Mayo Clinic lays out $6 billion development planThe Mayo Clinic is seeking more than $500 million in state support for economic development projects in the medical center’s hometown of Rochester -- a deal that clinic officials say would guarantee the world-famous clinic stays and grows in Minnesota.
By: Christopher Snowbeck , St. Paul Pioneer Press / MCT
The Mayo Clinic is seeking more than $500 million in state support for economic development projects in the medical center’s hometown of Rochester -- a deal that clinic officials say would guarantee the world-famous clinic stays and grows in Minnesota.
At a news conference Wednesday at the state Capitol, Mayo officials said they would spend about $3.5 billion on clinic-financed capital investments over the next 20 years to help ensure that the medical center continues to draw patients from around the world.
And, they said, an additional $2.1 billion in private investment could come through spinoff developments, such as research labs for companies that serve Mayo.
The Mayo Clinic wants to grow so it can hold off competitors and stand as one of just two or three global destination medical centers, said Dr. John Noseworthy, the clinic’s chief executive officer.
But growth in Minnesota is tied to state government support, he said. The clinic wants legislation that would allow for appropriation bonds and create a public authority to oversee spending on everything from land acquisition and building demolition to new parking facilities in downtown Rochester.
Gov. Mark Dayton, who recently underwent back surgery at Mayo, said during the announcement that he supports the plan, adding that bond support might cost the state about $30 million per year.
It’s not clear exactly when those state expenditures would begin, but it won’t be immediately, said state Sen. David Senjem, R-Rochester, who also spoke in support of the idea.
During 2011, Mayo Clinic had an operating profit of $610 million on revenue of about $8.48 billion.
The capital spending referenced by Mayo Clinic officials Wednesday includes some previously announced spending as well as new projects, said Karl Oestreich, a Mayo Clinic spokesman.
Organized as a nonprofit, the clinic is one of the state’s largest and most-profitable health care organizations, with 34,000 employees in Minnesota. It also operates clinics and hospitals in Arizona, Florida, Iowa and Wisconsin, and has famously attracted patients from around the world.
"Mayo Clinic is approached on a regular basis by numerous states and countries offering various incentives to encourage us to expand in other places," Noseworthy said.
"After much consideration, Mayo Clinic has decided that our global destination medical center will be here in Minnesota in Rochester," Noseworthy said. "But that decision is based on an important assumption -- that we can be assured that the public infrastructure investments can be financed and keep pace with the private investment that Mayo Clinic and other private entities will need to make."
The economic development initiative in Rochester would include about $3.5 billion in investments from the clinic, more than $500 million from the state and the estimated $2.1 billion in additional leveraged private investment, according to clinic officials.
They forecast 25,000 to 30,000 new jobs in southeast Minnesota as a result.
Noseworthy said the state dollars wouldn’t flow until after the clinic and other private parties first made their investments. The state appropriation bonds would be repaid by employing a "value-capture" model, officials said, that relies on using a small percentage of the new state tax revenues generated by Mayo Clinic’s growth in Rochester.
Once the tax base grows, an economic development authority would review and approve funding for eligible public improvement projects. Mayo officials project that with the economic development initiative, state tax revenues would grow by more than $2.5 billion over 20 years.
"We are not looking for a handout or up-front money from the state," Noseworthy said. "We are seeking (an) infusion of state dollars based on proof of -- not the promise of -- investment."
The state support that Mayo Clinic seeks is much more limited than the public dollars that some competing medical centers across the country are getting as they try to win patients from around the world, Noseworthy said.
"We’re not asking for support for the Mayo Clinic medical facilities," he added. "We are asking for support for the public infrastructure that will be necessary for us to invest between $3 billion and $6 billion of private money in the state."
Senate Majority Leader Tom Bakk, DFL-Cook, said the proposal would take time for lawmakers to digest.
"That’s a pretty big new precedent that will require significant discussion and deliberation at the Legislature," said Bakk, who added that the Legislature might convene a special working group to scrutinize the proposal.
Speaker of the House Paul Thissen, DFL-Minneapolis, said in a statement: "We thank Mayo Clinic for bringing this proposal forward, and we look forward to working with them to identify ways we can make sure Mayo Clinic remains and grows as a world-class medical and research facility."
Dayton said during the news conference: "I don’t need to tell anyone how vitally important Mayo Clinic is to ... the state of Minnesota."