Financial But-For Analyses

SB Friedman assists EDCKC in reviewing, underwriting and structuring public financial assistance packages in projects where total development costs exceed $20 million. To date, we have reviewed 42 projects that, upon completion, will result in over $2.0 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, SB Friedman was engaged, through a continuous 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 are currently under construction.