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� � '�J � �J� � � -:� _� � , Ciiy �' Roseville, Minnesota certain levels of nsk and rewards in the marketplace. This method provides benchmarks to determine the reasonableness of the redevelopment assistance requested after considering the developer's return on investment. For example: . I s the IRR of the project without assistance within an "acceptable" range? o If so, why does the developer need any assistance? • I s the IRR of the project � assistance above an acceptable range? o If so, does the developer truly need 100% of the assistance? The reference to "acceptable range" is the area where subjectivity anses. It isn't possible to define an acceptable range for a project until that particular project can be analyzed, but typically redevelopment will require a 10-year intemal rate of return of between 13% and 20%. Redevelopment projects are complex and time- consuming, often requinng that a high level of resources be provided by the developer up-front, prior to any project approvals. This is money completely at nsk. Developers that have the resources (time, talent, and hard cash) to put into a redevelopment project often expect a higher rate of return than they would in a typical real estate transaction. Given this, what may be an "acceptable range of retum" to a developer may seem exorbitant to the public sector, whose tax dollars are being used to facilitate the redevelopment of the site. Although v� may be able to quantify on paper the amount of assistance necessary to do the deal, in certain cases there has been some willingness for policy makers to provide assistance over and above that amount, depending upon other circumstances of the project. For example, in some communities the creation af 50 high-paying jobs, or the redevelopment of a high-profile property, may be deemed such a worthwhile project as to dictate assistance which would result in a developer's rate af retum on the high end of the average range for a similar investment. The full benefit of this type of project may not be quantifiable. For example, the project may provide a significant boost to the local economy, which will positively impact the existing business community, and enhance housing and cultural growth, creating a more livablecommunity. The example above demonstrates the subjective nature of ineasunng an � appropnate amount of assistance. There are many ways to measure the "worth" of such a public investment, apart from simply examining the results of quantitative analysis. Other issues that may influence Council decisions include: � �� • Redevelopmentconsistent with City's long term goals and objectives . Redevelopment addresses other unmet needs in the community 6. Leverage There are many components of a redevelopment project which can directly impact � a City's financial secunty. Risk can be addressed and controlled to some extent within the environment of a redevelopment agreement. A pnmary issue which needs to be addressed is timing. Even though an agreement may be reached resulting in the City providing "up-fronY' dollars for a project, there are many timing _� events which can be negotiated within the context of the redevelopment agreement to minimize nsk. Inherent in any project is the fact that the developer wants dollars to flow as quickly as possible to the pro�ect, and the City ideally 1 wants to retain dollars as long as possible so that it can take a measurement of � the project's viability (or lack thereo�. SPRINCSTED Rsg� 13