Minnesota, Mayo and the Destination Medical Center

Virginia "Ginny" Smith has owned Ginny's Fine Fabrics in downtown Rochester for 42 years. Most days, you'll find her presiding over a cutting board, surrounded by bolts of brightly-colored and patterned fabric peeking out from wall shelves and propped in antique ceramic pots.

"People come in and just relish the color, the exciting patterns and designs they can have," Smith said. And she's got the receipts from customers in 10 states and overseas to prove it.

But rents have steadily gone up over the years, and at the time of this writing, Smith was bracing for the terms of her renewal lease. Last month, the Rochester City Council adopted a preliminary property tax hike of nine percent. Smith said she hopes her rent increase will be limited to that. She said other independent businesses downtown were struggling under the cost pressures and would most likely relocate after the leases were up, in full expectation of increased rents.

"The value of the property is growing as the big companies from all over the country are moving in with their hotels, restaurants and chain stores. The small businesses that have really given the character to the downtown of Rochester are getting squeezed out."

One driving force for the property value speculation and rent hikes is the Destination Medical Center, a $5.6 billion, 20-year redevelopment plan to attract investment to revitalize an aging city core and public works infrastructure. The private non-profit partnered with the city and state to outfit the downtown with touchstones of modern-day urban environments, like rapid bus lanes, separate bike lanes, and more green space along pedestrian-friendly walkways.

"I think our community understands that we're ready for change, we're poised for change." Lisa Clarke is the executive director of the DMC. "The important plan for us is that we put such a solid plan together. People understand that we're being very thoughtful and very deliberate about this."

Approved by state lawmakers in 2013, bulldozers and construction cranes have only recently been a regular sight downtown. That's in part because the state-approved package required the city show $200 million in private investment upfront before the state package funds could be tapped. The 20-year state package amounted to $585 million, including $327 million in direct aid, $128 million from local taxes, $116 million from a county and state transit fund, and $14 million in state tax credits.

"[The Mayo Clinic] said they'd invest $4 billion in Rochester," DMC Corporation Board Chair R.T. Rybak said. Rybak is head of the Minneapolis Foundation; his role on the DMC Corporation Board is uncompensated. "If the state helped make sure the community around it is set up in a way that could grow."

Many local officials say Rochester could not have by itself redeveloped its downtown on the scale of the DMC plan. But while few find fault with an effort to attract new investment and breathe new life into outdated urban planning, some object to the state's involvement. Supporters of the DMC say the package does directly support the Mayo Clinic. But State Representative John Lesch (D) of St. Paul said the Mayo's business plan is linked to it.

"I asked Mayo in 2013 in tax committee, isn't it true that you're going to make [business] decisions on [operations in] Arizona and Florida, where they have facilities, based on where it's lucrative. [Mayo CEO John Noseworthy, M.D.,] said 'Well no, we still need this money because we're still going to favor Minnesota in the future.' And now it looks like they're not," he said.

Last month, the Mayo Clinic announced it would spend $800 million to expand its campuses in Florida and Arizona. The Mayo contends its a global health care provider and will make investments at all three of its campuses to stay in step with competition. It also recently announced an expansion to its Gonda building in Rochester.

Yet with the race to give downtown Rochester a makeover, fabric seller Ginny Smith hopes that businesses owners like her won't be sacrificed in the process.

This story was published October 22, 2018.