,805 *** County Transit Aid $46,400,000 $13,323,482 $4,948,292 $28,128,226 State Sales Tax Exemption $14,000,000 $0 $0 TOTAL $585,000,000 $243,192,194 $38,486,389 $289,421,417 * Does not include remaining commitment to Sixth Street Connectivity ($3.5M) **TIF payment figures will be updated annually ($33.9M in remaining DMC-eligible payments) *** Does not include remaining commitment to Link BRT ($7.05M) 2025 CIP PRIORITIES •Advance prior-approved projects –Chateau Theatre –Link BRT –6th Street •Advance time-sensitive projects –West Transit Village –Bold. Forward. Unbound. •Reserve resources pending 2025 DMC Plan Update Proposed 2025 DMC Capital Plan PROJECT RECOMMENDED FUNDING SOURCE Interim Wayfinding $100,000 General State Infra. Aid Strategic Development $3,000,000 General State Infra. Aid Chateau Theatre $100,000 General State Infra. Aid Sixth Street Connectivity $2,500,000 General State Infra. Aid Supporting Infrastructure, Unbound $1,000,000 General State Infra. Aid Supporting Infrastructure, WTV $1,000,000 General State Infra. Aid Link BRT $12,370,729 State, County Transit Aid FTA -required BRT contingency $13,740,000 State Transit Aid City of Rochester Admin. Support $100,000 City DMC Aid DMC Corp. Operations $229,887 City DMC Aid City DMC Project Management $1,361,141 City DMC Aid DMC EDA $2,984,632 City DMC Aid TOTAL $38,486,389 Interim Wayfinding •2025 Request: •$100,000 •What Might Come: •Additional wayfinding resources may be required throughout the duration of major construction •Addresses wayfinding not already covered through construction contracts Strategic Development •2025 Request: •$3M •What Might Come: •There are several projects currently in active development downtown •Affordable housing and bio-med-tech are DMCC priorities •Depending on project timing & scale, these funds will allow the DMCC and City Council to be responsive to this market interest Chateau Theatre •2025 Request: •$100,000 •Funding will provide for capital and operating planning •What Might Come: •In September 2023, the DMCC board made future funding contingent upon further definition of future capital needs, potential funding sources, anticipated uses, operating and business model, and expected operating duration •Anticipated longer-term public ownership •Current management agreement expires 2025 Sixth St. Connectivity •2025 Request: •$2.5M for design and construction •Not *new* funding •What Might Come: •Future annual CIP will continue to count toward the $10M grant match Physical & Technical Infrastructure to Align Major Private Investment: Bold. Forward. Unbound. •2025 Request: •$1M •What Might Come: •Significant additional public infrastructure investments may be recommended •15 blocks under construction in 2025 •8 blocks under construction in 2026 Physical & Technical Infrastructure to Align Major Private Investment: Bold. Forward. Unbound. •Aligned Area of Community Investment, 2024-2026 •Prioritizing Projects: •Necessary •Project Optimization and Future Capacity •Community Enhancement Physical & Technical Infrastructure to Align Major Private Investment: West Transit Village •2025 Request: •$1M •What Might Come: •Additional investment may be recommended as site development plans are finalized •2025 development-ready infrastructure: roadway extension, grading, retention pond, sanitary and storm sewer, electrical •Mayo Clinic ramp breaks ground April 2025 •Must be complete by November 2026 to align with LINK BRT Physical & Technical Infrastructure to Align Major Private Investment: West Transit Village Who owns it long- term? Who develops it? Who designs it? Who constructs it? Who maintains it? Mobility: LINK BRT, including Second St SW Reconstruction •2025 Request: •$12.4M of continued authorization; not *new* funding •$13.74M of additional required contingency •What Might Come: •Contingency guidelines and control mechanisms Proposed 2025 DMC Capital Plan PROJECT RECOMMENDED FUNDING SOURCE Interim Wayfinding $100,000 General State Infra. Aid Strategic Development $3,000,000 General State Infra. Aid Chateau Theatre $100,000 General State Infra. Aid Sixth Street Connectivity $2,500,000 General State Infra. Aid Supporting Infrastructure, Unbound $1,000,000 General State Infra. Aid Supporting Infrastructure, WTV $1,000,000 General State Infra. Aid Link BRT $12,370,729 State, County Transit Aid FTA -required BRT contingency $13,740,000 State Transit Aid City of Rochester Admin. Support $100,000 City DMC Aid DMC Corp. Operations $229,887 City DMC Aid City DMC Project Management $1,361,141 City DMC Aid DMC EDA $2,984,632 City DMC Aid TOTAL $38,486,389 PROGRAMMING AND IMPLEMENTATION BUSINESS DEVELOPMENT EXPERIENCE PROJECT DELIVERY STRATEGIC DEVELOPMENT COMMUNICATIONS AND ENGAGEMENT Allocation of DMC Staff and Work Plan Resources Includes DMC EDA and City DMC Project Management; allocations may adjust as work plans are finalized Business Development and Lead Generation 24% Public Infrastructure Project Management 44% Real Estate Investment and Development 17% Communications 7% Operations 8% BUILD AWARENESS, particularly through international recruitment and Mayo Clinic Innovation Exchange BUILD ECOSYSTEM by inventorying ecosystem assets and needs BUILD INFRASTRUCTURE, including defining a turn-key shared lab model 2025 BUSINESS DEVELOPMENT HIGHLIGHTS PROJECT SUPPORT, including Link BRT, 6th Street Connectivity, West Transit Village, Heart of City, Riverfront, Bold. Forward. Unbound. PROGRAM SUPPORT, including targeted business/workforce utilization capacity building, Downtown Task Force, Historic District infrastructure, active transportation, Business Forward TECHNICAL SUPPORT, including targeted business and workforce compliance tracking 2025 PROJECT DELIVERY HIGHLIGHTS PRE-DESIGN, including pre-occupancy data + analysis DESIGN DEVELOPMENT though a comprehensive prototyping strategy CONSTRUCTION, including Business Forward construction enhancement and mitigation strategies ACTIVATION AND USE, including assessing use cases and post- occupancy analyses 2025 PUBLIC EXPERIENCE HIGHLIGHTS DMC FINANCE, including assessment of available leveraged source and public and private project investment opportunities. PROJECT SUPPORT, including Link BRT, 6th Street Connectivity, West Transit Village, Heart of City, Riverfront, Bold. Forward. Unbound. SUSTAINABLE GROWTH, including energy and mobility improvements EQUITABLE DEVELOPMENT, including workforce and targeted business capacity-building 2025 PRIVATE DEVELOPMENT & INVESTMENT HIGHLIGHTS STRENGTHEN RELATIONSHIPS, with key stakeholders and community partners. ENSURE TRANSPARENT, CONSISTENT COMMUNICATION to keep the public informed and involved. CONDUCT NATIONAL AND REGIONAL MEDIA OUTREACH, to generate development investment interest in the DMC initiative. LEVERAGE THE TEN-YEAR/HALF-WAY POINT OF DMC, to generate new interest 2025 COMMUNICATIONS HIGHLIGHTS DMC Corporation & City Administrative Support •Professional services, including audit/tax preparation, legal counsel •Insurance and required non-profit filings •Board meetings •Board member travel, per diem, reimbursable expenses Proposed 2025 DMC Capital Plan PROJECT RECOMMENDED FUNDING SOURCE Interim Wayfinding $100,000 General State Infra. Aid Strategic Development $3,000,000 General State Infra. Aid Chateau Theatre $100,000 General State Infra. Aid Sixth Street Connectivity $2,500,000 General State Infra. Aid Supporting Infrastructure, Unbound $1,000,000 General State Infra. Aid Supporting Infrastructure, WTV $1,000,000 General State Infra. Aid Link BRT $12,370,729 State, County Transit Aid FTA -required BRT contingency $13,740,000 State Transit Aid City of Rochester Admin. Support $100,000 City DMC Aid DMC Corp. Operations $229,887 City DMC Aid City DMC Project Management $1,361,141 City DMC Aid DMC EDA $2,984,632 City DMC Aid TOTAL $38,486,389 DMC Corporation Board of Directors Meeting Thursday, September 26, 2024