Loading...
HomeMy WebLinkAboutDMCC Resolution No. 167-2025 (Approving Request For Private Development Funding (Loom Apartments Project))DESTINATION MEDICAL CENTER CORPORATION RESOLUTION NO. 167-2025 A RESOLUTION APPROVING REQUEST FOR PRIVATE DEVELOPMENT FUNDING (LOOM APARTMENTS PROJECT) The following Resolution was offered by Douglas Baker, Jr., seconded by Kim Norton. 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, leveraging the public investment to attract private investment, attracting new business, and expanding existing businesses, 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 identified a desired 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 Development Plan further states that Destination Medical Center (“DMC”) funding should provide gap financing to support extraordinary growth in the market. E. The DMCC approved the 2025 Five Year Capital Improvement Plan (the “2025 CIP”) on September 26, 2024 and approved the projects set forth in the first year of the 2025 CIP as public infrastructure projects within the meaning of Minnesota Statutes Section 469.40, subdivision 11, and consistent with the Development Plan. The 2025 CIP was later approved by the City. F. The 2025 CIP provided funding for a Strategic Development Fund, which was first approved in the 2021 Five Year Capital Improvement Plan. The Destination Medical Center Economic Development Agency (the “EDA”) has informed the DMCC that a portion of the funds from the Strategic Development Fund are available for allocation. As set forth in Exhibit A, the EDA requests that the DMC allocate funds in an amount not to exceed $4,000,000 from the 2 Strategic Development Fund to the Proposed Project (as hereinafter defined), subject to the conditions set forth in this Resolution. G. The DMCC is charged with evaluating whether a proposed project (i) is consistent with the DMC vision, goals and objectives; (ii) is consistent with the Development Plan and any updates; (iii) is consistent with adopted strategies, phasing and capital improvement planning; (iv) is financially viable; and (v) complies with or support the economic-fiscal goals and objectives of the DMC initiatives (collectively, the “Evaluation Criteria”). H. Onward Investors, LLC (the “Applicant”) submitted a joint funding application (the “Request”) for funding to facilitate the construction of a multifamily project consisting of 141 units of affordable housing at 50% Area Median Income (the “Proposed Project”). I. Staff from the City and the EDA have reviewed the Proposed Project in light of the Evaluation Criteria. J. The EDA has recommended approval of the Proposed Project based on the summary and recommendations attached hereto as Exhibit A. The recommendation of approval is based on the application of the Evaluation Criteria. K. As set forth on Exhibit A, the Proposed Project sufficiently advances the goals of the Development Plan. L. The DMCC has considered the recommendation of the EDA and based on the materials submitted, has independently evaluated whether the Proposed Project is consistent with the Development Plan and the goals of the DMC. RESOLUTION NOW, THEREFORE, BE IT RESOLVED, by the DMCC Board of Directors, that the DMCC approves the Request based on the following findings of fact: 1. The Proposed Project meets the definition of a public infrastructure project within the meaning of Minnesota Statutes, Section 469.40, subdivision 11. 2. The Proposed Project lies within the Development District. 3. The Proposed Project is consistent with the goals and priorities set forth in the Development Plan. 4. The Proposed Project supports a housing mix which is identified as a priority within the Development Plan. 5. The level of public funding requested is consistent with the economic goals contained in the Development Plan related to public and private investment. 6. The Proposed Project requests up to $4,000,000 in DMC funding. The Proposed Project includes eligible public infrastructure improvements, including, site preparation and 3 remediation, utility connections, streetscape improvements, vacation and utility relocation, site clean-up, sustainable energy systems, and community accessible amenity spaces. The total cost of said public infrastructure improvements exceeds the amount of assistance. 7. The Proposed Project may not proceed without the public funding, and the requested DMC funding will provide gap financing to support extraordinary growth in the market, as contemplated in the Development Plan. 8. The Proposed Project will serve as a catalyst or anchor development in the subdistrict. 9. The Proposed Project provides housing near services and transit and is walkable to the main employment center of the City, satisfying goals and priorities set forth in the Development Plan. 10. The Proposed Project will support the activation of the area through the introduction of commercial space and building amenity uses on street level. 11. The Proposed Project has provided sufficient evidence of financial viability. 12. The Proposed Project supports the economic strategies of the Development Plan by providing uses and 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 Development Plan. BE IT FURTHER RESOLVED, that the DMCC Board of Directors approves allocating funds reserved for the Strategic Development Fund to the Proposed Project in an amount not to exceed $4,000,000 subject to the following conditions: 1. The Applicant must provide evidence of financing for the Proposed Project satisfactory to the DMCC Board of Directors, such evidence to be presented within such time period as set forth in the City’s approved development assistance agreement. 2. The Proposed Project must meet all City requirements, including, without limitation, execution of a development assistance agreement by and between the Applicant and the City. 3. The Proposed Project must meet all conditions set forth in Exhibit A. 4. The Applicant must provide, at the reasonable request of the DMCC, EDA or City, financial and operating progress reports to ensure the Proposed Project, as-built, is consistent with the Proposed Project as approved in this Resolution. 5. Any modification to the scope of the Proposed Project, as set forth in Exhibit A, will be subject to subsequent approval by the DMCC. 6. The Applicant must provide evidence of long-term income affordability criteria and appropriate enforcement as set forth in the City’s approved development assistance agreement. 4 7. The DMCC Board of Directors shall receive periodic updates from the EDA as to the status of the satisfaction of the conditions set forth in this resolution, the Proposed Project expenditures, and the ongoing status of development of the Proposed Project. BE IT FURTHER RESOLVED, that the DMCC Board of Directors hereby authorizes its legal counsel and the EDA to work with the Applicant to structure the assistance being approved per this Resolution appropriately. 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, and to take such actions as are necessary and appropriate to effectuate the findings and approvals of this Resolution. 31645616v3 The question was on the adoption of the Resolution and there were YEAS and NAYS,as follows: BOARD OF DIRECTORS Destination Medical Center Corporation YEA Douglas M.Baker,Jr. James R.Campbell Kim Norton Randy Schubring Mark Thein Pamela Wheelock Paul D.Williams PTED on May 22,2025. \[TEST;y amela Wheelock,Chair Destination Medical Center Corporation NAY OTHER 7 0 X X X X X X X EXHIBIT A Loom Apartments (Onward) To: DMCC Board of Directors From: DMC EDA Date: May 16, 2025 Request of the board of directors: Consider utilization of $4M of General State Infrastructure Aid (GSIA) from the allocated Strategic Development CIP budget to support the extraordinary costs of the Loom Apartments project, contingent upon: - Mutually agreed upon final design for the public space and the pending private development - Community-oriented commercial space on the ground floor of the project at below market rents - Enhanced ground floor activation design - Biking amenities as agreed upon - Publicly available curbside EV charging - On-site geothermal wells to support heating and cooling loads of the building - No developer adverse tax event as part of receiving GSIA funds - Site development commences before year-end 2025 Background: The Loom Apartments project is a 100% affordable housing development on a Gateway corridor location (515 4th Street NW, along Civic Center Drive) into the DMC District that will provide 141 homes in the downtown at 50% of Area Median Income (AMI) rents. This project is poised to serve as a key component in the region's commitment to sustainable, affordable housing solutions as it would be the first private development to utilize on-site geothermal wells to support heating and cooling. Loom Apartments will serve as Phase I of a two-phase affordable housing initiative, and includes activation of the ground floor including biking amenities and community-oriented commercial space. Key Project Elements: • Number of Units: 141 deeply affordable housing units at 50% AMI • Funding Request: $5.5 million to leverage over $4.5 million in enhanced Low-Income Housing Tax Credit (LIHTC) equity • Affordable Housing Financing: The project will utilize a combination of $24.7 million in Multifamily Housing Revenue Bonds and $24 million in low-income housing tax credits, investment tax credits, and solar tax credits. The development will also seek gap funding from local and state sources to bridge the financing gap. • Development Timeline: The project must commence before the expiration of the Qualified Census Tract (QCT) designation, which is tied to securing critical federal tax incentives and equity funding. Fulfilling the DMC Vision, Mission, and/or Goals: 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. • Project goes beyond the City and DMC sustainability requirements to demonstrate on-site geothermal and solar can be achieved within a housing development. • Mid-block breezeway public realm • Support of community-oriented commercial space on the ground floor • Enhanced ground floor design to encourage pedestrian activity MEMO To: DMCC Board of Directors From: City of Rochester, Administration Date: April 25, 2025 Subject: Consideration of the Loom Apartments Project GSIA Request The City of Rochester provides the following update on the Loom Apartments Project. Onward Investors, LLC (the "Applicant") has submitted materials, and the City finds that the project aligns with the Destination Medical Center (DMC) vision and the shared goals of both the City and DMC. Affordable housing in transit-accessible locations remains a top priority for both entities. Project Overview: The project proposes 141 units of 100% affordable housing with 50% Area Median Income (AMI) averaging across all units, located in the vicinity of 515 4th Street NW, along Civic Center Drive (Gateway corridor into the DMC District). The project includes: •A multi-story residential building with active ground floor space including biking amenities •Community-oriented commercial space (~2,000 sq ft) •Public mid-block breezeway enhancing pedestrian connections •Phase I of a two-phase affordable housing initiative that will ultimately deliver 283 units of income-restricted housing (50-60% AMI) Sustainability Features: The sustainability elements of the design include: •First private development in the region to utilize on-site geothermal wells for heating/cooling (~45% electricity and ~40% gas reduction) •Rooftop solar array •LEED Silver certification targeting •WaterSense plumbing and low-energy lighting •Electric vehicle charging stations •E-cargo bike library Market Study Findings: A third-party market study by Novogradac LLLP found: •Significant "rent-advantage" (23-56%) compared to market-rate units •Expected absorption rate of approximately 9 months (3-4 months faster than comparable projects) •4,635 income-qualified households in Rochester Primary Market Area for 50% AMI units •Project would need only 2.6% household eligible capture rate, indicating strong demand Financial and Development Support: The Applicant has established a financing structure that includes: •$24.7 million in Multifamily Housing Revenue Bonds (approved) •$24 million in investment tax credits, and solar tax credits •Tax-Increment Financing (TIF) - approximate value of $900,000 (pending) •$750,000 from Coalition for Rochester Area Housing (approved) Despite these funding efforts, a verifiable financing gap remains. A significant driver of this gap is the project's commitment to deeply affordable rents at 50% AMI rather than maximizing revenue through higher rents. The Applicant has demonstrated that the project is not financially feasible without public support. Based on a review of the project's financials, the funding request of $5.5 million will leverage over $4.5 million in enhanced Low-Income Housing Tax Credit (LIHTC) equity, which is dependent on the project's Qualified Census Tract (QCT) designation that will soon expire. Alignment with DMC Goals: This project represents a critical opportunity to provide affordable housing near transit and services, reinforcing the DMC's long-term goals. The project will: •Provide affordable housing in a transit-oriented development along a key corridor •Contribute to community resilience through sustainability-focused investments •Revitalize an underutilized site within the Central Station subdistrict •Support workforce stability for Mayo Clinic and other employers •Enhance the public realm through ground floor design that encourages pedestrian activity Critical Timing Factors: •Project must commence before the expiration of the QCT designation to secure $4.5 million in additional federal tax credits •Federal energy incentives (ITC, STC, Section 45L rebates) may be curtailed in future budgets •Project is designed to align with Mayo Clinic's Bold. Forward. Unbound. $5 billion investment City Staff Recommendation: Approval of the Loom Apartments project by the DMCC Board as a DMC Public Infrastructure Project is required before the City Council can take action. Any approval by the DMCC should be contingent upon future approval by both the City and the City EDA of the Development Assistance Agreement (DAA) and the final Tax Increment Financing (TIF) assistance amount. The City recommends that the DMCC Board approve the allocation of up to $4 million in General State Infrastructure Aid (GSIA) from the Strategic Development CIP budget to support the extraordinary costs associated with the Loom Apartments project. This allocation should be contingent upon a mutually agreed-upon final design for the public space and the pending private development. Approval by the DMCC Board is a critical step in allowing the project to continue moving through the City’s review and approval process, in coordination with future actions by the City Council and the EDA. Sincerely, Josh Johnsen Strategic Initiatives Director City of Rochester DESTINATION MEDICAL CENTER ECONOMIC DEVELOPMENT AGENCY MEMORANDUM To: Chair Pam Wheelock and the Destination Medical Center Corporation Board of Directors From: Dr. Clark Otley, President of the Board of Directors Patrick Seeb, Executive Director Destination Medical Center Economic Development Agency Date: May 16, 2025 Re: Onward Investors (Loom) DMC Funding Recommendation Dear Chair Wheelock and members of the DMCC Board of Directors: The DMC legislation provides that the DMC EDA must assist the DMCC by “evaluating proposals for development and evaluating and making recommendations to the (DMCC) and the city regarding those proposals.” Accordingly, please find enclosed with this letter the DMC EDA staff evaluation of the DMC Joint Funding Application submitted by Onward Investors for an affordable housing project on property near Civic Center Drive. Following our evaluation, the DMC EDA board of directors recommends that the DMCC board of directors approve up to $4,000,000 in DMC General State Infrastructure Aid (GSIA). This figure is less than the amount requested by the applicant ($5.5 million). We provide this recommendation following thorough consideration of the project as described in the Joint Funding Application and the evaluation prepared by staff, the priorities expressed by the DMCC, and the goals and objectives of the DMC Development Plan. The evaluation report details our analysis of the proposed project. In addition to our project-specific evaluation, other factors may weigh in your independent consideration of this funding request and our recommendation. These factors may include: •Public Benefit. The proposed project includes several elements that the DMC EDA deemed to be of specific public benefit, including that all the planned housing units will be affordable to residents who earn fifty percent of the Area Median Income (AMI); the establishment of street level service retail; and installation of geothermal energy system. •Opportunity Cost. We fully recognize that this recommendation is being provided alongside several others and that, if approved, these combined recommendations will draw DMC DESTINATION MEDICAL CENTER ECONOMIC DEVELOPMENT AGENCY “strategic development” funds down to approximately $300,000. Even so, we heartedly offer this recommendation and, should the approval of a future funding request require the authorization of funding outside the usual capital budgeting process, we will balance that request against competing demands on DMC resources. •Alignment with DMC Priorities. Each application for DMC funding is unique, and the considerations around each proposed project necessitate careful, singular evaluation. An additional consideration of the DMC EDA is whether—and if so, how—a given project aligns with our understanding of the priorities of the DMC Corporation and City of Rochester. This is an inherently subjective determination, but DMC processes, including a standard application, advisory review by City staff and the DMC EDA, successive agreement by the DMC Corp. and City of Rochester, and final approval of expenditures by DEED, safeguard against the non- aligned or imprudent allocation of public funds. We recognize and appreciate this process. In closing, we note that our evaluation report also outlines several conditions we recommend be applied to the project to ensure that DMC interests are protected and goals are met. For the reasons noted above and in our report, the DMC EDA board of directors respectfully submits our funding recommendation. Thank you for your consideration. Respectfully, Clark Otley, M.D. Patrick Seeb President of the Board of Directors Executive Director DESTINATION MEDICAL CENTER ECONOMIC DEVELOPMENT AGENCY 1 Loom Apartments Evaluation Report May 9, 2025 EXECUTIVE SUMMARY / RECOMMENDATION STATEMENT OF RECOMMENDATION: Based on information provided by Onward Investors, LLC (the “Applicant”), the Loom Apartments aligns with regional development visions and goals and the housing needs outlined in the Coalition for Rochester Area Housing’s commissioned housing needs study (the “Maxfield Study”). The development of 50% AMI or lower affordable housing units is a priority need and has been identified by DMCC as a priority. Importantly, going beyond addressing the community-wide affordable housing needs, this project is creating community-oriented commercial retail space at the ground floor at below market rents, will be the first multi-family housing project to pilot on-site geothermal wells, and provide for additional public bike and EV charging infrastructure. The ground floor design and landscaping will be enhanced beyond the zoning and baseline City requirements as well. 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. We recommend support for the project. We further recommend a financial audit to ensure the project is consistent with what was proposed and approved, and to confirm the costs. The applicant will provide all requested documentation to facilitate this audit and work in good faith with representatives. 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 subdistrict). PROJECT SUMMARY: The Loom Apartments project is a transformative development that will provide 141 affordable housing units in downtown Rochester, Minnesota, to tenants earning 50% of Area Median Income (AMI) or less. This project is poised to serve as a key component in the region's commitment to sustainable, affordable housing solutions that will also enhance walkability and access to the core downtown employment center. Loom Apartments will serve as Phase I of a two-phase housing initiative, with the second phase being the Tapestry Apartments project, which is currently in planning and anticipated adding another 142 units of housing at 60% AMI at a later date. DESTINATION MEDICAL CENTER ECONOMIC DEVELOPMENT AGENCY 2 RELEVANT PROJECT HIGHLIGHTS: The following list outlines relevant project highlights for consideration: •General Project Information o Located in downtown Rochester along Civic Center Drive from 4th Ave to 6th Ave (515 4th St. NW, Rochester, MN 55901) o Located within the Central Station subdistrict of the DMC District o 141 units of Workforce Housing at 50% AMI o Community-oriented commercial space on the ground floor of the project o Enhanced ground floor activation design o Biking amenities as shown o Publicly available curbside EV charging o On-site geothermal wells to support heating and cooling loads of the building o Site development commences before year-end 2025 •Financial Details o Funding Request: $5.5 million o Other Funding Sources: o Other - Private Placement Bond Execution $14,810,000 o Other - Low-Income Housing Tax Credit ("LIHTC") Equity $19,997,333 o Other - Investment Tax Credit ("ITC") & Solar Tax Credit ("STC") Equity $3,973,008 o Other - Deferred Loan - Coalition for Rochester Area Housing $750,000 o Other - 45L Tax Credit for Home Builders - ENERGY STAR $292,575 o Other - RPU Energy Rebates + Heat Pump + Electrification Rebates (HEAR) $1,053,270 •Sustainability o On-site Geothermal wells (“Darcy wells”) to support entire apartment HVAC load o On-site solar o Curbside public EV charging infrastructure in partnership with City of Rochester o EnergyStar appliances o WaterSense plumbing fixtures o LED lighting o Enhanced insulation and glazing o Water and energy conservation measures o Pursuit of Third-Party Green Building Certification •Community Benefits o Public/private breezeway easement between phase 1 and 2 to continue 5th Avenue connection to Civic Center Drive for pedestrians and cyclists o Approximately 2,000 square feet of retail/commercial space at below-market rents to support active use o Enhanced public realm and street level activation on Civic Center Drive and 6th Ave. DESTINATION MEDICAL CENTER ECONOMIC DEVELOPMENT AGENCY 3 EVALUATION REPORT SECTION 1.0 PROJECT OVERVIEW The Loom Apartments project is a transformative development that will 141 affordable housing units in downtown Rochester, Minnesota, at rents set to 50% of Area Median Income (AMI). This project is poised to serve as a key component in the region's commitment to sustainable, affordable housing solutions. Loom Apartments will serve as Phase I of a two-phase affordable housing initiative, with the second phase being the Tapestry Apartments project, currently planned to provide 142 units at 60% AMI. DESTINATION MEDICAL CENTER ECONOMIC DEVELOPMENT AGENCY 4 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. DESTINATION MEDICAL CENTER ECONOMIC DEVELOPMENT AGENCY 5 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 DESTINATION MEDICAL CENTER ECONOMIC DEVELOPMENT AGENCY 6 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 downtown Rochester. Workforce housing is needed. The project provides housing near services and transit and is walkable to the main employment center (downtown). Construction jobs will be created, as well as 3 full-time and 1 part-time permanent jobs to operate and maintain the housing when complete. In addition, there will be retail employment in the retail spaces. Is the project consistent with the DMC Vision? Is the project part of a bold and aspirational concept for the future? Loom Apartments seeks to weave many elements of the DMC’s Vision into one comprehensive community. Specifically, Health & Wellness is emphasized in the Project’s location in the Downtown Fringe which encourages multi-modal transportation and enhanced walkability. These are both correlated to significant increases in wellness and happiness. The Project also features a to be programmed retail and/or commercial location of ~2,000 square feet. This space will be oriented to be accretive to both residents of the Project and the community as a whole and will be offered for licensing/lease/usage at below market rate economics. This supports the DMC’s Vision for Retail, Dining, Entertainment, Arts, and Culture. The Project’s location contributes to the concept of a “15-Minute City”, demonstrating that even in a secondary metropolitan area, a Livable City is certainly achievable and can even be a replicable model when created at scale. Lastly, while Loom Apartments will offer residences to only income qualified individuals and families, the geothermal ground-sourced heat pump system will present a locally manufactured concept that can be modeled upon going forward. While not directly facilitating a Learning Environment, the very thesis of the Destination Medical Center’s requested investment is to allow this project to serve as a learning example so future projects may benefit from a locally executed example. •Does the project fit with the principles of the vision? Loom Apartments demonstrates a bold new model for equitable urban development in Rochester, combining deeply affordable housing, advanced green infrastructure, and public realm improvement in a central corridor adjacent to Mayo Clinic. It signals a commitment to a more inclusive, livable, and resilient city core that matches the ambition of the City of Rochester and DMC. •Does the project provide a framework for growth in this sub‐district? Rooted in a third-party market study and aligned with current housing demand trends, Loom Apartments is responsive to local economic realities and demographic shifts. The project’s unit mix, location, and pricing strategy are tailored to Rochester’s workforce, particularly in the healthcare, DESTINATION MEDICAL CENTER ECONOMIC DEVELOPMENT AGENCY 7 education, and hospitality sectors, ensuring long-term demand and operational sustainability. Its layered financing structure reflects a savvy and adaptable approach to development in a competitive capital environment. 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 while meeting market rate of returns without public assistance. Based on our own independent analysis, we concur. As stated above, the 50% AMI income approach of this project helps provide affordable units for workers in the downtown and community. •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 public infrastructure, specifically the public/private breezeway, commercial space, EV charging and bike infrastructure and GHG reductions from utilizing geothermal technology is not solely for the benefit of the Loom Apartments project. It also supports the broader vision of the DMC District by enhancing pedestrian access and connectivity between the Kutzky Park neighborhood, Civic Center Drive, and Downtown Rochester. •Will the public funding accelerate private investment in the Development District or applicable sub district? The Loom Apartments project will contribute 141 units of housing at 50% AMI. This project will address a portion of the housing needs for this income demographic in Rochester at a time of growth and transformation in downtown Rochester. 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 contribute the Central Station subdistrict and provide a key piece of housing infrastructure. The “above and beyond” approach to sustainability will hopefully prove a model for future private developers to raise the ambition for sustainability targets. Its location is an anchor for the subdistrict and will generate momentum for other developments – residential and otherwise and facilitate better pedestrian and bike connectivity. •Can the project reasonably be expected to catalyze necessary transportation/transit strategies? The proposed project advances multiple pillars of the DMC Development Plan and the City's Comprehensive Plan, including "mobility," and that the project is designed to incorporate various options for alternate transportation to reduce single-vehicle traffic flow. Elements include: lower parking ratio, curbside public EV charging, bike amenities, community-oriented retail and enhanced ground floor public realm. DESTINATION MEDICAL CENTER ECONOMIC DEVELOPMENT AGENCY 8 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 workers to live that are affordable, have lower utility costs and are walkable to the employment center and other critical functions. This project expands on this possibility by providing units at a 50% AAMI level. 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 Project would be congruent with the Planning 2 Succeed 2040 Comprehensive Plan Integration for the City of Rochester in the following respects: Loom Apartment’s income-targeted housing and deeper affordability directly serve the goal of ensuring all residents have access to safe, affordable housing by addressing critical needs for housing near jobs, transit, and amenities. As a redevelopment of underutilized parcels and lower density parcels in the city core, Loom Apartments exemplifies the plan’s directive to prioritize infill development and reinvestment, concentrating growth where infrastructure exists and reducing sprawl. •If a Transit/Transportation project, is the project consistent with the ROCOG long-range Transportation Plan? N/A Does the project support sustainability principles as a core objective in the development and operations of the project? The proposed project is designed as a replicable model for energy efficient, climate0forward affordable housing, integrating geothermal heating and cooling with rooftop solar to reduce long-term operating costs and emissions • Geothermal HVAC System: Ground-source heat pump system with energy recovery ventilation • Energy-Efficient Appliances and Fixtures: EnergyStar appliances, WaterSense plumbing fixtures, LED lighting, and automated lighting systems • High-Performance Building Envelope: Enhanced insulation and glazing • Water and Energy Conservation: Achieving up to 49 kW reduction in peak electrical demand and carbon emissions significantly below regional multifamily averages DESTINATION MEDICAL CENTER ECONOMIC DEVELOPMENT AGENCY 9 • Long-Term Operational Savings: Estimated savings exceeding $1.1 million over 10 years • Green Building Certification: Pursuing Third Party Green Building Certification (LEED, Living Building Challenge, etc.) • Energy Benchmarking: Participation in the City of Rochester’s Voluntary Energy Benchmarking Program DESTINATION MEDICAL CENTER ECONOMIC DEVELOPMENT AGENCY 10 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 private funds. Of the total project cost, approximately 68% is lending and 15% developer equity. 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 public assistance of $5.5 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. Is the proposed operating structure sustainable? Yes, we believe the operating structure is sustainable. 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 City of Rochester TIF and DMC funding, the applicant has stated that they will agree to execute the DMC Development Agreement consistent with all expectations of the City and DMC. DESTINATION MEDICAL CENTER ECONOMIC DEVELOPMENT AGENCY 11 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? NA •If private, is the project otherwise compatible with the planned public improvements in the DMC---CIP? Yes – the recommended funding amount fits within the existing Strategic Development budget that remains in the CIP. 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. DESTINATION MEDICAL CENTER ECONOMIC DEVELOPMENT AGENCY 12 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 economic-fiscal gain based upon job projections? As a housing project, the project supports the overall economic growth of the downtown without contributing to sprawl and further commuter load. Does the project maximize the opportunity for investment by attracting other private capital? Yes – though as a 100% affordable housing project many of the other sources of capital are also public or philanthropic. Is the project required (e.g. public works) to continue to seed investment in the DMC District? Not applicable 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 Applicant proposes including approximately 2,000 square feet of retail and/or commercial space as part of the Loom Apartments project. This space is located at a key intersection that will become increasingly important as the Mayo Clinic's "Bold. Forward. Unbound." project progresses. The Applicant is open to partnering with local operators and is willing to offer below-market rents, additional build-out provisions, and potentially a licensing agreement to ensure economic feasibility. The goal is for this space to benefit both the residents of Loom Apartments and the surrounding community by fostering a walkable, inclusive, and resilient neighborhood. The Applicant is considering uses such as daycare/childcare facilities and local convenience stores focused on health, wellness, and home goods. 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? A public/private breezeway will improve pedestrian access to continue 5th Avenue all the way until north to Civic Center Drive for bikes and pedestrians. Approximately 2,000 square feet of retail/commercial space will be integrated, intended for community- serving uses like daycare or health-focused stores. The project seeks to create a walkable and resilient neighborhood that connects residents to essential services and businesses.