Real estate development support requests are a powerful tool that, when used correctly, help catalyze real estate development and unlock outcomes that directly align with the long-term goals of the community. However, as they are funded by public dollars, determining the right level and structure of public support is a high-stakes decision. As the municipal team responsible for reviewing incentive requests, you are not only evaluating documents. You are also making decisions that affect municipal budgets, development trajectories, community vibrancy, and public trust, often with implications that extend well beyond a single project.
In this article, our development advisors will highlight what to evaluate to make informed, defensible decisions that help worthwhile projects move forward and deliver meaningful community outcomes.
Where development support requests get technically challenging
Development support requests are grounded by one question: Are the project’s assumptions supportable in today’s market?
This question arises because market conditions are constantly changing, and assumptions around rents, lease-up timelines, and financing terms that were reasonable when a project was first underwritten may no longer reflect current market realities. While a capital stack may appear feasible on paper, uncertainty around future outcomes can make certain inputs difficult to validate without deep market context. The combined effect of these inputs can materially alter a project’s feasibility.
There are several assumptions we find particularly challenging to underwrite in today’s environment, for developers and municipalities alike:
- Interest rates, which directly affect debt sizing, equity requirements, and overall feasibility
- Construction costs, including escalation risk, contractor availability, and contingency adequacy
- Lease-up or absorption assumptions, which should be validated against current demand
- Project timing and delivery schedules, where delays can materially change returns
- Capital structure complexity, including the use of conditional or layered financing
Each of these assumptions can materially influence whether a project succeeds or stalls, and small miscalculations can have outsized effects on feasibility and the amount of support a project needs. Validating each assumption means understanding what comparable projects are achieving, how current market dynamics compare to past cycles, and whether stated assumptions align with actual demand and pricing trends.
Ultimately, when these assumptions flow through the project’s financial structure, you will naturally start to ask more questions: Is the capital stack viable? Does the development team have relevant experience? Are financing sources committed, and on what terms? And critically, is there a financing gap that requires assistance for the project to move forward under market-based conditions? Answering these questions objectively requires you to stress test the project with and without incentives in a “but-for” analysis. That analysis not only helps validate whether a legitimate financing gap exists and how much support is appropriate, but it also clarifies how sensitive the project is to changes in factors that drive outcomes such as rates, costs, or timing.
What’s at stake for communities
Getting the review right matters for everyone involved. When assistance is sized higher than a project needs, limited public dollars may be diverted from other high-impact uses. When it is sized too low or structured poorly, a worthwhile project may stall, underperform, or fall short of delivering the community benefits it was designed to provide.
Reaching the right answer means reviewing complex financial proposals under real-world constraints. A thorough review benchmarks assumptions against real-time market data, considers how interest rate movements affect debt and equity, and evaluates whether the proposed financial structure aligns with the project’s scope, timeline, and risk profile. Done well, this process does more than identify risk; it establishes assumptions, informs the appropriate amount and structure of assistance, and creates a common fact base that both the municipality and the developer can rely on during negotiations.
How third-party reviews can strengthen these decisions
Municipal staff bring deep knowledge of local priorities, policy goals, and the community context that every development support request must ultimately serve. On larger or more complex projects, or when several requests are under review at once, outside advisors can supplement that expertise by adding capacity and market perspective, helping test assumptions against current market conditions.
Given the complexity and the stakes, each review benefits from more than a surface-level analysis. When capacity or specialized expertise is limited, bringing in outside support can be an important risk management decision that allows your municipal teams to focus their time and resources on broader economic development priorities while confirming each development support request receives a thorough, objective evaluation.
Plante Moran Realpoint, as a real estate development consultant, can provide that support by complementing municipal expertise, not replacing it. Because we work with both municipalities and developers, we bring frequent exposure to active transactions, real-time market insight, and the ability to assess financial structures across multiple jurisdictions and asset types.
When municipalities engage us to supplement their internal reviews, we follow a structured, independent evaluation process focused on validating project feasibility. This entails benchmarking assumptions to current market conditions, applying a “but-for” test to assess whether and to what extent incentives are needed for a project to proceed, and ultimately, determining whether public support is structured in a way that balances public interests with successful project delivery. This approach typically includes a review of key project documentation, such as development budgets, pro formas, operating assumptions, financing terms, schedules, and market comparables. The result is a clear, objective summary that highlights strengths, identifies risks, and provides your office with a defensible basis for determining whether and how to extend public assistance — while giving all parties a shared understanding of how the project was evaluated.
Driving better outcomes through technical reviews
As development support requests become more numerous and project structures more complex, a disciplined review process is increasingly important. The result is greater confidence for both municipalities and developers, better informed decisions, stronger accountability for the use of public dollars, and better alignment between project feasibility and community objectives.
If you’d like added capacity and market perspective as you evaluate an upcoming development support request, consider contacting our development consulting team at Plante Moran Realpoint. We can help you validate assumptions, assess feasibility, and structure public support in a way that helps worthwhile projects move forward successfully. Contact our team if you’d like to learn more about how we can help.
