The billion-dollar private investment coming to Duluth's medical district could be getting a multi-million-dollar public boost.

State Sen. Erik Simonson, DFL-Duluth, is introducing a bill on Thursday that would invest $164 million in state money and $20 million from Duluth toward infrastructure throughout the dozens of blocks surrounding the city's hospitals.

Newsletter signup for email alerts

That's on top of the $800 million Essentia Health is investing in its Vision Northland project and the $200 million St. Luke's expects to spend on its own campus upgrades.

"With total proposed investment exceeding $1.18 billion, the Medical Exchange District is a public-private partnership that is a once-in-a-generation opportunity to spark major investments and result in tremendous economic benefits for Duluth," Simonson said in a statement.

Duluth's medical district proposal mirrors the Mayo Clinic-led Destination Medical Center in Rochester and is expected to draw additional investment beyond the planned medical campuses and the surrounding road and utility improvements.

To that end, 10 percent of the state money in Simonson's bill would need to go toward affordable housing with a required match from other sources - which could mean at least $32.8 million spent on housing in the east end of downtown.

"We can do some of the public infrastructure investments that would need to be made to make it possible to build," Duluth Mayor Emily Larson said on Wednesday. "A bill like this is what makes it a benefit for the broader community."

Larson said the $20 million local buy-in would be spread over 10 years and largely comprise projects that would need to be completed anyway.

"When we have the kind of construction that will be seen in this area, it's a good time to get into the streets," she said. Some of the money from the voter-approved 0.5 percent sales tax increase would go toward medical district projects that are street related, should the increase win legislative approval this year.

The bill requires an additional $250,000 of city money from the general fund every year for debt service.

The bill would also create a city-funded advisory board to plan development within the district. The nine members would include:

  • The mayor or her designee.
  • A City Council member.
  • Two Essentia representatives.
  • One St. Luke's representative.
  • A member appointed by the Greater Downtown Council.
  • A local building trades council representative.
  • Two governor-appointed representatives, one of whom must have expertise in housing policy and finance.

The board would be required to prepare an initial development plan by March 31, 2020, with a comprehensive version due a year later that the Duluth City Council would then consider.

State funding of up to $13.4 million per year would only kick in after 2022, when much of the hospital construction will be wrapped up or nearly so.

A similar bill failed to make it through the Legislature last year. Changes in this year's proposal include the expanded composition of the advisory board; mandatory spending on affordable housing; and language that will require a certain amount of private money be spent on parking before public support kicks in.

Essentia's vice president of public policy, Michael Mahoney, said the health system "really appreciates the effort that has gone into this legislation, and we look forward to supporting it through the process."

St. Luke's also supports the proposal.

"We believe this legislation will have a positive impact on furthering economic development in the medical district and throughout the region," interim CEO Eric Lohn said. "We're looking forward to helping advance this bill through the legislative process and with the Walz administration."