Client: Renewal Wheat Ridge
The City of Wheat Ridge Urban Renewal Authority, Renewal Wheat Ridge, engaged Gruen Gruen + Associates (“GG+A”) to complete an analysis of a 6.3-acre redevelopment at 38th and Kipling and to evaluate the need for subsidies requested by the developer. The development was proposed to include a 27,000-square-foot Sprouts grocery store, approximately 6,000 square feet of outlot retail space, and 64 senior housing units. The developer had requested a partial rebate of incremental property and sales tax revenues anticipated to result from the redevelopment.
To complete the analysis of the proposed development and incentive request, GG+A met with representatives of the developer and its real estate consultant, City of Wheat Ridge staff, and reviewed the TIF Application packaged submitted as part of the incentive request. GG+A obtained development cost, market, financing and investment parameters from a representative of the developer and used its discounted cash flow model, REALISMTM, to simulate the real estate economics of the proposed development.
The real estate economic analysis prepared by GG+A was used to identify the residual land value supported by the project; the gap between actual and supportable land costs; and the amount of public funding necessary to bridge the feasibility gap. To evaluate how the funding gap could be bridged over time (rather than through upfront public subsidy), GG+A reviewed and evaluated a projection of sales tax and property tax increment revenue likely to accrue to Renewal Wheat Ridge as the result of development of the project. The share of increment revenue needed to be rebated to the developer, in order to provide a present value dollar amount consistent with the size of the feasibility gap, was identified.
GG+A prepared a report summarizing the results of the research and analysis, key findings and conclusions drawn from it, and resulting policy considerations and recommendations. GG+A principals and staff also held a conference with City of Wheat Ridge staff to review and discuss the implications of the analysis. Based on GG+A’s analysis and recommendations, Renewal Wheat Ridge elected to put forth a TIF Agreement, providing approximately $3 million of funding, that the developer and City Council accepted.