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Oops, DMC: Lawyers find $6 billion glitch in law subsidizing Rochester project

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The Minnesota Attorney General's office says the law authorizing state money for Rochester's Destination Medical Center project requires private investments twice as large as the Legislature envisioned when it approved the plan.

Finance & Commerce reports a legal opinion released this week supports an interpretation of the law requiring $12 billion worth of private spending to trigger the full state subsidy, instead of the $6 billion lawmakers intended.

State Rep. Kim Norton, DFL Rochester, tells the publication she does not expect any problems modifying the law during the 2015 legislative session, given the bipartisan support lawmakers showed when they approved $327 million for the project in 2013.

What's DMC?

Leaders of the Destination Medical Center initiative call it the largest economic development project ever undertaken in Minnesota.

It includes a 20-year expansion of the Mayo Clinic together with improvements to transportation and public amenities in Rochester and Olmsted County. Mayo agreed to spend to $3.5 billion on the expansion when it proposed the project and said it would raise nearly as much from other private investors.

Including county and city funding, $585 million in public money is going toward the project.

Gov. Mark Dayton's former chief of staff and current running mate, Tina Smith, chairs the DMC Board. She tells KARE 11 the number of jobs created by the project is estimated at 25,000 to 35,000. Olmsted County's planning director tells the station it will be a challenge for the area to find enough workers to fill the labor force expansion.

The funding glitch

Under the legislation, the state money will be provided gradually once private contributions have surpassed the $200 million mark.

Finance & Commerce reports legislators who devised the formula for releasing the state aid meant for it to be based on the cumulative private investment over the 20-year project.

But the legal opinion released by Minnesota's solicitor general Tuesday says, as the formula is currently written, the state's annual subsidy would be based only on the private investment made during the previous year. Under that scenario, releasing the full $327 million in state funding would require about $12 billion in private money, Finance & Commerce says.

Rep. Norton tells the publication she's deeply disappointed by that interpretation of the law, though it's consistent with the way state officials in two other departments read it, Finance & Commerce reports.

Meanwhile, the planning of just how DMC will improve Rochester is underway. The Post Bulletin reports DMC officials are traveling to five U.S. cities this week and next to see what they can learn from economic development projects there.

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