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Mayo Clinic celebrates state funding approval, but questions remain on expansion details

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Destination Medical Center
Gov. Mark Dayton speaks about the passage of the Destination Medical Center plan at Mayo Clinic Wednesday, May 22, 2013.
Photo by Alex Kolyer for MPR

Mayo Clinic's proposed 20-year, $5 billion investment plan to make its flagship campus a "destination medical center" is closer to becoming reality.

The tax bill awaits Gov. Mark Dayton's signature to become law, but Mayo Clinic, local and state officials are celebrating the legislative victory, which commits $327 million in state aid for Rochester, Minn.

Amid the celebration, questions remain about how exactly the clinic plans to expand and how local taxpayers will contribute to the growth in Rochester.

Hundreds of Mayo employees, local and state officials, even former Vice President Walter Mondale filled the lobby of the Mayo Clinic building in Rochester Wednesday, to celebrate what Mayo and government officials say is the largest economic development initiative in Minnesota's history.

Dayton described the passage of Mayo's expansion legislation as "almost unprecedented."

Destination Medical Center
Supporters of the Destination Medical Center plan chant 'DMC' before the arrival of Gov. Mark Dayton to speak at Mayo Clinic Wednesday, May 22, 2013.
Alex Kolyer for MPR

"If this expansion and leap forward were not happening in Rochester, Minnesota, it'd happen somewhere else in the country," Dayton said. "We'd be the big losers and they'd be the big winners. We're very grateful that it's here in Minnesota."

He said the most promising aspect of Mayo Clinic's proposal is the number of jobs it is expected to create over the next two decades. Mayo Clinic officials estimate the expansion will add up to 15,000 highly-paid medical positions -- doctors, researchers and support staff -- and another 25,000 spinoff jobs in southeastern Minnesota.

Currently, Mayo Clinic employs roughly 32,000 people in Minnesota, and is the largest private employer in the state. About a third of Rochester's residents work at the clinic.

"People will work on this for 10, 20 years. I mean those are careers," Dayton said. "So to put all the people to work -- all the people will be working professionally, in the expanded facilities, and the transformation of downtown Rochester -- is just tremendously exciting.

What Rochester's transformation will look like is still unclear. State funds won't kick in until the Mayo Clinic invests least $200 million in the city.

Mayo President and CEO Dr. John Noseworthy says the clinic already has teams in place mapping out the project's next steps but declined to give details about those plans on Wednesday.

Destination Medical Center
Dr. John Noseworthy, president and CEO of Mayo Clinic, center, shakes hands with Gov. Mark Dayton as Sen. Dave Senjem watches Wednesday, May 22, 2013, after Dayton's speech about the passing of the DMC legislation.
Alex Kolyer for MPR

"We now have the opportunity to plan in a very specific way what happens," Noseworthy said. "It won't be random, first to the table, let's do something over here. It'll be all knitted together in an integrated way for the city, the county and the state."

In all, Mayo Clinic plans to invest $3.5 billion in capital improvements. That could include adding new space to the clinic's existing facilities, upgrading patient rooms or building research or administrative buildings on existing parking lots. Mayo currently owns nearly 500 acres in Rochester to support its growth plans, as of Mayo Clinic's 2011 Five-Year Plan Update. Mayo Clinic also expects an estimated $2 billion in additional private investment.

Once the governor signs the bill into law, Mayo will have 60 days to put together an eight-member nonprofit oversight board. The bill will also authorize the city of Rochester and Olmsted County to raise $128 million in local taxes to help with the expansion.

City Council President Randy Staver said the legislation allows Rochester officials to raise those taxes by increasing the local sales tax, adding a food and beverage tax, and taxing certain entertainment events. 

"What we're very happy to see is the Legislature gave us a number of tools in the legislation, and that's noteworthy because now we've got some flexibility," Staver said.

He said the city still has to determine how it will make its obligation for Mayo Clinic's expansion plan work. 

"I think we'll want to choose tools that have the least amount of burden on taxpayers in general. We don't want the taxpayers of Rochester to bear the burden of all of this," Staver said. "We'll look do to things that are equitable, and across a number of citizens and structures."

Olmsted County Board Chair Jim Bier says the county's $40 million share of the project will likely come from an increase in county taxes.

"I would anticipate we'll have the wheelage tax, I would think, and maybe the sales tax. I don't know," Bier said. "We've got to talk about that. We've got to have some meetings with the other commissioners. But I think we'll do one for sure and maybe both." 

Bier anticipates the Olmsted County Board will make those decisions by the end of the year. Mayo Clinic officials say they will release more information on their expansion plans later this summer.