HomeMy WebLinkAbout7E, Resolution 2008-037�
EN HILLS
Request for Council Act�on
Prepared By: Ronald J. Maors�
Council Meeting Date: July 28, 2fl08
Resolution 2008-037: A Resolution Designating the Rate of Return for Purposes
of Negotiatian Be#ween the City and RRLD
Budgeted Amo�r�t:
$O.flO
Recommendation:
Actual Amount:
$D.00
Funding Saurce:
Approve Resolution 2Q�8-037, A Resol�tion ❑esig�ating the Rate of Return for
Purposes of Negotiation Between the City and RR�D.
Supporting Documents:
Memorandum fram Ronafd J. Maorse to tF�e City Council
2. Resalution 2Q08-fl37
�S. EN HILLS
MEMORANDUM
DATE: July 23, 20Q8
TO: Ma�or and City Couneil
FROM: Ron Moorse, City Adrninistrator
SUB.�ECT: Resal�tion Desigx�ati�g the Rate of Return for Purposes of
Negotiation Between ihe City a�d RRLD
BACKGROUND
A� its July 2] work session, the Couricil reviewed additional financial infarmat�on regarding the
TCAAP development project, in order to de�ermine an.acceptable rate of return �'or RRLD, the
developer of the TCAAP property. The Council detez�x�ined that, given the numerous risk factors
involved in ihe rec�evelopment ofthe TCAAP property, a 15% rate of return would be
aceeptable. A resolution desig�lating the rate of retum for purposes of negot�ation between the
City and RRLD is attached for CounciI adaption.
COUNCIL ACTION REQUESTED
Motion to adopt the attached resolution designating a I S% rate of return as an acceptable rate of
return for p�rpases of negotiation between the City a�d RRLD.
C'lf7ocumcitis and Settingslnolh.simonlLaca] SettingslTempo�ary ]nter�et FiEes10LK6Cleesol re IRR 1oe ItRLD 7-28-08 (Z).doc
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CITY OF ARDEN HILLS
COUNTY OF RAMSEY
STATE OF MINNESOTA
RESOLUTION NO. 2008-037
A RESOLUTION DES�GNATING 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 znto a Preliminary Development Agreement dated March 30, 2007, as
amezzded (the "PDA"), during the �erm af which t�e parties de�ermined to negotiate a
Master Development Ag-eement ("MDA") re�arding the redevelopment of the Twin
Cities Army Ammun�tion Plant site (defined as the Deve3opment Property in t�e PDA);
and
WHEREAS, pursuant to the PDA, the City agreed to evaluate the fnancial and
market feasibility of the redeveIopment of the Deve�op�nent Property proposec� by
Developer, and to analyze whetl�er Developer can demonstrate a need for public financial
assistance in ti�at effort; and
WHEREAS, to provide a�ide for conducting those evaluations, the City has
cietermined to specify a rnaximum internaI rate of retum ("IRR") that is com�nercial�y
reasonable for De�eIoper to seek in its role as developer of the Development Property,
taking into cansideration the timing, nature anc� scape af the redevelopment effort.
NOW, THEREFORE, BE IT RESOLVED by the C�ty Council of the City of
Arden Hil�s, Mir�nesota as follows:
l. The Ci#y directs staff �d consultants ta e�aluate Developer's pro formas
for development of the Developrr�ent Property using a 15% IRR as the maximurn
benchrrsar� for (a) detennining whether the Developer is projected to receive a
commercially reasonabie rate of return, and accordingly whethez- the redevelopment is
financially feasible; (b) determining the arnount of tax inczeznent or other public financial
assistance (if any) that is reasanably rey�ired in order to reach market feasibility; and (c}
determining a rate of return in excess of which the parties will negotiate terms to adjust
f nancia� assistance based on future perfor�ance {referred to as "look back").
2. The IRR analysis described in this resolutioi3 relates only to the
Developer's raIe as developer of the �and, and not as developer of speeific improvements
on the land. The Ciiy intends to develop a separate standard for 1RR (or other measure}
for the developers of indivic�ual inapz-avexnents, which wil� also be incorporated in the
MDA.
3. Staff and consulta�ts are authorized and directed to continue negotiating
the MDA in accordance with the direetians in this resol�tion and with the principle that
any financiaS assistance for the propased redevelopment wiIl not create unreasonable risk
to the City.
Approved by the City Counc�I of the City of Arden Hills this 28t�' day of July,
2408.
Stanley D. Harpstead, Mayor
ATTEST:
Ro�ald J. Moorse, City Administartor
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