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<br /> <br />6423 City W Pkwy, Eden Prairie, MN 55344 TheDoranGroupUS.com <br /> <br />MEMORANDUM <br />To: St. Anthony City Council <br />From: Evan Doran; The Doran Group <br />Date: September 17, 2025 <br />Subject: Request for Extension on Entitlements – Ruby Apartments Phase II <br /> <br />Dear Council Members, <br />We are writing to respectfully request a two-year extension of our entitlements to develop the <br />second phase of the Ruby Apartments. While our team remains committed to advancing this <br />project, we are currently facing continued economic challenges that have significantly impacted <br />the second phase’s financial feasibility. <br />In order to raise debt and equity for a multifamily development project in the current economic <br />environment, a project must have a minimum 7% return on cost. Return on Cost is defined as the <br />Net Operating Income divided by the Total Development Costs. <br />To illustrate these challenges, we have prepared five development scenarios, enclosed for your <br />review: <br />Scenario 1: Base Case <br />o Construction cost estimates based on Spring 2025 estimates. <br />o Taxes are modeled based on current assessments on Ruby Phase I. <br />o Rents are based on Phase I market performance. <br />- Findings: 5.76% Return on Cost <br />Scenario 2: Rent Adjustment Only <br />o We assumed a 10% increase in rents beyond our current rental rate. <br />- Findings: 6.53% Return on Cost <br />Scenario 3: Tax and Fee Adjustment Only <br />o Assumes elimination of city-assessed taxes and city assessed SAC fees. <br />- Findings: 5.91% Return on Cost <br />Scenario 4: Cost Reduction Only <br />o Assumes a $3 million reduction in construction costs.