Mayo offers $6 billion vision to remake Rochester

  • Article by: JACKIE CROSBY , Star Tribune
  • Updated: January 31, 2013 - 6:46 AM

The clinic seeks state support to enhance the city in parallel with Mayo's improvements to its facilities.

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The Mayo Clinic's Gonda Building in downtown Rochester.

Photo: Glen Stubbe, Star Tribune

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The Mayo Clinic is asking the state to inject half a billion dollars into the Rochester area to ensure that the city's development keeps pace with the medical institution's ambitious growth plans.

Mayo executives and Gov. Mark Dayton said Wednesday that the money would act as a catalyst for perhaps $2 billion in private investment, on top of $3.5 billion Mayo has already pledged to upgrade its own facilities in the coming years.

The idea is to transform Rochester into a world-class city with upscale shopping, hotels and housing, as Mayo works to preserve its role as a global destination for medical care. "We want to defend our turf and grow," Mayo Clinic CEO Dr. John Noseworthy said. "It's good for us, and it's good for the state."

Officials said the $6 billion in combined spending would make the effort the largest economic development initiative in Minnesota and one of the largest in the nation.

Mayo isn't seeking government money upfront. Funds would come instead from a new, special taxing district around the Mayo Clinic campus that requires approval from the Legislature.

The estimated $30 million a year in taxpayer dollars that would result would pay for such infrastructure needs as parking and transportation, demolition and cleanup of building sites and land acquisition.

Noseworthy said that for every $1 in public financing, the project would leverage $10 in private investment.

A bill isn't fully crafted, but the proposal has a measure of bipartisan support and the backing of labor and business leaders, many of whom lined up behind Noseworthy and Dayton for the announcement.

Dayton, in a nod to his family's rich retailing history, said he believes in downtown revitalization but added that he wasn't sure whether "this is exactly the right financing mechanism."

Dayton referenced the bitter wrangling over public financing for the Vikings stadium, but pledged to support the efforts by Mayo, which he called "the platinum jewel in our social and economic crown."

The Mayo Clinic, the state's largest private employer with 32,000 employees, draws patients from all 50 states and more than 130 countries each year.

It is battling other national players such as the Cleveland Clinic, Massachusetts General, Johns Hopkins Medical Center and the M.D. Anderson Cancer Center to attract national and international patients.

Global competition

In the coming decades only two or three will remain as leading global destinations, Noseworthy predicted, as the health care industry undergoes fundamental changes.

"Our competitors are now seeking public funding to try to capture this 'Mayo Model' of a destination medical center," he said. "They're getting public funding not just for infrastructure but also for their own facilities."

Noseworthy said Mayo intends to vigorously protect its status as a premier medical institution. The clinic's first choice is to expand its footprint in Rochester, where the Mayo brothers launched their practice 148 years ago.

But if legislators aren't willing to offer support for infrastructure, the message was clear that Mayo might well look elsewhere, including Sun Belt outposts where it already operates in Arizona and Florida.

"As we look forward to the next 20 years, we have a decision to make as an organization: Where do we do it? Do we do it in Minnesota? Hope so, provided we can have the public infrastructure investment," he said in an interview.

"If it turns out that can't happen, then we'll have to rethink where we go," he said " Lots of places would love to have the Mayo Clinic set up there."

Buffing up the Rochester area would make it easier to draw a high-quality workforce as well as keep "hundreds of thousands" of new visitors and medical travelers entertained.

A "satisfaction gap" among clinic employees, their families and Rochester residents has made it harder to recruit new physicians and others to relocate to Rochester, Noseworthy said.

Many Mayo doctors and staff have "urban cabins" in downtown Minneapolis, which is about 85 miles away, said Andrea Christenson, vice president of commercial real estate with Cassidy Turley's Minneapolis office.

Supporting Mayo's global headquarters would bring with it improved housing options and other quality-of-life enhancements, officials hope.

"We have wonderful restaurants and wonderful hotels," said Rochester Mayor Ardell Brede. "National and international visitors may be looking for a five-star hotel. So maybe we need a five-star hotel? Maybe we need more choices, more services, more support to be more of a destintion."

Mayo's growth plans

Mayo has been discussing its project, known as Destination Medical Center, with civic leaders and elected officials in Rochester and Olmsted County for several years.

In November, Rochester voters approved a half-cent tax increase, which included $20 million earmarked for the Mayo Global Destination Medical Center initiative.

In addition to Mayo's effort to draw public money for infrastructure, the city of Rochester is seeking $37 million in state bonding to upgrade its civic center, a project rejected last session by Republican legislators.

Mayo projects that the public contribution combined with private investment would bring $2.5 billion to $3 billion in tax revenue to the state through personal income, state and other sales taxes over the next 20 years. Another $300 million in additional local and tax revenue would be generated, according to Mayo.

About 35,000 to 45,000 new jobs would come to the region, according to Mayo, with the bulk going directly to the clinic and its expansion in the region. About 1,800 to 2,200 construction jobs would be created each year.

Transforming Rochester into a more cosmopolitan city isn't a far-fetched vision, Christenson said. If Mayo leads the way, and public and private investment follows, it can happen.

"For developers, it's all about the numbers," she said. "What are they building, how many patients will it bring, how many people are coming to the area? Yes, they'll get on it.

"If you're flying into Rochester from another state or another country, you obviously have the financial wherewithal," she added. "These people aren't shopping because they need something."

Jackie Crosby • 612-673-7335

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