Gov. Mark Dayton said that while he is a big supporter of Mayo Clinic's request for $585 million in public dollars for its Destination Medical Center initiative, he has serious concerns with the proposed financing.
During a press conference on Thursday, Dayton said his understanding of the latest proposal is that the state would have to bond for all of the money upfront for a 30-year period. That would amount to roughly $30 million in debt service a year. He compared that request to his plan to release a $750 million bonding plan in the next few weeks to fund construction projects across the state.
"My understanding is they want us to essentially bond for the whole $600 million up front. You can see with a $750 million bonding bill for the whole state, that is almost unfeasible. So I am hoping and working toward finding some way that they can have financial support and the security as much as possible that they are going to have it on an ongoing basis," Dayton said.
He added that there is the potential the $30 million in annual costs could simply be paid in cash, as opposed to borrowing a large amount of money right away. He said he realizes that Mayo Clinic will want to have the security of knowing they can rely on those dollars and lawmakers cannot bind future legislatures to abide by their decisions.
"I can't conceive of this project getting five to six years down the road and then having anybody want to pull out of it," he said. "But I understand (Mayo Clinic) wanting better assurances than mine."
In the end, Dayton said he remains optimistic that a deal can be reached on the financing for the project.
"It's a great project. Mayo is just priceless in terms of its value to the state and value to Rochester and Olmsted County," he said.
In exchange for the public funding, Mayo Clinic is pledging to invest $3.5 billion over the next 20 years to expand its Rochester campus and leverage an additional $2 billion. The public money would be used for infrastructure upgrades in the city to support the massive growth fueled by the Destination Medical Center project.
I have put a call into Mayo Clinic to get a response to the governor's concerns. I'll update this post when I hear back from them.
Mayo Clinic spokesman Karl Oestreich said it is important for lawmakers to understand that Mayo Clinic is not asking the state to issue the bonds for the project right away. Rather, the clinic is looking at doing it in chunks over 20 years. The bill caps the amount of money that can go to the authority to $75 million per year. But the bill does want the state to authorize the full amount of bonding, and that could lead to issues with the state's ability to borrow in the future. More on that in Friday's Post-Bulletin.