Client: Richmark Companies
The Richmark Companies engaged GG+A to complete a financial feasibility analysis of the proposed 4.5-acre redevelopment of the former City Market in Downtown Grand Junction. The primary purpose of this analysis was to evaluate the financial feasibility of the proposed development with- and without- affordable units (set to 80% AMI) and the reasonableness of public financial assistance requested. GG+A reviewed the proposed terms which outlined several sources of requested assistance, including waiver of municipal fees and construction use tax, a sale-leaseback for a portion of the site, and future tax increment payments from the Downtown Development Authority (“DDA”) or City.
To put obtainable market and affordable rents into context, rental and occupancy conditions for the Grand Junction apartment market were reviewed. GG+A obtained development cost estimates and compared these estimates to comparable projects outside of Grand Junction (as the proposed project would be a pioneering scale and type of use in Grand Junction). A discounted cash flow analysis with- and without the requested incentives was structured to estimate the returns on equity the development could likely achieve.
GG+A also used the development cost and assumptions about the occupancy rates and incomes of the renter households to estimate the economic and fiscal impacts of the proposed construction and spending by the tenants of the development. To make the estimates of economic impacts, GG+A used RIMS II multipliers from the Bureau of Economic Analysis (BEA). GG+A estimated the return on public investment the City of Grand Junction would obtain if it provided the incentives needed to bridge the estimated feasibility gap.
GG+A prepared reports summarizing the work completed and findings and conclusions drawn about the evaluation of financial feasibility and estimates of economic and fiscal impacts. A copy of the financial feasibility analysis submitted to the city is available here: Financial Analysis of the Proposed City Market Redevelopment