Economic Development & Redevelopment

Pro Forma Analysis

When new development and redevelopment projects are being considered for Tax Increment Financing (TIF) assistance, state statute requires a “but-for” test to justify a public subsidy. Ehlers’ proven pro forma analysis goes beyond the statutory thresholds to evaluate projects with greater scrutiny to help clients ensure they’re offering subsidies that are commensurate with returns on investment.

Economic Development & Redevelopment Services provided by Ehlers & Associates.

Statutory Requirements

A project approved for public assistance must meet two statutory requirements:

  • It will increase market value of the parcel
  • A determination by the municipality that a similar development would not proceed in the foreseeable future without tax increment financing. This “but-for” requirement is rather subjective, however, municipalities can make a decision based on knowledge of the site and previous lack of development or redevelopment.


Our Pro Forma Analysis

At Ehlers, we partner with clients to take the second requirement to a more objective level by completing a pro forma analysis of the development’s financials.

Our thorough analysis:

  • Scrutinizes project costs and economic projections
  • Evaluates a developer’s operating revenues and expenses to justify need
  • Benchmarks against standard industry data and similar projects in the area
  • Accounts for the risk-adjusted return that developers must earn from the project, but ensures they are not overly subsidized
  • Validates that the financial assistance structure adheres to municipal policies
  • Recommends term for TIF District and appropriate amount of assistance
  • Offers decision data that helps build consensus among staff, local officials and the public

Why it Matters

Well considered TIF assistance can help local governments achieve goals they otherwise couldn’t on standalone basis, such as

  • Blight remediation
  • Public roads and infrastructure
  • Affordable housing
  • Job creation

A comprehensive pro forma analysis can reassure policymakers, constituents and other taxing jurisdictions that the proposed development will contribute to increased future tax revenues and the betterment of the community.

Rely on Ehlers

The next time your community identifies an opportunity for housing, development or redevelopment using Tax Increment Financing, rely on Ehlers to conduct comprehensive and independent pro forma review.