Bond Revenue Analysis—A Niche Service

Since 2000, GAI’s bond revenue analysis work has resulted in more than $1 billion in bond sales for our clients to date. What is bond revenue analysis, anyway? Dave Darsey, Senior Director of Economic and Real Estate Advisory Services, sheds some light on this niche service offered by GAI’s Community Solutions Group.

Bond revenue analysis can be likened to getting prequalified for a home mortgage. A mortgage broker will ask the buyer about his/her annual income and then estimate the total loan amount the person can afford, which sets an upper limit on the home price.

A bond project involves many professional disciplines, including bond underwriters, attorneys, financial advisors, and more. The underwriter acts as a “mortgage broker” for the entity issuing the bonds—usually a general purpose local government or taxing district. GAI’s role in a bond project is to estimate the applicable tax revenue streams generated by the development within the taxing district, which the underwriter then uses to estimate the amount of bonds that could be sold, similar to setting the upper limit on a home price in the above example. Tax revenue streams can consist of many options, but in the majority of the projects GAI has worked on, sales taxes and property taxes are the main revenue sources.

Bond projects we analyze are typically retail/entertainment in nature and may be existing, planned, or a combination of the two. In almost all cases, GAI estimates each operator’s taxes individually and then combines them into a grand total. As an example, think of a large, open-air retail center that includes tenants such as a Bass Pro Shops, Target, Bed Bath & Beyond, Marshalls, and numerous other stores and restaurants. For this type of development, we would estimate annual taxable sales and sales taxes for each operator from opening through a set projection window—usually 20 to 25 years into the future. The underwriter then uses our estimates to determine the amount of bonds the project can support.

Bond Revenue Analysis Reports—A Valuable Tool for Our Clients

This independent review is extremely important. In addition, the reports also provide information on area demographic trends (i.e., population, housing, income, and employment), pertinent retail industry trends, and potential project competition.

Bond Revenue Analysis—Types of Clients and Projects

In most cases, GAI’s bond revenue analysis professionals work for the public entity issuing the bonds in order to maintain our independence from the project developer. Many of GAI’s bond projects have been in the Kansas and Missouri areas, where enabling legislation exists to allow this type of financing. We have also worked in Colorado, Tennessee, West Virginia, Nevada, Kentucky, and Florida, which have various forms of tax increment financing.

See below for a sampling of bond revenue analysis clients with whom we’ve worked—we will elaborate on some of these projects individually throughout the year:

  • The Industrial Development Board of the City of Bristol, Tennessee | Pinnacle Shopping Center
  • Grandview, Missouri | Truman’s Marketplace
  • Raymore, Missouri | Raymore Galleria
  • Manhattan, Kansas | Manhattan Marketplace
  • Ohio County, West Virginia | The Highlands
  • Dodge City, Kansas | Dodge City Heritage Area
  • Belton, Missouri | Belton Gateway
  • The Unified Government of Wyandotte County/Kansas City, Kansas | Village West
  • Blue Springs, Missouri | Adams Dairy Landing
  • Liberty, Missouri | Liberty Commons
  • Mid-Cities Metropolitan District, Broomfield, Colorado | Wal-Mart Anchored Commercial Area
  • Prairie Center Metropolitan District, Brighton, Colorado | Prairie Center
  • The Unified Government of Wyandotte County/Kansas City, Kansas | Schlitterbahn Vacation Village and Legends Auto Mall

Over the years, GAI has performed numerous bond revenue analyses nationwide—the financing community has come to significantly rely on our documents due to our track record of providing estimates that are very close to actual results. For questions or additional information on GAI’s bond revenue analysis services, contact us.

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