Feasibility Study for Construction
In this case study, you will create a feasibility and constructability document to present to the stakeholders of the Cherry Creek LLC group. This group is a consortium of Real Estate investors who have decided to build a project in South-Western Florida, approximately 5 miles north of the city of Naples Florida. The Cherry Creek partnership is a sophisticated group of investors who construct apartment luxury homes across the country in prime locations adjacent to “up and coming” clean cities, with a stable and growing professional base. The group has built 9 complexes over the last 12 years and has been able to fund 80% of all deals from within the group account, using bank financing for the remaining 20%. These projects are well planned, gated rental communities with pool; club house; tennis courts; tot lots and basketball court. The use of green belts is a required feature along with landscaping to buffer on visual lines from the 2 streets that border the parcel. The city has also stipulated that there shall be a parking space for each unit, plus 20 spare for visitors. Cherry Creek constructs these complexes using outside architects, outside general contractors and outside construction management consultants. The only “in-house” employees are the President of the company, VP of Finance and Real Estate, VP of development; and 10 other professionals involved with the management of this Real Estate Limited partnership.. Below are some financial statistics of the company. Assets: Long term:……….. $190 million (Existing developed Real Estate) Short Term ……….$30 million in cash and short term treasuries Debt: Long term: ………$25 million 20 year permanent financing with JP Morgan Chase 5.69% Short term…………$5 million prior construction loan on a $100 million credit loan facility with JP Morgan Chase.. 6.76% Note: No income statement was provided by the stakeholders Scope of Study The stakeholder association (Cherry Creek LLC) has asked you to come up with a feasibility study for the construction of 80 unit luxury apartment homes in the Naples, Florida area. They request the basic building architecture to be 8 units per building. The company has purchased 22 acres from WCI Communities back in 2009 before WCI went bankrupt for $200,250 an acre. The land was paid off last month, and is free and clear to be developed. Cherry Creek has spent 2 years getting this parcel re-zoned for multifamily use, but to this date, has only acquired the Zoning approval and the Environmental wetlands & land use permit which is on file with the county and State. In the solicitation, Cherry Creek states that they are still in need of the following: • Impact fee assessment • Legal studies of Florida covenant association rule changes • Full Geotech Engineering bores and sample wells • Agreement with a utility company for power • Lease consumer Demand studies • Risk Analysis of the project • Constructability analysis • Insurance coverage to build the project • Financial pro forma • Architectural drawings and specifications What has been described in the solicitation, by Cherry Creek to you, the developer is given here: Land description • The parcel is mostly all green meadow land with natural rolling small hills and a creek in the center • Natural stands of trees remain and are in good health, furthermore the parcel has been “scrubbed of all exotic vegetation” and the spread of these wild plants are contained. • A natural drainage system is/has been developed by nature over the years and 2 small lagoons are located across the property. • The elevation of the property is 20 ft above mean sea level, which is 4 feet higher than most of Naples • This parcel is bordered by another meadow on the north side separated by trees • On the east and west side of the parcel, are asphalt roads used by the neighboring subdivisions for communal travel. • The south side is a 15 acre parcel “up for sale” but no contract yet, and has been listed for over a year. • Preliminary topographic studies performed show that a net import of fill will be needed to balance the site after clear and grub operations are complete. It is estimated that 5,000 CY of clean sand/fill will need to be brought in at $9.00/yd. in-place • It is also estimated that 1500 CY of topsoil will need to be imported at $15.00 CY • Preliminary soil bearing capacity is 2200 PSF • Hydro-studies show a water table at 10 feet, with 10 gpm well head flow rate on a 2 inch pipe. • The top 2 feet of soil is comprised of sand and loamy sand with native vegetation • The next 6 to 8 feet down is calcified coral known as lime rock • Under that lies the water table • The lagoons have capacity to accept more water , but a retention pond may be needed. The Buildings In the solicitation, Cherry Creek has stipulated that 80 units are to be built in a ten building configuration around/ adjacent to the 2 lagoons on the 22 acre site. Each building shall have 4 single bedrooms; 4 double bedrooms, and finally 2 three bedroom units per building. They request that the building conform to the 2002 Florida Building Code which was amended after many hurricanes damaged Florida buildings throughout the State.