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ARDEN HILLS CITY COUNCIL WORK SESSION- TCAAP MDA- May 24, 2007 4 TCAAP Financials and MDA: Ms. Kvilvang indicated that the land developer fee is for both profit and for overhead administrative costs for doing the land development, including assembling the parcels, doing all the grading, getting the utilities, etc. Councilmember Holden asked why there is nothing on return on developer equity. Ms. Kvilvang indicated at this time it is a good thing that there is no return on developer equity in there and also there are no dollars in there to return anything on. Mr. Inman indicated equity is what the developer is putting into the project. Mr. Inman recapped on the potential that the developer will be selling themselves land and the City wanted to make sure that it's monitored and an arm's length transaction. He indicated that from the discussion last week, Council had agreed. Ms. K vilvang asked if the City wanted the ability to look at each of the individual developments. Mr. Imnan stated it is really important that Council understand that there are two different functions that the developer has. Their role as master developer is to get the land assembled, prepared for development and sold for development, and that role is different than when they come in to build buildings. City Administrator Wolfe stated there is an advantage to be able to do the cleanup and the land preparation simultaneously because it is more efficient and it takes less time. She stated the overall combined cost of cleanup and preparation for development should be lower than it would be if it were two different and separate processes. Ms. Kvilvang indicated they make sure they are not double counting by looking at everything that they do and every invoice that they get. In addition to that Ehlers recommends having a construction manager. Mr. Inman indicated a document with much more detail will be attached to the development agreement, plus if analyzing buildings those will be attached also. He indicated Mr. Bubul will define in words what grading is allowed. He stated the developer then will have to give back a document and an independent auditor will have to certifY that it is a true and accurate representation of what happened. Ms. Kvilvang indicated they will also be working on figuring out the value of the lots and have more detail on that. Mr. Inman indicated the developer would be giving numbers and how they arrived at those. The City will then look at those, and based on experience of other developments that have happened, see if they are realistic or not. Ms. Kvilvang indicated each type of development has different levels of profit required based on risk.