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September 23, 2025 Saint Anthony Council Work Session - 3 <br />asked if there is separate metering for each unit for water, electricity, and gas. Mr. Doran stated that <br />water is typically not metered, but gas and electricity are individually metered. Councilmember Doolan <br />asked if units are set up with gas and electricity. Most of the units are electric with EnergyStar <br />appliances. <br />Mr. Doran reviewed that they are requesting a two-year extension of their entitlements to develop the <br />second phase of the Ruby Apartments. While the team remains committed to advancing this project, <br />they are currently facing ongoing economic challenges that have significantly impacted the financial <br />feasibility of the second phase. To raise debt and equity for a multifamily development project in the <br />current economic environment, the project must have a minimum 7% return on investment. Return on <br />Cost is defined as the Net Operating Income divided by the Total Development Costs. <br />Mr. Doran provided five development scenarios for City Council review: <br />Scenario 1: Base Case. <br />Construction cost estimates based on Spring 2025 estimates. <br />Taxes are modeled based on current assessments on Ruby Phase 1. <br />Rents are based on Phase 1 market performance. <br />Findings: 5.76% Return on Cost. <br />Scenario 2: Rent Adjustment Only. <br />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 />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 />Assumes a $3 million reduction in construction costs. <br />Findings: 6.04% Return on Cost. <br />Scenario 5: Combined Adjustments. <br />Incorporates all three modifications: elimination of city-assessed taxes and SAC fees, a $3 million <br />construction cost reduction, and increased rents. <br />Findings: 7.02% Return on Cost. <br />Mr. Doran stated that, given these circumstances, he respectfully requests an extension of their <br />entitlements to allow time for market conditions to stabilize and for them to pursue solutions that can <br />make Ruby Apartments Phase II feasible. They are not asking for the Council or staff to consider making <br />any tax, cost, or rent-related actions related to the project at this time. <br />Also provided for the City Council’s consideration are spreadsheets showing the five scenarios in detail. <br />Mayor Webster thanked Mr. Doran for the discussion. She noted this will be coming to an October City <br />Council meeting to consider approval of an extension. <br />5