Client: City of Oak Creek (WI)
Gruen Gruen + Associates (GG+A) was retained by the City of Oak Creek to evaluate development proposals for Drexel Town Square and provide negotiation assistance.
GG+A reviewed the development cost estimates for the proposed multi-family and retail developments; operating projections and investment parameters of the proposed developments; and prepared a discounted cash flow analysis of the proposals to identify the land values and returns on equity investment they would support. GG+A completed sensitivity analysis to identify how changes assumptions affected the amount of subsidies required.
GG+A identified extensive sets of questions for the developers and led meetings with the developers to obtain answers. As the proposals were revised, we analyzed the real estate economics and identified how changes to proforma assumptions (e.g. development costs, rents, cap rates, etc.) affect supportable land values and amounts of subsidy required. GG+A identified implications for programming of the scale and configuration of uses for the site and strategies for mitigating municipal financial risks and aligning the interests of the developers and City.
GG+A prepared reports summarizing the real estate economics analyses, questions raised about the proposals and provided initial negotiation support to provide the City with an information base and framework which its attorneys and City Administrator used to finalize development agreements with the two developers.