MN: West Transit Village expected to generate more than $40 million for TIF support

Planned development on the west end of Rochester's planned Link Bus Rapid Transit system is expected to generate at least $40 million in added property tax revenue within 15 to 20 years.

On Thursday, the state's Destination Medical Center Corp. board unanimously approved capturing those funds to help support development at the site, which is expected to include affordable housing, as well as public connections to the neighboring Cascade Lake Park.

"This project funding we are talking about couldn't happen in any other city in the state," DMCC board member RT Rybak said. "I'm glad we have it in Rochester."

While cities can create tax-increment finance districts to collect newly generated tax revenue on blighted property, the Mayo Clinic parking lot that's being developed wouldn't qualify without added legislative authority given to the DMC initiative.

If the Rochester City Council approves the district, it means added tax revenue generated from Mayo Clinic's development of a planned 2,500-stall parking ramp could be used to develop housing and other projects deemed to have public benefit on the roughly 14 acres between Second Street Southwest and Cascade Lake.

Dubbed West Transit Village, the site will include public transit infrastructure for the city's planned Link system with a 2.8-mile route through downtown. As part of the development of the current parking lot, the city's station will sit alongside a new Mayo Clinic employee parking ramp, with both expected to be operational by the end of 2026.

To meet the deadline, construction of the eight-level parking structure is expected to start in March, which sets a deadline for creating a TIF district.

"The TIF district would need to be established prior to any of that (construction) commencing in order to capture any tax increment off of the parking deck," said Catherine Malmberg, the DMC Economic Development Agency's director of public infrastructure and development strategy.

While the Mayo Clinic project is unable to receive financing support from the funds collected, the captured tax revenue will be available to support other projects approved by the DMCC board and City Council.

One project already counting on the TIF support is a planned affordable housing project being designed to line the south and west sides of the Mayo Clinic ramp.

Minneapolis-based Aeon, a nonprofit focused on developing affordable housing, is in the process of securing financing for the development, which will include an application for state housing support.

Aeon project manager Luis Pereira said state support is key to current plans, which would likely lead to a 2026 construction start, if the project serving residents age 55 and older is approved for state funds later this year.

If it's not approved, he said Aeon would likely look at altering plans, but the nonprofit is committed to seeing the housing built.

"I think we would continue to find a financial pathway forward," he said, adding that could mean resizing the project.

Mayo Clinic project manager Jay Smith said the ramp construction will continue with or without the housing secured, and the design calls for an attractive exterior and required supports for housing, in case the Aeon project is delayed.

Also included in plans for West Transit Village is a development being led by Kraus Anderson Construction, which is expected to start by the end of 2026, with the potential to include market-rate housing and retail space.

A second affordable housing project on the site is also being considered by Aeon.

Each project will need to submit its own development plan for city review, with Mayo Clinic's ramp plans expected to be submitted within 30 days.

In addition to having plans reviewed by city staff, any project seeking to tap TIF support will need to be approved by the state DMCC board and the City Council during future meetings.

"The use of funds will come back to the City Council and the DMC," DMCC Board Chairwoman Pamela Wheelock said of the anticipated tax increment.

©2025 the Post-Bulletin.
Visit www.postbulletin.com.
Distributed by Tribune Content Agency, LLC.