– Finance & Commerce
For all the hundreds of millions invested so far in Rochester’s Destination Medical Center effort, there’s still a long way to go to hit the final goal of $5.5 billion in new development.
Since 2013, total private investment was pegged at $428.7 million at the end of 2017. Additional public investment brought the total to $498 million, said Patrick Seeb, an official with the DMC Economic Development Agency.
At a meeting last Thursday, Seeb said public spending so far is at about 12 percent of total investment to date, in line with what officials had hoped to see. Under the terms of a 2013 spending bill, the state of Minnesota and other public entities have pledged $585 million toward the Destination Medical Center initiative to make Rochester a global center of medical tourism and research around Mayo Clinic.
The public commitment, which comes in the form of $400 million-plus in state infrastructure support and a sales tax exemption on construction materials, remained locked until Rochester officials certified more than $200 million in private investment in the area. That milestone occurred at the end of 2016.
At a Destination Medical Center Corp. board meeting last week, officials said that annual private investment reached $131 million in 2017, down from $145 million in 2016.
As in past years, the majority of 2017’s investment came from Mayo Clinic, which was the driving force behind the DMC initiative. Mayo’s 2017 investments throughout the city totaled $86 million, down from $107 million the year before.
That work includes $21.2 million to expand the surgical suites and robotics capabilities of the Jacobson building, $6.3 million to consolidate Mayo’s radiology practices into one location, and $2.2 million for a new complex intervention unit at St. Marys Place. The Mayo Clinic board in 2017 approved more than $200 million in projects for the St. Marys campus to take place over the next four years.
While Mayo investment dipped in 2017, other private investment grew year over year, from $38 million in 2016 to $45 million in 2017. Key projects discussed included the $33.87 million Hilton Hotel under construction and the $35 million bioscience lab building under construction by Golden Valley-based Mortenson in Discovery Square. On deck is Alatus LLC’s $115 million multifamily complex near the St. Marys campus.
Seeb said officials are happy with the investment so far by private developers.
“How are we doing against a 20-year campaign? We’re ahead of schedule against a 20-year, $5.5 billion anticipated [total],” said Seeb, the director of economic development and placemaking with the Economic Development Agency.
“The remaining nearly 90 percent has been private investment,” he said. “So that goal of leveraging [public funds] can show that 1:10 ratio is working in this community.”
Other metrics touched on at Thursday’s meeting included employment, which does not yet include 2017 figures but shows that Rochester added 1,400 and 1,800 jobs respectively in 2015 and 2016.
Backers of the 20-year effort also hope to see $7.5 billion in new net tax revenue over 35 years. While the exact methodology to measure that has yet to be determined, sales tax figures show accelerating growth in the past five years for both Rochester and Olmsted County.
Destination Medical Center Corp. Chair R.T. Rybak said the latest investment figures demonstrate that the initiative is fulfilling its initial promise.
“There are two places that people doubted,” said Rybak, a former Minneapolis mayor. ”One is, will Mayo deliver on its promise to make these investments? And Mayo is absolutely delivering on that promise, and that’s great. The other point is, would this lead to other types of development? And there are other types of development.”
By: William Morris
Date: March 26, 2018
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