There's no doubt that changes are ahead for how development projects are processed by the city of Rochester in the aftermath of the Brutger Holiday Inn project.
At least one City Council member and key city officials are expected to roll out proposals to clarify and improve the process, in light of the Holiday Inn episode. That $63 million project proposed for the big vacant lot across from Saint Marys Hospital was withdrawn by St. Cloud-based developer Larry Brutger last week after several months in the city's grinder for approval.
Brutger said in a letter to the city on Feb. 19 that "without a clearer path and a realistic timeline for DMC/EDA approval to allow our project to move ahead, we regrettably must withdraw our application at this time."
Brutger Equities submitted an application to the city six months earlier, and among other hurdles, it went through three visits to the city Planning and Zoning Commission. As far back at late October, Brutger expressed frustration with the city's cumbersome review process, and that was before he encountered the brand-spanking-new DMC process for seeking "enhanced" TIF for the project.
Several people I've talked with have said the way this went down was a black eye for the city at a time when major developers from the Twin Cities (such as Opus and Ryan) to Abu Dhabi (such as Bloom Realty, which is working on a riverfront deal) are watching closely. They want to know whether the city and DMC are ready for prime time.
The Holiday Inn episode wasn't an auspicious debut.
City Council President Randy Staver told the Post-Bulletin last weekend, "The most important thing now is what are we going to do fix this. We have multi-million ideas on the horizon. We have got to be able to up our game. We need to make sure we aren't throwing up unnecessary barriers."
Staver also said, "We need the DMC EDA to pull in the same direction. Quite frankly, I think they need to create a greater sense of urgency in terms of how they are responding to some of these projects."
Staver told me Friday he expects to have a draft proposal of ways to "fix this" within several days, and City Administrator Stevan Kvenvold also said Friday he planned to make recommendations to council members on process changes to consider.
How big a deal was the Holiday Inn project? Aside from the total price tag, which was nearly half of what Gus Chafoulias intends to do with Broadway at Center, here's what Brutger told the city:
It would have created about 120 construction jobs. Sales tax revenue from construction materials would be have $1.3 million. Payroll tax revenue during the construction phase would have amounted to about $2.1 million. Direct tax revenue from construction and property-related taxes was estimated at $3.4 million, and local tax revenue from indirect economic impact was estimated at $1.4 million, for a total local tax impact of about $4.8 million during construction.
The hotel would have employed about 200 people.
Property taxes paid on the property after completion were estimated at $728,000 per year, versus the current $81,000. About 90 percent of the property taxes could have been directed to TIF, still leaving about $145,000 in property tax revenue.
The hotel would have generated about $460,000 in lodging and hospitality taxes annually, based on a perhaps optimistic 80-percent occupancy.
And in addition to the new townhomes on the First Street side of the block, additional parking, etc., it could have advanced the city's goal of a pedestrian tunnel under Second Street to serve the north side commercial properties, not just the Holiday Inn.
Total it all up and it's easy to understand why many people in town want to know what happened, and deal with the process so that applications of this kind aren't dropped for reasons of delay, confusion between the city and DMC, nitpicking, personal animus or whatever.
One intriguing question is whether Larry Brutger would come back to the table. Sources tell me it's not out of the question if the TIF issue could be resolved in a timely way. Brutger wasn't available for a call late this week; I'll try that early next week.
Other notes from conversations I've had this week with key people involved:
The Holiday Inn brand was a pinata: I've heard from more than a few sources that the Holiday Inn brand wasn't favored explicitly by a few key figures in the debate, which others thought was absurd. "There's no need for a four-star hotel across from the hospital," said one source, "there's a need for high-quality, affordable hotel rooms for people with friends and family who are patients across the street."
The financial viability of the project was a concern from the start: The price Brutger planned to pay for the site on Second Street at 13th Avenue Southwest, which is owned by Kahler owner/executive Javon Bea, was said to be lofty for what was planned. Sources say the land cost amounted to nearly 20 percent of the project's total cost.
There were concerns about what, if anything, DMC EDA was doing to move the application for enhanced TIF forward after the DMCC board meeting in December. The next DMCC board meeting wasn't until late March, and DMCC action was needed for the city council to move forward in early April.
The EDA's reaction after Brutger withdrew the application was fairly muted. For the record, the EDA felt that the P-B should have gotten comments from them for last Saturday's story, and ideally we would have. That said, EDA's comments earlier this week were restrained, emphasizing the long view. Maybe that's appropriate, from EDA's perspective; they take a very long view on the 20-year timeline for DMC development.
But as Staver and others said, that's clearly not in sync with what the city is expecting.
Here's the text of the letter from the Me to We Racial Healing organization to Rochester Mayor Ardell Brede, Police Chief Roger Peterson and others, about Police Officer Ben Schlag. I copy-and-pasted one of the image files...there were others.
February 17, 2016
Ardell Brede, Mayor
Roger Peterson, Police Chief
Director of Human Resources
City of Rochester Minnesota
201 4th Street SE
Rochester, MN 55904
CC: Darrel Hildebrant, Crime Prevention Specialist
Rochester Police Oversight Committee
Randy Staver, City of Rochester Council President
Mark Dayton, Governer of the State of Minnesota
Dear Mayor Brede and Chief Peterson,
I am writing on behalf of Me to We Racial Healing, a national group of nearly 1,000 citizens with headquarters in Minnesota. The primary purpose of our letter is to bring your attention to a troubling Facebook posts made by Ben Schlag. It is our understanding from news and public social media that he likely works for Rochester Police as an officer. We seek your response and swift action.
Though he has since removed them from public view, up until yesterday evening, Mr. Schlag’s public posts on his Facebook page indicated significant prejudice towards black people, Muslims and civil rights activists. Below is a selection of the numerous violently racist posts he made to his page:
Beyond the obvious messages in these images Mr. Schlag uploaded, the timing of when he chose to post them is chilling.
November 17, 2015: Image depicting a car running over protesters.
November 26, 2015: Text image suggesting shooting Muslims in the face.
August 13, 2015: Text suggesting Ferguson demonstrators are criminals.
Mr. Schlag’s comments show a clear pattern of disregard for systemic and interconnected realities and a distinct disrespect for people of color and people who care about racial justice.
His comments furthermore show deficiencies in critical/higher order thinking capacities that balance diverse realities, a persistent and callous disregard for the lives of others, as well as a lack of understanding of civil disobedience and non-violent demonstration practices commonly used in justice and equality efforts worldwide. Including in most of the 150 countries our US military is currently deployed to protect the civil rights of oppressed citizens. And, much like those used to achieve the US Civil Rights Act of 1964. Including by the Rev Dr Martin Luther King Jr and others and in demonstrations like the famed march on a bridge in Selma, Alabama. They are particularly well explained in King’s A Letter From A Birmingham Jail.
His comments would seem to violate the mission of the City of Rochester: “The City will strive to enhance community pride by improving the physical, environmental, economic, cultural and social quality of the city. “ They also conflict with the Rochester Police Department’s mission statement: "To work with the public to improve the quality of life in the community. " We should note here the conspicuous underutilization of Rocheseter public safety staff who are people of color. Of your 96 staff only 3 (three) are people of color. Of these, all but one serve in the lowest position on the force. No doubt, witnessing hostility from officers like Mr. Schlag wouldn’t likely inspire people of color to apply for positions at the Department.
Indeed, we’re especially troubled given Mr. Schlag’s position as a police officer. It is unsettling to imagine how his racism would play out in relationships with other officers, the Rochester community and surrounding areas in engagements that are isolated and/or out of public view. His behaviors demonstrate deficits in emotional maturity, professional circumspection, composure, and restraint. And specifically relevant to public safety: a severe lack of situational judgement--given the increasingly poor reputation police departments have with black people and other people of color.
Most immediately serious, however, is that this type of rhetoric contributes to, and escalates racial tensions in our communities and country, tensions that are endangering lives and undermining civic esteem.
The collective effects risk the health, safety and well being of both citizens and police. This was evidenced by attacks on Minneapolis police by anarchists which came after the day after Mr. Schlag, along with many others, expressed incitement of violence against demonstrators on social media. A similar environment was present on social media in the days before the shooting of five black demonstrators by four young white men.
Just yesterday St. Paul police officer Jeff Rothecker resigned his position due to racist comments he also made on social media. Notably, just as Mr. Schlag’s image comment calls for running over protesters, so did Sgt Rothecker’s comments. Rothecker is just one of a number of people in public safety nationally whose racist social media comments have led to investigations, firings and resignations.
More specifically: comments like these, coming from city,state and federal public safety officers continue to further erode trust between police and citizens—of all races; and perpetuate further cross-cultural tensions, if not gaslight more violence. They also undermine the hard work of fellow officers and other public safety departments. As government employees such behaviors are increasingly resulting in significant costs to city budgets and citizens whose taxes pay for public safety departments.
Should the impact of Mr. Schlag’s comments be misunderstood or mishandled by city, state and/or police officials, the lack of appropriate response(s) might imply acceptance of, or complicity with, institutional racism.
With all of this in mind, we ask that you address this issue immediately and comprehensively, as follows:
We hope you agree that this incident provides engaged leaders like you a powerful opportunity that the globally-recognized City of Rochester needs to seize for both short-term and ongoing positive outcomes for your city, surrounding communities and our state. Please respond promptly to this letter at firstname.lastname@example.org.
We look forward to hearing from you.
Andrea Morisette Grazzini
Organizer Me to We Racial Healing
Founder & CEO WetheP
PO Box 3121
Burnsville, MN 55337
Here's the letter that Brutger Equities wrote to the city Thursday, I believe, saying they were pulling the plug on the $63 million Holiday Inn project. As Larry Brutger says toward the end, "Without a clearer path and realistic timeline for DMC/EDA approval to allow our project to move ahead, we regrettably must withdraw our application at this time."
This pointed reference to the "realistic timeline" for DMC EDA, fairly or not, explains why people there were nervous as cats about how this news was going to be reported.
I received an interesting note from Steve Borchardt, of the Rochester Area Foundation, over the weekend about the link between Imagine Kutzky, the Kutzky Park advocacy organization; the foundation; and First Homes, the affordable housing initiative of RAF.
Imagine Kutzky was a "reinvestment initiative and partnership established by the Kutzky Park Neighborhood Association, First Homes and Rochester Area Foundation," according to a webpage that's still posted on the neighborhood association's website. "As an organization, the Kutzky Park Neighborhood Association was increasingly put in a position of reacting to development proposals, often in negative terms. In an effort to become proactive and preserve our neighborhood, as well as promote neighborhood-friendly development where needed, Kutzky Park neighborhood leaders began planning Imagine Kutzky."
Imagine Kutzky's mission statement is described on that webpage: "To preserve, enhance and promote Kutzky Park as a vibrant and sustainable, mixed-use urban neighborhood."
Imagine Kutzky does have a Facebook page that says it became an "independent advocacy group in fall of 2015" and that it aims to represent more than just the Kutzky Park area -- its mission is said to be "supporting great urban design policy, projects, and initiatives in all downtown neighborhoods."
The organization also has a website that doesn't turn up well on Web searches and is fairly light on information. (It also narrows the mission to Kutzky Park.)
In any case, a few of our recent news stories have referred to Imagine Kutzky as being a spinoff of those organizations or affiliated in some way, but the foundation wants that clarified. In an email over the weekend, Borchardt says the foundation hasn't been affiliated in any way with Imagine Kutzky for four or five years, and "I think that it is important to note that our boards of directors, for both RAF and First Homes, desire neither credit or blame for the activities of Imagine Kutzky."
He goes on, "The activities the Imagine Kutzky group has been involved with since 2012 are not in alignment with the policies or opinions of RAF and First Homes."
The collapse Friday of Brutger Equities' plans for a $63 million hotel project across from Saint Marys Hospital was a big deal. A lot of powerful forces came together to challenge the developer, the city's planning and zoning process, city administration, the Destination Medical Center bureaucracy, and eventually the City Council's competency, and developer Larry Brutger decided he'd had enough.
Here's my take on who won and who lost in the Holiday Inn debacle. There are many more losers than winners, but let's start with winners.
The biggest winner, at least for the moment, is the Imagine Kutzky neighborhood group, which is an offshoot of the Kutzky Park Neighborhood Association, and the city's neighborhood associations generally. Imagine Kutzky and people allied and associated with it, including City Council Member Michael Wojcik and council candidate and businessman Sean Allen, raised concerns about almost every aspect of the project, including its Holiday Inn brand, which apparently was too declasse for some.
Whether Imagine Kutzky was reflecting neighborhood concerns or imagining them is hard to know, in part because the top concerns weren't headline-grabbing. It's not as if the project involved demolition of a beloved landmark, major planning and zoning changes or whatever. There were concerns about its frontage on First Street, how well it fit with transit plans for the Second Street corridor, and of course tax-increment financing that would have been involved. But neighborhood activism about the project was in place before the TIF and Saint Marys tunnel angle emerged.
In any case, Kutzky Park activists helped put the brakes on the project. If delays in winning city and DMC EDA approval were the reason Brutger abandoned ship, Imagine Kutzky played an important part.
Neighborhood associations have become organizations to reckon with in Rochester, which generally is a good thing. That said, it's reasonable to wonder whether neighborhood leaders always act in a way that reflects neighborhood interests, and how that community input dovetails with the elective process of running a city.
That brings up another big winner: Politics. The Holiday Inn project got caught up in the gears of a much larger political debate involving City Council politics as well as concerns about DMC. Allen, co-owner of Forager Brewery and of what's described as a boutique real estate firm, Midwest Landing, plans to challenge City Council President Randy Staver this fall, and Wojcik, who's running for re-election, has made no secret of his wish for a new governing majority on the council, with two other seats up for grabs.
Both have commented extensively on their blogs and social media about this project and criticized just about every facet of the project and the process. Wojcik's postmortem comments on his blog were somewhat muted -- he sounds almost wistful about "what could have been" if the project had gone ahead, though he says, "I think the public will be excited to see some of the other projects being proposed in this area."
Wojcik blames the project's demise on city zoning issues, poor city staff work and communication, "high land acquisition costs," "lack of public benefit to justify high subsidies," the Holiday Inn brand and Larry Brutger's personality.
On that last point, I can't remember a time when a developer's personal qualities, his outreach and engagement with people involved, has been so closely analyzed. Regarding the Holiday Inn brand -- really? Are the other hotel brands within a few blocks either direction from that site any more prestigious? The "Holiday Inn brand" issue was absurd from the start.
And regarding TIF financing, we'll see how that plays out and what the record shows for Wojcik and other council members regarding TIF and "choosing winners and losers."
Allen, in the Post-Bulletin story today, is less wistful about the project's demise. He lays the blame on the developer and says, "This is not a huge loss for Rochester. We lost a $63 million project, but we're likely to gain a $90 million project that will be better."
We'll see how long it takes for that $90 million project to come along. As Staver says in the P-B story today, based on how this project was treated, that property might remain a parking lot for a while.
A few other winners might include other hotel owners along Second Street, especially Tom Torgerson and TPI Hospitality, which owns three other hotels within a few blocks of Saint Marys. Torgerson wrote an open letter to the council last month that publicly hammered the Holiday Inn project and its TIF request. That was a pivotal moment in the whole series of events that led to Brutger's announcement Friday.
Another winner might be the owner of the site, Oronoco businessman and Kahler executive Javon Bea, who presumably gets to keep some earnest money from Brutger, though one would assume he'd prefer to close the deal and move on.
Losers? There are many: The City Council, and Staver probably takes some extra lumps because of the political atmosphere. City Administrator Steven Kvenvold and city staff get some blame for how the project was handled, especially in the presentation to the DMC EDA. The DMC EDA, and by extension DMC, which is likely to come under more pressure to get moving or get out of the way so the city can move on projects of this kind. Brutger, who lost some time and money here but presumably has other fish to fry.
And the biggest loser? The city, which just lost a $63 million investment.
There'll be other developers and other projects, and that land across from Saint Marys won't sit vacant for long. But this wasn't Rochester's finest hour.
The Rochester Public Library Foundation board announced plans last summer for a feasibility study to look at adding two floors to the library and nearly doubling its size, at a cost in the range of $47 million to $54 million. Recently, the foundation released more detailed plans, and a feasibility study for the now-$55 million project is to be released tonight.
Some public officials, such as City Council Member Michael Wojcik, have already embraced the idea, which would keep the library right where it is, at a time when some wonder whether Destination Medical Center planning might displace it. Where the money would come from is an even bigger question. Most of it presumably would come from city bonding, and the city already has major DMC obligations, but the foundation has suggested Olmsted County and maybe DMC money would be available.
This sounds like a good topic for a Post-Bulletin Dialogue, so we'll do it on Wednesday, March 2, in the library auditorium. The informal 90-minute forum will begin at 6:30 p.m., and joining me will be Library Director Audrey Betcher, plus others who will contribute perspective and context on this important community issue.
Watch this space for more details, and we'll get a story in the paper within a few days, but plan to join us if you can.
Thanks to all who joined us for the Dialogue at the Rochester Public Library last night -- one of our best-attended ever. The room was packed to the gills and people, as always, came prepared to talk.
Thank you to the arts leaders who joined me at the head table also: Andy Westreich, of SEMVA; Bari Amadio, CEO of the Greater Rochester Arts and Cultural Trust; Patrick Seeb, director of economic development and placemaking for DMC's Economic Development Agency; Megan Johnston, Rochester Art Center executive director; Gregory Stavrou, Rochester Civic Theatre executive director; Audrey Betcher, Rochester Public Library director; Steve Schmidt, executive director of the city's music department; and Jere Lantz, CEO and music director of the Rochester Symphony Orchestra & Chorale.
Though I was up and about with the microphone for much of the evening and couldn't take notes, here are eight takeaways from what I heard:
Big things are just ahead for arts and culture in Rochester: This may seem obvious, but there's a strong feeling (again, based on comments at the meeting, including from leaders of key organizations) that we're on the cusp of a transformation of the local arts scene. The challenge will be to channel it and maximize it, and that will take genuine collaboration and listening by DMC, city and arts leadership, artists and audience.
The former Armory (Rochester Senior Center) building is a giant opportunity: The city owns it, it owns the adjacent parking lots now, and it already has features that would make it work as an arts center. As a familiar, beloved historic building on Broadway, it's a dream come true for this type of center.
The future of Rochester arts isn't just downtown: Several people said the future growth in arts organizations, venues and space won't occur only in downtown. That's also obvious -- there aren't that many buildings or sites available in or close to downtown, and Mayo and DMC-related growth will certainly gobble up more than their share of downtown space. But we don't have a warehouse district, we don't have a Lowertown or Torpedo Factory like St. Paul and Alexandria, Va., and we barely have any historic buildings close to downtown. Where will that future arts growth occur?
Arts leaders insist they're all working together: They tended to protest too much, in fact, that they're all on the same page. It was striking that more than a few people insisted there are no conflicts between arts groups such as the Greater Rochester Arts and Cultural Trust and the Rochester Arts and Culture Collaborative, or disagreements about the suitability of the remodeled Presentation Hall at Mayo Civic Center.
There's no big pot of money for arts coming from DMC: An audience member asked about the "1 percent" of DMC-related spending that would be put aside for arts, and I've heard from others that they think there's a windfall coming for the arts. There's no such mandated 1 percent in the DMC statute; Mayor Ardell Brede noted that the statute says public officials "may" choose to prioritize that spending, but that's it.
At best, a plan for the Chateau Theatre is a year away: ...and that's on a fast track, said a few of the committee members working on that "visioning process." When I asked when we'll be able to catch a show or movie or whatever will be available at the Chateau, nobody offered a guess.
There's no one-stop navigation point for Rochester arts: An audience member asked where an artist or arts consumer can go to navigate what's available and how to access it. There are plenty of publications and websites available, including ours, but there's no one contact point in the local arts community that brings all this together.
It all comes down to the artists: All the planning in the world won't change the fact that the city has to be an attractive place for artists to live and work. Stavrou made some great comments about how local artists need to stay focused on their art as the priority. They need to stay fearless and passionate in pursuing their vision; that's what will make local art compelling, and audiences and patrons will find them.
I pulled the plug on the Four Stars blog a few weeks ago -- one too many blogs for me to manage -- so I'll be posting Four Stars-related items here instead. Here's one from a reader who appreciates Spam, my theme last week, as well as the Four Stars of Hawaiian Food, which I covered in January:
News release from Treasure Island casino/resort and the Prairie Island Indian Community:
Treasure Island Resort & Casino will open The Lagoon Water Park and Wave Spa at a ribbon cutting ceremony. The Lagoon is 40,000’ of fun and relaxation. It was a $19 million dollar project that began in May 2015.
The Lagoon features a 320’ long lazy river with rapids, a water fall and an island in the middle of the pool that has benches and lounge chairs. There is 119,000 gallons of water between all four pools and a state-of-the-art eco green filtration system that utilizes natural Sphagnum Moss as a pre-filter water conditioner that is much healthier for swimmers. The Barefoot Bar is the only swim up bar in Minnesota, located in the adults only section of the water park. There is also two hot tubs, one inside and out outside.
There is 14,000’ of outside terrace areas and custom fire pits.
The upscale Wave Spa is a full service salon and spa that offers hair services, manicures/pedicures, facials, waxing, make-up and nail services. Guests can choose from a variety of massages and spa packages will be offered as half or full day experiences. The relaxation room has a wall fire feature, lounge chairs and can accommodate up to 12 people. Catering is available for special spa events.
The fitness center has the latest technology in bikes, elliptical and treadmill equipment.
This $19 million dollar project added more than 30 new jobs, bringing the workforce to more than 1,500 team members.
Enter at the hotel lobby to access the ribbon cutting ceremony.
The Prairie Island Indian Community owns and operates Treasure Island Resort & Casino.