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ARDEN HILLS CITY COUNCIL WORK SESSION - JULY 21, 2008 12 Councilmember Holmes asked if the Council completely understood the numbers provided by Ryan Companies. Councilmember Holden stated she understood the numbers and explained the numbers provided by Ryan were in their favor and that the financing provided by Ehlers showed more conservative land sale values. Councilmember Grant indicated these numbers were truly invalid at this time, until a rate of return was agreed upon by the Council. Councilmember McClung explained he would like further information on the internal rate of return on the vertical side of this project. Ms. Kvilvang noted this could run roughly 8-120/0. Councilmember Grant questioned how the City would be protected if the market rate for properties greatly increased over the Ryan projections. Ms. Kvilvang stated a look back would be used to continually review the numbers. She indicated the developer was not excited about these look backs but that this would be written into the development agreement. Councilmember Grant indicated the vertical rate of return should be set along with the land sale to give the Council a better picture of profits for the developer. He stated this would provide for greater structure. Councilmember Grant explained that without this information he would not be in favor of going forward with with the developer's agreement. Ms. Kvilvang stated this would be difficult because that means all 585 acres would have to have a developer in place with proforma's submitted as to how this would work financially. She indicated she could provide a mechanism or look back provision when certain criteria are met. City Administrator Moorse asked if the developer's agreement would set thresholds. Ms. Kvilvang stated the thresholds may not be defined specifically, but that each developer that comes forward is required to go before the Council for review and consideration to set terms and conditions.