In Rochester build-out, more questions over project review

After developers complained about a more complex project review process in Rochester, planners this week unveiled a new framework designed to streamline development evaluation and approval.
But while city staffers and others touted the fresh guidelines as a helpful bridge between them and the growing crop of developers circling Rochester, not everyone is so sure it’s the right move – especially as the city embarks on a massive downtown build-out that has already driven up development interest.
The rejiggered review process sprouted from the Destination Medical Center, the catch-all name for a series of initiatives aimed at stoking growth in Rochester around Mayo Clinic. The effort introduced a new board to the project-review process, on top of the city approvals always required to build within its borders.
A board overseeing development tied to the Destination Medical Center effort on Monday praised the city’s moves toward clarity for developers, but questioned whether the approval standards – and the highly collaborative process they rely on – do enough to simplify the process.
“Unless one person is in charge on a big project, it’s very difficult,” said Michael Dougherty, who sits on the Destination Medical Center Corp. board. Dougherty is the founder and chairman of Minneapolis-based Dougherty Financial Group, which specializes in public and commercial finance.
The multiphase framework presented to the board on Monday starts when a developer meets with staff from the city and an economic development authority formed for the Destination Medical Center.  They gauge whether a project falls in step with the broader development push.
Then, staff members work with developers to smooth out nitty-gritty project details, including stops on the path to approval – like whether it will need a go-ahead from the Destination Medical Center board or seek funding from the $585 million in public money set aside to support related projects.
Staffers from the city and EDA would jointly vet each proposal and decide where it fits in the bigger development scheme. A chart showing how the process works will be made available to developers online.
In response to developers’ concerns, the board and city officials last year called for a clearer path for proposed projects. To develop the guidelines, they gathered feedback from several local development heavyweights, including Golden Valley-based Mortenson and the Minnetonka-based Opus Group.
To solve the problem, the city last year flirted with the idea of creating a new position to serve as a liaison to developers, steering them through the permitting process.
“The goal for the process is to try to provide a process that developers that want to come into this community can easily and readily understand and go through,” Patrick Seeb, director of economic development and place-making with the EDA, told the board.
Several board members, however, asked planners on Monday whether an intertwined city and EDA approval process could invite trouble later.
“My question is, who’s in charge?” Dougherty said. “I believe every successful project has somebody in charge, that we as a board can go get our hands around their neck if things aren’t going well.”
The Destination Medical Center has drawn $152.4 million in private investment since the initiative formally kicked off in July 2013, mostly from the Mayo Clinic. Project planners expect to surpass the $200 million threshold this year, and to bill 2016 as a year of notable progress in Rochester’s build-out plan.
Eventually, more than $5.5 billion is expected to funnel into related developments, boosters have said. Already, the city says its project pipeline is stocked with new projects – a trend they attribute to Destination Medical Center buzz.
With interest expected to mount over the next several years, board members expressed concerns that the project-vetting process wouldn’t easily squelch the conflicts bound to eventually arise between developers, the city and the EDA. Having a single party in charge would help, said Lt. Gov. Tina Smith, who chairs the board.
“For every single project we’re trying to move through this complex process, I would argue that there needs to be one person who’s in charge of that project,” she said. “That is something that we ought to be thinking about even in a world where we have to have close collaboration between the city and the EDA.”
Legislation that helped shape the Destination Medical Center established a direct link between the initiative and city officials. Particularly given the public money involved, Smith said enlisting the Rochester City Council as an ultimate arbiter of projects makes sense.
Lisa Clarke, who heads the EDA, acknowledged criticism from the board. She said the heavy focus on working together across agencies stems from the need to prevent confusion among stakeholders.
“We’re working so hard with the collaboration part of this, making sure that the city and the DMC [are] working so closely, so that when we get to the end of the line, if you will, in a particular project, we’re hoping we’re hand in glove on this thing,” Clarke said.
But, she conceded, there will come a time when competing interests between those parties flare up. The high-value, long-range nature of the Destination Medical Center will spawn “tough discussions,” she said.
In those cases, a point person to provide information to the board and address concerns could go a long way toward minimizing holdups.
“Every project has to have its person,” Smith said.

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