Laserfiche WebLink
Metadata
Document management portal powered by Laserfiche WebLink 9 © 1998-2015 Laserfiche. All rights reserved.
<br /> <br />Memo <br />To: <br />Jill Hutmacher – Community Development Director, City of Arden Hills <br />Heather Worthington – Deputy County Manager, Ramsey County <br /> <br />From: Stacie Kvilvang & Bruce Kimmel – Ehlers <br />Date: April 13, 2016 <br />Subject: Financial Capability of Master Developers <br /> <br /> <br />You have requested our input as to the financial capacity of the development teams that <br />have submitted proposals to be considered the Master Developer for Rice Creek Commons. <br /> <br />A financial commitment from the Master Developer and their partners will be required in <br />three areas: (i) predevelopment work; (ii) marketing center; and (iii) land acquisition. <br />Predevelopment work will consist of, but not be limited to, market studies, preliminary site <br />planning and engineering, legal research, and preparation of financial proformas. The costs <br />associated with these predevelopment activities could range from $250,000 to $500,000. <br />The range is a function of the relationships the development teams have with their <br />consultants and fee arrangements (i.e. fees reduced upfront and remainder paid when first <br />project moves forward; full payment upfront, etc.). Certain teams may also reduce their <br />initial out-of-pocket expenses due to having planners and other “consultants” on staff. <br />Nevertheless, all of the teams have the capacity to finance preliminary costs since they are <br />common and always anticipated whether a project moves forward or not. <br /> <br />All development teams spoke of constructing a central marketing center that would be <br />utilized to set the tone/brand for the development and where prospective home owners and <br />businesses would come to view the overall plan for Rice Creek Commons, select their <br />home site and unit plans, and so on. These centers are routinely constructed for residential <br />developments and can range in cost from $1.5 million to $5 million, depending upon the <br />size and intended use after project completion. Again, all applicants have the capacity to <br />finance this cost as part of the project, either internally or with their noted capital partners. <br /> <br />Finally, the biggest cost to the Master Developer will be land acquisition, including any <br />assessments levied for public improvements. All of the candidate teams have stated they <br />will purchase the land from the County when they have specific development components <br />approved and ready to proceed. At that time, the end development entity (i.e. residential <br />neighborhood, retail, office, flex, etc.) will purchase the required land and wrap the cost into <br />its overall project financing. This is typically how all multi-purpose real estate transactions <br />transpire, and while the Master Developer may wish to purchase certain parcels prior to <br />securing end users, we believe this would be of uncertain benefit to the County because of <br />the “risk discount” that the Developer likely would try to negotiate into the purchase price. <br /> <br />Overall, we expect the up-front “out-of-pocket” expenses of the master developer to range <br />from $1,750,000 to $5 million, which all development teams have the financial capacity to <br />complete. Please contact either of us at 651-697-8500 if you have any questions.