Pulling the Trigger for Eco Express
Finding a suitable site, estimating site viability and putting together a partnership with sufficient funding take considerable time and sweat equity. But if things don’t work out up to this point, little hard cash is lost. There exists in any project of this magnitude an inflection point of risk and investment. The greatest amount of financial risk exists between the time you place a contract on a piece of land, and the time you have city approval and financing secured. This phase of the development requires substantial cash outlays to complete the steps necessary for project approval. During this phase, you will have to determine where the greatest risks lie, and how to best mitigate them.
We came to this point fairly rapidly in the process, with all indications showing this to be a viable project. With our partnership agreement signed, equity arranged, and a site selected, we moved forward with making an offer on the land. We used a commercial broker to draft the contract offer and represent us through the negotiations. He proved invaluable, ensuring that we had sufficient time and escape clauses built into our contract, to allow us to cancel the contract if the project became unviable. Specific risks that could have killed the project were environmental, existing easements on the land, municipal approval and financing. By having the contract written appropriately, it helped reduce the risk in one area. He also proved invaluable during the negotiation process to read the sellers’ intentions, as well as determine the lowest likely price we could expect to obtain. After we made our offer, there were several rounds of counter offers with the price and closing dates being the main levers of negotiation. Two weeks into the process, we had a signed contract.