Credit Analysis: Day 3

Phoenix, AZ 

Today was the last day of our Credit Analysis course, and we mostly focused on case studies and determining whether projects were viable for incentivizing. I also had the opportunity to put the local project of the Grim Hotel on a spread sheet to determine whether or not, by this course's standards, the Grim project was sound or not. My conclusion? 

In the Grim project, the city's investment is lower than in most projects of this nature for redevelopment across the country. After discussing the project with CDFA experts, City officials felt comfortable with the city's level of involvement in the project as it compares to similar projects of this nature. While the specific Grim developer has been working with the City for many years, and is only now nearing a workable deal, the City has been very cautious over the years about the sources of funding and how much time, resources, and financing the City is willing to front.  In any deal, this is prudent, but especially in one that has been so heavily public-driven. 

This project is more community development, rather than economic development in nature, so applying the spread sheet credit analysis model that I've learned this week is not a completely accurate, but I still wanted to use a project that I am personally involved with to apply the concepts I've learned this week. This project from the surface seems like it would not be sound, because it is not creating a lot of jobs, or introducing new money into the market. Ultimately, however, due to the location of the Grim Hotel property in the heart of our downtown, and it being the unmistakable black hole that could be the turning point for synergy there, regardless of how the numbers look on paper, it's a project the city has to do. 

So, back to yesterday's conclusion. The Grim deal, and any other economic development project the City touches, has built-in risk, but at the end of the day, the City's job is to make sure that the financing sources are sound, and that the taxpayer's are ensured benefit from any investment. In this case, redeveloping a derelict property as large as the Grim Hotel, creating some buzz in this downtown space, and any progress on a building that has been vacant for more than 20 years should be enough to offset any "skin in the game" by the City. 

That's it from Phoenix. Next up, Marketing and Attraction in Baltimore.