Who will pay for planning ambitious Rochester makeover?

There's a big question looming over the ambitious plan to transform the city into a $6 billion global health care hub.

Rochester's leaders are thinking big with plans to create the Destination Medical Center. They envision spending hundreds of millions of public and private development dollars over the next two decades.

But before planning can really get rolling, there's the matter of who's going to pay for the bureaucracy needed to make it work. In the first five years, it will take $21 million to pay the salaries and other operational expenses for the two governing boards created by the Legislature in 2013, the Mayo Clinic-led Economic Development Agency and the Destination Medical Center Corporation.

Even though it's a small part of the overall project, City Council President Randy Staver said those expenses are causing concern at City Hall.

"The legislation largely focused on bricks and mortar and the improvements to the city," Staver said. "And I think we anticipated the administrative or oversight expenses would be perhaps not as great as what they're being depicted in the plan."

In 2013, the state Legislature approved $327 million in state aid to help support Mayo Clinic's expansion and add tens of thousands of new jobs to the region over the next 20 years. The city will kick in another $128 million to fund improvements to public facilities in the city — things like parking ramps and roads.

While the question of fees won't derail the project, the city wants legislators to clarify who should be on the hook for that money, City Administrator Steve Kvenvold said.

"That is a concern to the city of Rochester since basically there isn't any funding source, other than property taxes, and there's no appetite for the City Council, and I expect the citizens, to spend any significant amount of property taxes in the DMC initiative," he said.

Kvenvold said if the city is stuck paying that money, it likely will rely on a sales tax increase of 0.25 percent. The Legislature gave the city that option when it passed the Destination Medical Center legislation in 2013.

"We still have to have it clarified, whether or not especially the sales tax, which would be the main funding source, could be used for that purpose," Kvenvold said. "Because that was not clarified in the original legislation."

The DMC board is expected to vote on the proposed plan later this month, kicking off a 60-day public comment period.

Kvenvold says city leaders hope to have the matter of administrative costs clarified before the council has the final vote on the overall plan later this spring.