Council denies district's annexation request; plus a rundown of other key items

It is an issue that has divided city and school district officials for months — and on Monday it came to a head.

The Rochester City Council voted 6-1 to deny Rochester Public Schools a request to annex 80 acres of land for a new middle school.

The vote was a major blow for the district, which had been unwavering in its preference for the property, known as Hart Farm.

District officials had presented the site as the best option for a middle school due to the continued growth in the southern part of Rochester. Funding for the school — though not at one specific site — was included in a bond referendum overwhelmingly approved by voters last November.

However, the proposal was met with resistance from city staff who argued the project would intensify development pressures in the area, leading to infrastructure spending inconsistent with the city’s growth strategy.

Cindy Steinhauser, director of the Community Development Department, told the council Monday that staff’s concerns with the project date back to October 2018 when the district first notified them of the proposed site.

“As early as that meeting, those in attendance expressed grave concerns about this site,” said Steinhauser, citing issues with access to sanitary and water systems, as well as fire protection, as some of the key drivers in the staff’s recommendation to deny the annexation request.

Despite meeting many times ahead of Monday’s council meeting, neither side moved far from their original positions, and it was evident on multiple occasions their relationship regarding the project had frayed.

Speaking to the council via video call, RPS Superintendent Michael Muñoz said “it felt like that in the beginning, instead of working with us, it was more about telling us where we should build our school.”

Council Member Mark Bilderback expressed his disappointment that the two sides were unable to find a compromise, before joining the majority of his colleagues in denying the district’s plans.

“I am concerned about some of the things staff had talked about — future sewer, traffic — so even though the school system is talking about a willingness to pay for a lot of this, there are a lot of unknowns,” he said.

Council Member Shaun Palmer was the lone dissenting vote. He said, “For me, our education partner, the school district, is saying this is the best location for them. And that weighs heavy on my mind.”

It is unclear where the district goes from here. For the sake of comparison, district officials did show two other potential sites to the council, including one in northwest Rochester where a developer has offered donated land. Superintendent Muñoz has, however, been lukewarm about the offer, pointing to challenges with the site’s topography, location, and size.

Budget shortfall

City Administrator Steve Rymer provided the council his administration’s first formal update on the state of the budget amid the Covid-19 pandemic.

Rymer said current forecasts show a revenue reduction of $17-28 million resulting from the economic downturn. The projection is based on an assumption that the current shutdown ends in early summer, with an extended recovery period to follow.

His staff is now looking at ways to reduce spending, while simultaneously seeking opportunities for federal funding.

Measures taken now include implementing a hiring freeze and asking department heads to come forward with cost-containment plans.

As for the $190 million in capital improvement projects scheduled for this year, those will go on as planned. Notable projects include the reconstruction of the Rochester International Airport runway and Destination Medical Center’s Heart of the City initiative.

Rymer said the reason to continue on with the projects is that they are not only good for the economy, but many have funding mechanisms built into them, meaning funds cannot be easily diverted for other expenses.

“We have 32 different funding sources [for the 2020 CIP],” he said. “There are restrictions on those that we cannot typically take funds from capital projects and apply them to cover operating losses.”

While some funding streams, such as parking revenue, have taken significant dips, one key revenue generator appears to remain steady: property taxes. Rymer said the city expects to generate $80 million, consistent with what was expected pre-pandemic.

Heart of the City bids approved

The council approved bids for the first phase of Heart of the City.

The $15 million project — being paid for using state DMC funds — had initially come in over budget. However, for the second round of bidding, the city broke up much of the package so smaller contractors could apply.

The result, according to city officials, was more small businesses getting involved. They now estimate local participation to be around 50 percent.

The project now falls within budget, though with one caveat. The council’s approval is contingent on the DMC Corporation board authorizing an additional $1.6 million in state DMC funds for a snow melt system.

North Broadway project pushed back

It is unlikely that work on the North Broadway reconstruction project will begin this year after bids for the project came in over $5 million higher than anticipated.

Bids for road construction ranged from $19.5 million to $24.5 million. The city had estimated about $14.2 million for that portion of the project.

The city now plans to re-bid the project later this year. That means the project, which had been slated to begin this summer, will likely be delayed for a full year.

Rochester City Engineer Dillon Dombrovski said in the meantime, staff will continue to look for ways to reduce costs. Given the economic slowdown, he also noted the possibility for a more competitive bidding environment.

“I don’t know that we will ever get it to that original construction estimate, but we can take a look at things to reduce the overall budget and try to cut into some of that 25 percent [over-budget cost],” said Dombrovski.

Tif awarded for 2DS

The council awarded $7.3 million in tax increment financing (TIF) to the developer Mortenson for the company’s Two Discovery Square building.

The project, valued at $45 million, had already received a nod from the DMCC board. Construction is expected to begin later this year.

Plans for 2DS call for a LEED-certified five-story, 124,000 square foot space, just south of the existing One Discovery Square. According to DMC, the new structure could accommodate upwards of 500 new, permanent jobs upon completion, in addition to 800 temporary construction jobs.

Pay cut proposal rejected

Council Member Palmer's proposal to cut council pay by 30 percent failed after none of his colleagues seconded the motion.

Palmer suggested the council take the cut in solidarity with local workers affected by the economic shutdown.

Palmer and Council President Randy Staver were the only two members to vote in January against the contentious pay increases.

Prior to the vote, Palmer had published an op-ed in the Post Bulletin outlining his proposal. On Monday, however, some on the council called the motion premature — noting they would prefer to see a recommendation from staff before signing off on any specific spending cuts.

Sean Baker is a Rochester journalist and the founder of Med City Beat.