Kiger's Notebook

Collaboration rolling toward Rochester streets

While it isn't street-ready yet, several of Rochester's public transportation businesses are trying to put together an alliance to pool their resources and ultimately improve the experience getting from Point A to Point B in the Med City.

Details are still being hammered out and nothing is finalized yet, but it sounds like it will probably happen.

I chatted with someone involved with deal. He wasn't comfortable being identified yet, but he did offer a few insights of what might be coming down the road.

The businesses involved would retain their individual identities. However, they will join forces to handle needs they have in common, fleet maintenance in particular.

"The alliance wants to ensure a seamless experience for customers by providing a prompt, efficient and more consistent transportation service across all product lines," he said. "A world-class medical center deserves a world-class transportation system and we intend to deliver."

That sounds like a lofty goal that fits well with Mayo Clinic's Destination Medical Center initiative.

One interesting element is that it involves many types of transportation as well as bringing direct competitors together under the alliance's umbrella.

While these local businesses might not make it all the way to their targeted destinations, the journey itself sounds like one that could improve what happens on Rochester's streets.

I'll keep tracking this one. Stay tuned.

New building proposed for deposed Burger King site

After eight years as an empty building gathering dust, a proposed development might mean that it's time to say farewell to Rochester's deposed King.

This royal saga begins with an ending, so here's a slightly condensed version of the history to provide background for the new chapter.

In 2005, the Burger King at 4107 U.S. 52 N. closed its doors after a dispute between franchisee Road Corp., which was owned by Girish Dharod, and the royal fast food corporation ended with all five of Rochester's BKs being shut down.

Burger King shifted the Rochester area franchises to the Twin Cities-based Dolphin Corp., which quickly re-opened three of the five restaurants.

The two others — the North 52 location and the one at 615 S. Broadway — were owned by the Dallas, Texas-based Z’s American Properties. Z's American Properties is owned by Sunil Dharod, Girish's brother.

Eventually, a real estate auction of the two ex-BKs was held in 2006. Dolphin was the top bidder, but Sunil Dharod later rejected the bids.

A frustrated Greg Dolphin said he was ready to “go back to the drawing board" and pursue other Rochester sites to open more Burger Kings. True to his word, Dolphin is planning to build a new restaurant on a long empty chunk of land at the corner of 12th Street Southeast and Marion Road Southeast. When completed, it will be the new home for the BK that's now based in the nearby Cub Food Plaza.

In the ensuing years, the South Broadway building became the Tex-Mex eatery Rico Mex. That closed in 2008. It was bought up by the University of Minnesota Rochester and demolished to clear the way for a future campus.

Meanwhile, Sunil Dharod's other building sat quietly, tucked away in its nook on the U.S. 52 frontage road

That could all change now that Z's American Properties has filed plans with the city to build a 7,400-square-foot complex. The plans show it split into two units — a 2,400-square-foot restaurant and a 5,000-square-foot retail site. Rochester's McGhie & Betts is handling the design duties.

The building plans were filed with the city this week, so it might be a while before anything happens at the faded fast food site. If the plan does move forward, it'll be interesting to see what restaurant might open there.

Like his brother, Sunil Dharod was a franchisee with Burger King. At one point, he had 18 BKs as well as many Applebee's restaurants. His BKs were auctioned off in 2011. The Dallas Morning News described the split as being "Beset by lawsuits, slumping sales and hard feelings."

Sunil Dharod still has his flourishing portfolio of 43 Applebee's, all of which are in Texas. However, an Applebee's doesn't seem a likely candidate for the new spot, since one is already cooking across the highway. Since the plans include a drive-through window, it looks like some sort of fast food entity is in mind.

Mayo Clinic Biz Accelerator already speeding along

Here's some from my 2nd Mayo Clinic Business Accelerator story of the week. I'll have more in seperate post soon.

The just-opened Mayo Clinic Business Accelerator is already bursting at the seams with companies, including some local start-ups that are ready to aim high.

"We want to be the Amgen (the largest biotechnology company in the world) of Rochester," says Dr. John Burnett Jr., who with Dr. Horng Chen founded Zumbro Discovery just a few weeks ago.

The pair develop peptides to help treat medical conditions and two of their previous creations were licensed by out-of-state companies.

"We really had the desire to set something up here," says Chen. And as the inventors, they believe they will be able to better direct the course of the product as well as do it faster.

Their first patented peptide is designed to treat a condition known as Resistant Hypertension. It is generally defined as high blood pressure that standard treatments can't lower. About 10 to 20 percent of people diagnosed with hypertension are believed to be resistant.
It can lead to heart failure, myocardial infarction, stroke as well as kidney failure.

The Federal Drug Administration has already given the doctors the greenlight to begin testing on patients with Resistant Hypertension and they hope to do that by the end of the year.

"Being in the Accelerator is great for a young, virtual company like us. It gives a chance to interact with venture capitalists and network with other businesses," says Burnett. "And it is just a short walk from our lab."

The Accelerator offices in the Minnesota BioBusiness Center were packed this morning as crowds of Mayo Clinic administrators, city officials and community leaders packed into the just-completed space to christian is open for business.

It's "business" is to speed up local business development and ultimately create new jobs.

“The Accelerator is an example of the strength of a strong partnership between Mayo Clinic and the community to make it easier and more affordable for companies to start and locate in Rochester,” says Mayo Clinic CEO Dr. John Noseworthy.

A collaboration between Mayo Clinic, the City of Rochester and Rochester Area Economic Development Inc., the Accelerator is starting out with a full boat of tenants that include biotech businesses, medical device makers, software start-ups, venture capitalists and health care consultants.

Funded by $100,000 from Mayo Clinic and $100,000 from local sales tax money, the 2,500-square-foot cluster of offices is located on the second floor of the city-owned Minnesota BioBusiness Center. RAEDI is handling the management and leasing of the space.

“We hope to provide a nurturing space for new company formation in Rochester,” says Jim Rogers of Mayo Clinic Ventures.

A window on Mayo Clinic's business accelerator plans

It is getting close to the big reveal of the Mayo Clinic Business Accelerator in the City of Rochester's Minnesota BioBusiness Center.

The plan, as I understand it, is to announce the new tenants - possibly eight - in the 2,500-square-foot center at RAEDI's annual meeting on Thursday. Remember this new twist on a business incubator is designed to house early biotech start-ups as well as venture capitalists. The tenant names have been kept hidden from anyone outside of Mayo Clinic and the usual insider crowd of public figures.

And yet this morning, a couple of venture capitalist firms' names are as clear as glass as being part of this private/public project.

Sanderling Ventures and Versant Ventures are up on the window, along with Mayo Clinic Ventures, the City of Rochester and RAEDI.

The California-based firm has a lot of experience working with Mayo Clinic and Mayo-related companies, like Torax and Naviscan.

I don't know as much as about Versant Ventures, but it is also based in California. However, it also has an office in Minneapolis.

Here's some background on the accelerator:

Mayo Clinic is giving $100,000 to turn the unused space, which is owned by the city, into offices. RAEDI will handle the management and leasing of the space.

HGA, which was the architect firm for the building, handled designs for this space. Lots of glass walls, I hear. Rents are expected to range from $13 to $15 per square foot.

Shoppes on Maine poised for growth as Mercedes readies for opening

While downtown and the northwest quadrant of the city have been seeing a lot of action in recent months, one shouldn't forget southwest Rochester.

The sprawling Shoppes on Maine commercial development on Rochester's South Broadway may not be exploding with growth, but it seems to be bubbling along.

It was car dealership Rochester Toyota that first put what was an empty field on the map in 2006. And now another dealership, Mercedes-Benz of Rochester, is gearing up to hit the gas again for the area that I once labeled as "Rochester 2.0." Yeah, I know… Sometimes I'm a little over dramatic. Heh.

Anyway, look for the lights to go on inside the shiny glass walls, and the doors of the dealership to open in late March.

That should bring in more traffic to that area and, in turn, attract the interest of more businesses.

Look for Cherry Berry frozen yogurt to sweeten the deal as a new franchise should start serving in the strip center in front of Lowe's. It will be next to Portrait Innovations, which is a photo studio that is going strong since opening in 2008. I recently messed up and misreported that it wasn't open. It is very open and seems pretty busy, too. I'm sorry about that.

Miracle Ear is also very active in the Minnesota Lakes Dental building. It recently moved out of the Sears store in Apache Mall to join the Shoppes on Maine mix.

Of course, there have been some places, such as the more than 30,000-square-foot Best Buy store and the nearby Mattress Firm store, that have emptied recently.

However, one of my sharp-eyed spies let me know last week that the "For Lease" sign has been taken off of the ex-Best Buy, and lights were on inside.

Does that mean a deal is starting to surge to plug in a new business there? I'm not sure, but I'll keep an eye on it.

Highlights of Mayo Clinic's 2012 financials

Here are a few random, fun facts from Mayo Clinic's 2012 financials:

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• Spent on charity care: $83.4 million, up from $61.8 million in 2011.

• Spent to support Medicaid: $321.7 million, up from $260.4 million in 2011.

• Revenue from retail pharmacy sales: $149 million, up from $134 million in 2011.

• Revenue from technology commercialization, health information and medical products: $34.1 million, down from $40.4 million in 2011.

• Revenue from cafeteria sales: $28.8 million, down from $30.3 million in 2011.

• Cash and cash equivalents: $59.6 million, down from $141.3 million in 2011

• Earned incentive from federal government for introducing electronic medical records: $44.7 million

Costco = Rainmaker for Roch. development

Bringing businesses into a new development can sometimes be a hard sell.

However, once you have a big Costco store sitting in the middle of the property, all of that changes. Businesses seek you out rather than the reverse.

"We're at the cool stage now where we can pick and choose," says Hans Zietlow, of Kwik Trip, who is in charge of the 108-acre commercial development at 19th Street Northwest and West Circle Drive.

While the deals are still in the works and he can't name names yet, Zietlow says Rochester can expect a lot of dirt to be moving this summer.

If I was a betting man, I'd say we'll have four or five construction projects going on out there," he says. "They will all be stand-alone buildings."

Any more hints?

"They all are national names … we should have some pretty cool names," Zietlow says.

I guess I'll need to keep at eye on that quadrant, when the ground thaws and construction season heats up again.

Rochester man steps up with new shoe company

Here's some from a piece I wrote about an interesting project based here in Rochester. A designer is launching his own men's shoe company from a northwest Rochester townhouse.

And he is forgoing China or any other international manufacturing. And all of the source materials - leather, shoelacers and whatnot - originate in the U.S.

One last note, his fiancee's name is Krisa Ryan. I mucked up the spelling in print. Sorry about that.

Jorge Gomez wants people to try walking in his shoes. Literally.

In a small southwest Rochester townhouse that he shares with his fiancée, Gomez's new men's shoe company — Well Bred — is taking its first steps.

And he's following a path that's rare these days. The young designer's creations are being made solely in this country, using only materials from the U.S.

"I wanted to make a product made in the U.S. that I could be proud to wear," he says.

Gomez left a career designing cars to step into the world of shoes. But why shoes?

"They are the most functional piece of clothing in a person's wardrobe," Gomez says.

When he ended up at a New York shoe design firm, Gomez worked to learn all he could about making shoes. Part of that education included traveling through China to tour factories.

What he found was not pretty. "Very unhappy" workers making one particular stitch all day long as hundreds of thousands of shoes rolled by on a conveyor belt.

"I saw horrible, dirty conditions," he says.

That's what drove him to have his shoes crafted in the U.S., despite the higher cost. Designing his contemporary menswear in his Rochester home office was the easy part. The most difficult and time-consuming part of it all has been lining up a U.S. manufacturer.

Eventually, he found a factory in California with a dedicated team of artisans. Gomez found a source for American leather in Illinois. But finding U.S.-made shoelaces was a challenge, since only two firms still make them.

Now he has actual samples of five styles of shoes, his re-interpretations of classics like oxfords, wingtip brogues and everyday boots.

Gomez says his shoes are very versatile. His hope is that men can wear them when they need to look professional as well as at more casual, off-hours times. They will cost between $395 and $475, which puts him on the mid- to high end of the price ranges for these types of shoes. However, he says his shoes will last and are designed so they can easily be re-soled.

"I was frustrated by the selection of shoes in menswear. I would spend $300 on a pair of beautiful shoes, and they would fall apart within two weeks," Gomez says.

He's traveling to New York this week to show his shoes to potential retailers. The goal is to get around 15 high-end men's boutiques to make orders from the New York show and a Las Vegas event next month.

While the focus is on getting into stores, Well Bred will eventually sell shoes directly through its website. That means he'll need stock on hand in Rochester.

"We'll use the 'little warehouse,' aka the guest bedroom," he says with a chuckle.

Gomez says he probably wouldn't have made it this far without his fiancée, Krisa Ryan. She brought him to Rochester, when she got a job at Mayo Clinic. She was the one who came up with Well Bred as a name to embody a brand that comes from good circumstances.

"I've had my doubts, but she really supported me through it all," he says.

Now everything depends on the reactions of the retail buyers.

"I put everything I've got into it. I think it is a project that I can be proud of, no matter the outcome," Gomez says while looking at one of his shoes.

Oregon hospital says "No" to proton beam therapy, cites studies

This is some from an interesting story in The Oregonian by Nick Budnick. The context is, of course, that Mayo Clinic is building a proton beam center in downtwon Rochester as well as one in Arizona.

Gary Schwitzer, former Mayo Clinic executive, pointed out the article on the Healthnewsreview.org website. Schwitzer characterized the trend of hospitals building proton beam centers with the very evocative and provocative phrase -  a "medical arms race."

Here's some from Budnick's article:

In recent years, large medical centers around the country have been building massive proton therapy machines costing $100 million and up, marketing them to men with prostate cancer.

For now, Oregon Health & Science University won't be one of them, with officials saying the treatment's cost and continued debate over its benefit have caused them to scrap a push to build one here.

"All of us were interested in exploring it," said Tomasz Beer, deputy director of OHSU's Knight Cancer Institute. But as conventional radiation therapy has improved, "it's not clear today whether proton therapy offers a meaningful and substantial clinical advantage."

University officials have mulled the idea for some time, even hiring an outside consultant about two years ago. Plans to hire another consultant were dropped earlier this year, with officials instead inviting two experts to university leaders, Beer said. Officials made their final decision in the last month or so.

Though the technology is considered useful in some pediatric cancers, studies continue to question its benefit for adults. "It is a technology that for adult tumors may have some advantages but those advantages have not been proven in head to head studies," Beer said. Things could change as the therapy evolves, but "We felt that we couldn't really justify this sort of investment based on the promise that this technology offers as it stands today."

Proton therapy centers can be as big as a football field, but OHSU had been considering a smaller, more recent version that would have cost about $30 million.

The treatment costs significantly more than conventional radiation therapy. Supporters say the therapy offers fewer side effects, but that claim has been undermined by studies released this year, most recently in the Journal of the National Cancer Institute. Critics call proton therapy an example of profit-driven medicine gone awry.

Proton therapy center operators have received other bad news this year. The federal government recently announced that it will follow through on plans issued this summer to cut Medicare reimbursement for proton therapy by nearly a third. That means centers' per-patient revenue dropped from an estimated $36,000 to $25,000.

Railroad puts brakes on DM&E expansion plan

Here's some from a good piece by my colleague Mike Klein. It looks like the more-than-a-decade battle to keep the DM&E from running more coal through Rochester may have come to an end with a whimper rather than a bang.

Of course, now that silca sand and fraccing is hot, that might become the new coal and be a future reason to ramp up. Life on the rails is unpredictable.

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Canadian Pacific is dropping plans to extend its rail network into the Powder River Basin, abruptly ending Rochester's decades-long fight to stop the increased coal train traffic through town planned as part of that $6 billion plan.

The railroad's announcement this morning will likely be followed by more news, as new CEO Hunter Harrison will be meeting with executives Tuesday to announce plans moving forward, spokesman Ed Greenberg said. The railroad has been reviewing its entire network, he said.

When CP acquired the Dakota Minnesota & Eastern railroad in 2007 for $1.48 billion, it also acquired the option to build a 260-mile extension of its network into coal mines in the Powder River Basin in Wyoming. Now Canadian Pacific will take a fourth quarter charge of approximately $180 million on its books, on its option to build there.

"It is CP’s intention to defer indefinitely plans to extend its rail network into the PRB coal mines based on continued deterioration in the market for domestic thermal coal, including a sharp deterioration in 2012," the company said.

The low price and increased availability of natural gas has cut into coal usage in recent years.

"We believe it is a prudent decision to defer the network into the Powder River Basin when you consider the long-term prospects of coal," said Canadian Pacific spokesman Ed Greenberg.

Olmsted County Commissioner Ken Brown said the announcement is a "good deal" for Rochester, but he cautioned that Canadian Pacific is trying to sell those tracks, and a new buyer could proceed with the Powder River Basin plan.

"In the future, who knows what could happen," said Brown, who serves on the Rochester Coalition opposing the increased rail traffic. "It could be a long time before anything could happen. It looks like it's not something to worry about imminently. In the future, if they sell it, maybe it will be, but that's down the road."

Right now, Canadian Pacific moves about about two to four trains every 24 hours through the Rochester area with "mixed freight," mainly steel and grain.

Rochester’s history of conflict with DM&E dates to 1998, when the railroad announced its plans to extend its line 260 miles west to coal fields in Wyoming’s Powder River Basin. The coal-line plan alarmed Rochester-area officials because of the likelihood it would bring increased and heavier, faster traffic through the city.

The Mayo Clinic, the city of Rochester, Olmsted County and the Rochester Area Chamber of Commerce teamed up to form the Rochester Coalition to oppose the bypass.