Incorporating TIF into your development feasibility planning

New projects translate to growth for your development firm. New tenants, new locations and new revenue streams. Your feasibility planning phase helps determine the necessary components to your project before you even move forward with construction, and municipal details can add complications to the financial health of your plans. When costs begin to pile up from preconstruction, TIF bonds can help tilt the scales back towards profitability for your new plans.

Can you monetize your TIF bond to bridge your project’s equity gap and boost returns?

Expertise to transform TIF into project gains

Selling your TIF instead of holding it or utilizing a loan, converts the full term of your asset into up-front cash for your project. It’s a new approach, one that requires direct access to capital, and a depth of real-estate and finance expertise to value your project and structure your TIF bond in a way that multiplies your proceeds. At Hageman Capital we’re committed to developer’s financial success and in helping foster growth in your target communities. Your development growth is our goal.

When conducting a feasibility analysis for your project, consider TIF as a cash infusion that helps raise the bar of what’s possible for your development. Balancing the other components of your market study and getting an accurate read on your target location, can help ensure your plans and TIF have the most value.

Expertise for your projects

CRE development feasibility assessment: components that affect your financial projections

Feasibility studies are the heart of strategic planning for a new commercial real estate project. Financial feasibility is the target objective, combining with demographic and competitive analyses to form the tripod upon which your development stands or falls.

Demographic trends analysis

Local demographics play a large role in your prospective project’s revenue streams. However depending on the type of project, they may shift in importance. For multifamily developments, local area income can influence the amount of rent you can charge per unit. For industrial or commercial developments, locality to residents and future employees may play a role.

This analysis hinges on acquiring current population figures, age and income distribution, and local employment statistics. Doing so paints an initial picture, one you can layer with projections that align with the timeline of your project. Watching for trends such as urban migration or the silver wave of retiring baby boomers can suggest the fluid potential of your market.

Competitive assessment

The competitive assessment’s goal is to identify supply and demand imbalances and define where your project fits in this equation. Understanding the supply and demand dynamics of your local market is key. Understanding existing commercial spaces and their occupancy rates, along with historical analysis sheds light on trends and how your new building fare financially. Leverage this analysis to carve your niche, whether that’s offering something unique or satisfying an unmet need in the market.

Surveys and community qualitative feedback

Beyond spreadsheets and numbers, direct community feedback can add further color to your specific location. Engage with local businesses, residents, and community leaders to gain insights on local sentiments, unmet demands, and community aspirations. This qualitative data acts as a balancing act to quantify tangible demographic census data and inject local resident perspectives, which can make or break a project.

Cost and financial analysis

–Market Analysis

Your cost and financial analysis should start with a deep market analysis. You’ll identify land and construction costs, expected rental rates, and potential operating expenses. Look for the fluctuations in materials and labor costs that could sway your bottom line.

–Risk Assessment

Risk is inseparable from large-scale development projects. It can come from market-related factors, like an economic downturn, or project-specific challenges, such as delays or unforeseen costs. Categorize and quantify these risks as best as possible, developing contingency plans for the most likely scenarios. The lender’s perspective is vital here—anticipating and mitigating the doubts they might have will strengthen your financial case.

–Legal Considerations and Regulations

Zoning laws, building codes, environmental regulations, and red tape can all impact the project’s cost and feasibility. Ensuring you have a clear path through these considerations can prevent costly surprises down the line.

–Funding and Capital Structure

The final piece of the financial puzzle is navigating the funding landscape. Understanding your capital structure—how much equity, how much debt—is crucial. The right mix can lower your risk and maximize your return. Multiple sources of funding, such as traditional construction loans, private equity, and TIF bonds help to stabilize a financial package that matches your project’s objectives and potential IRR.

Hard costs

Hard costs are the essential components of a development project and are tangible expenses directly associated with physical construction.

–Architectural Planning

Expenses related to architectural design services, including initial concept development, blueprints, floor plans, and building elevations.

Costs for hiring architects, designers, and engineers to create detailed construction drawings and specifications.

–Land Development

Costs for land acquisition, site preparation, and utilities infrastructure development.

Expenses linked to obtaining zoning approvals, permits, environmental assessments, and surveys for the development site.

–Construction

Direct costs of physical construction materials like concrete, steel, wood, and fixtures required for the building.

Labor costs for construction workers, contractors, subcontractors, and project management services.

Equipment expenses for construction machinery, tools, and temporary structures on-site.

–Engineering

Engineering fees for structural, mechanical, electrical, and plumbing systems design and coordination.

Costs for geotechnical studies, soil testing, environmental impact assessments, and building code compliance reviews.

Soft costs

Soft costs encompass more intangible expenses such as legal fees, financing costs, insurance, marketing, and administrative expenses that contribute to the overall project budget but are not directly tied to physical construction activities. Such costs will vary from project to project and based on your target location.

Improve your returns today with Hageman Capital

Maximize your project returns with the best monetization strategy for your TIF bonds. We have the expertise you need to bridge the equity gap in your CRE developments. Contact us today for a free consultation to explore the details of your project and the valuation of your TIF bond.

Turn TIF into new capital