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Mayo expansion more costly than expected

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news Red Wing, 55066

Red Wing Minnesota 2760 North Service Drive / P.O. Box 15 55066

ST. PAUL -- Minnesota legislators expressed sticker shock Tuesday when they learned the state's Mayo Clinic expansion proposal would cost more than they thought.

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It could be $1 billion more than Mayo supporters had said.

The Rochester-based health center known around the world asked the Legislature and Gov. Mark Dayton to borrow $585 million to help the community build facilities related to the expansion, things such as parking ramps, streets and land purchase.

But Mayo ran into opposition Tuesday when a Senate committee asked if the $585 million was the total state and local government cost.

Mayo insisted that would be the limit, although the bill being considered allows the state to pay up to $75 million a year for 33 years. Sen. Barb Goodwin, DFL-Columbia Heights, said the Mayo bill could be up to $2.5 billion over time.

After Judiciary Committee Chairman Ron Latz, DFL-St. Louis Park, asked a panel of Mayo representatives several times, Mayo consultant Bob Dunn told the Senate Judiciary Committee that the frequently reported $585 million figure only would be the amount the state borrows.

Dunn compared the situation to a person buying a house: The amount borrowed is just part of the money the homeowner must repay. A mortgage payment also includes interest.

A state report, not available during the senators' meeting, indicates Mayo project interest could top $1 billion over 33 years. Since the state would sell bonds over several years and interest rates change, it is impossible to deliver an exact amount.

Sen. Dave Senjem, R-Rochester, said that the state would repay principal and interest only after Mayo paid enough new tax, due to the expansion, to cover those costs.

Saying they were unclear about the real state cost of the Mayo project, members of the Judiciary Committee made the unusual decision of sending the bill on to the next committee without recommending that it pass. Most committees approve bills with recommendations that they pass.

Senjem said information about complete costs will be available at future committee hearings.

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