Financial But-For Analyses

SB Friedman assists the EDCKC in reviewing, underwriting and structuring public financial assistance packages in projects where total development costs exceed $20 million. To date, we have reviewed 57 projects that, upon completion, will result in over $3.1 billion in private investment.

EDCKC offers public financial assistance to challenging and catalytic projects through property tax abatements; tax increment financing; sales, utility and income tax reimbursement; and sales tax exemptions on construction materials. In 2015, wishing to conduct a more thorough review of developer requests, the EDCKC engaged SB Friedman, through a term agreement, to evaluate the level of financial assistance (if any), required to make projects financially feasible. Our work typically includes: 

  • Assessing the reasonableness of key project assumptions (development costs and projected revenues and expenses) against industry data and comparable projects;
  • Reviewing the proposed capital stack to determine the reasonableness of equity contributions, status of financing sources, and assumed terms;
  • Preparing independent projections of project returns and/or financial gap;
  • Analyzing developer returns with and without the requested public assistance packages;
  • Conducting sensitivity analyses to determine the appropriate structure and term of public assistance required to ensure project feasibility; and
  • Providing structuring recommendations, such as construction cost true-ups or up-side sharing.

Results: The projects that we have evaluated have led to the remediation of environmentally contaminated sites, preservation/adaptive re-use of historic structures, development of workforce housing, and revitalization of the downtown core. Proposed projects have been both new construction and adaptive reuse and include nearly all major land uses. We have reviewed complex financing arrangements that have included conventional debt and equity, historic tax credits, PACE financing, and EB-5. Several projects have been completed or are currently under construction.