Two sites, one tract that probably drops off the 2027 map

Realized 310k of long term gain in October from selling a small retail strip. My 180 days runs out in April. I have two sites under LOI and I can only fund one without a partner.

Site A is a 14,000 sf vacant industrial shell in a currently designated tract, 340k asking, my scope to convert to five flex bays is 620k, stabilized NOI pencils at 118k with a 9.2 exit assumption if I'm honest about my rents. That tract is not on the eligibility list I read for the 2027 round, so if I want this deal inside the program I have to do it under the current designation.

Site B is a corner parcel in a tract that does appear eligible for the new designation, 210k, ground up 12 units, total cost 2.9M, and I cannot fund it out of 310k of equity without raising or without a construction lender I don't have yet. It also can't start before the new zones take effect January 1, so the timing works against my 180 days unless I find a different gain to pair with it.

The part I keep circling: the enhanced benefits attach to the new zones and the rolling five year deferral applies to investments made after 2026, so waiting is worth something real. But my 180 day clock does not wait, and site B is not shovel ready anyway.

So my actual question is whether anyone has run the comparison of a decent deal under the old designation against a better deal I cannot start on time. I know which one my spreadsheet likes. I don't trust my spreadsheet on the benefit side.

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1devon_pierce Get yoursPRO5

You're comparing two things that aren't really competing. Site B can't take this gain because of the calendar, so the choice is site A or paying the tax and keeping the cash.

On site A, 9.2 on flex in a tract that didn't make the new eligibility list is the assumption I'd fight about. If Treasury's screen dropped that tract, something in the underlying data moved, and your exit buyer will notice the same thing in year eight. A 9.2 becoming a 10.5 on 118k of NOI is roughly 160k of value, which is half your gain deferral in one keystroke.

Also 620k of scope on a shell you haven't opened up. I've never once seen an industrial conversion come in at the first number. Ask what the deal looks like at 720k, because that's the version you'll actually build.

One thing you left out is whether you have a construction lender committed on A. If that's still open, your 180 days is tighter than it reads.

Two sites, one tract that probably drops off the 2027 map

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