Income from two condo sales in this As-of-Right building is $11,940,000.  After condo construction and miscellaneous expense of $8,348,000, a profit of $3,592,000 remains from a project spanning 23 months.  Stated another way, the project’s bank account would have $3,592,000 left at the end of the project. 

Expressing the project profitability as a percentage, $3,592,000/$8,348,000 is 43% over 23 months, or 22% annualized.  While this method calculates a percentage, it is only an abstract number.  It does not indicate the financial return such as return on equity as required by BSA’s application instructions for condos, Item M.  The $8,348,000 is an expense; it is not equity capital.  Financing is mostly provided by a bank, not the developer.  See fuller explanation in Financial Return link on the CSI Issues page.

The Developer’s true financial return is based on the equity it provides, perhaps 20% of total costs, borrowing and repaying the remainder of costs from the proceeds.  The Developer’s Return on its Equity is $3,592,000 / (20%)  x $8,348,000 or 215%, or 112% annualized. 

The corresponding CSI analysis (see the Clearly Invalid page) introduces a non-existent expense (Acquisition Cost) of $12,347,000, paid by CSI to itself in order to claim an $8,757,00 loss.  CSI’s bank account will not show an expense of $12,347,000 because it does not exist.  Since the Acquisition Cost is imaginary, it is not included in the above Scheme A diagram.

To summarize,  CSI claims that this As-of-Right building, constructed within existing zoning limits, is a loser, when in fact it is quite profitable.   Since this is a fact demonstrated with CSI’s own numbers, the question must be asked ‘Why is this AoR alternative not satisfactory to CSI?’.  The answer is simple: their preferred building, with 5 condos, is even more profitable than these two condos, and economics is the driving force behind the development.