Project Analysis
Investment Gap
An investment gap occurs when the costs of developing a property (acquisition and project costs) are not supported by the project revenue (sales price). To stimulate development in this situation requires the utilization of economic incentives through public-private partnerships.
Costs associated with the development include:
- Acquisition of land and improvements;
- Demolition expenses of improvements;
- Site preparation;
- Holding costs absorbed prior to sale of lots;
- Predevelopment costs;
- Cost of incentives for development ("gap")
Developer Financial Model
Based upon the private investment needs established through consultation with multiple homebuilders, TLC Advisors created a detailed financial model (see Appendix B). TLC Advisors identified an approximate "investment gap" of $13-15 million, which included costs and demolition of the subject properties.
Incremental Analysis
A goal of the Neighborhood Center development is to capture incremental revenue from the project to fund identified investment gaps. A conservative cost/benefit model was developed to measure the potential tax increment gained from the new development (see Appendix C). Using historic Tarrant Appraisal District values, the new development would yield an additional $76.3 million in taxable value over a 20 year period. Excluding the FWISD, the increment would yield a present value of $16 million over a 20 year period.