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~ ~HlLLS CITY OF ARDEN HILLS COUNTY OF RAMSEY STATE OF MINNESOTA RESOLUTION NO. 2008-037 A RESOLUTION DESIGNATING THE RATE OF RETURN FOR PURPOSES OF NEGOTIATION BETWEEN THE CITY AND RRLD WHEREAS, the City of Arden Hills (the "'City") and RRLD, LLC ("Developer") have entered into a Preliminary Development Agreement dated March 30, 2007, as amended (the "PDA"), during the term of which the parties determined to negotiate a Master Development Agreement ("MDA") regarding the redevelopment of the Twin Cities Army Ammunition Plant site (defined as the Development Property in the PDA); and WHEREAS, pursua11t to the PDA, the City agrees to evaluate and continues to evaluate the financial and market feasibility of the redevelopment of the Development Property proposed by Developer, and to analyze whether Developer can demonstrate a need for public financial assistance in that effort; and WHEREAS, to provide a guide for conducting those evaluations, the City has determined to specify a maximum internal rate of return ("IRR") that is commercially reasonable for Developer to seek in its role as developer of the Development Property, taking into consideration the timing, nature and scope of the redevelopment effort. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Arden Hills, Minnesota as follows: 1. The City directs staff and consultants to evaluate Developer's pro formas for development of the Development Property using a 150/0 IRR as the maximum benchmark for (a) determining whether the Developer is projected to receive a commercially reasonable rate of return, and accordingly whether the redevelopment is financially feasible; (b) determining the amount of tax increment or other public financial assistance (if any) that may be required in order to reach market feasibility; and ( c) determining a rate of return in excess of which the parties will negotiate terms to adjust financial assistance based on future performance (referred to as "look back"). 2. The IRR analysis described in this resolution relates only to the Developer's role as developer of the land, and not as developer of specific improvements on the land. The City intends to develop a separate standard for IRR (or other measure) for the developers of individual improvements, which will also be incorporated in the MDA.