SBA 504 Feasibility Study Case Study: Owner-Operated Edge Data Center in an Existing Flex Building at 10051 W Emerald Street, Boise, Idaho

A 13,140-square-foot flex building built in 2005 at 10051 W Emerald Street in Boise, listed at $2,700,000, converted by a hypothetical established managed services provider into a 600 kW edge data center that houses the provider's own 200 kW of racks and sells up to 400 kW of retail colocation. Underwritten under SBA 504 with a 7(a) companion at a total project cost of $11,081,312, restructured to a 15 percent injection of $1,408,688, a $3,377,000 debenture, a $4,695,625 first lien and a $1,600,000 7(a). The facility never covers its own debt, with project DSCR peaking at 0.39x, and is financeable only on the borrower's global cash flow, which covers 1.02x in Year 1 and 1.73x in Year 5 after owner distributions. The 504 job test fails at about 5 jobs against 36 required, so eligibility runs through the 13 CFR 120.862(b)(11) energy-reduction route on a modeled 15.6 percent reduction. Determination: not approvable as proposed; feasible as restructured on global credit, with an engineer-certified energy baseline and customer-concentration evidence as conditions.

Model study prepared by MMCG Invest | Michal Mohelsky, J.D., FMVA | 4 October 2026

MMCG concludes that the project is not approvable as proposed. The proposal carries a 10 percent injection, a $3,859,000 debenture and job-based 504 eligibility. The job opportunity test fails: the facility supports about 5 positions against the 36 a $3.4 million debenture requires at $95,000 per job, or 23 at $150,000. The special purpose question is unresolved, and a 10 percent injection does not survive a special purpose classification.

As restructured, the project is feasible on global credit and only on global credit. The restructuring carries a 15 percent injection of $1,408,688, a $3,377,000 debenture under the 13 CFR 120.862(b)(11) energy-reduction route, an Eligible Passive Company holding structure, the existing building under the 51 percent occupancy test, the short-lived IT and controls moved to a $1,600,000 7(a), and a $417,500 ramp reserve. On that basis global DSCR after owner distributions runs 1.02x in Year 1, below the 1.15x floor and covered by the reserve, then 1.27x, 1.49x, 1.63x and 1.73x. The facility on its own never covers its debt: project DSCR peaks at 0.39x in Year 5, because a 24-hour staffing floor spread over 600 kW consumes 30 percent of revenue and the borrower's own load is carried at a transfer price 23 percent below the incumbent's rate. The lender is underwriting an MSP that is buying its own building, not a data center.

Eligibility rests on three judgement calls that the lender and CDC must confirm: that assigned-cabinet colocation at 9 percent of combined revenue is service revenue rather than space rental under SOP 50 10 8, Section A, Chapter 1, Paragraph E.3; that the improved building is not special purpose property, with the restructured case underwritten at the 15 percent tier regardless; and that the 15.6 percent energy reduction, measured against an industry-average baseline rather than the incumbent's metered PUE, satisfies 120.862(b)(11). The determination is conditioned on an engineer-stamped baseline using the incumbent facility's metered consumption and a contractual design PUE of 1.35 or better, customer-concentration evidence showing the top three customers under 15 percent of revenue, a written CDC determination on special purpose status, a covenant capping third-party space at data hall B, and vacant delivery of the building.

This is an MMCG model study: a feasibility analysis performed on a real, publicly listed building using public data only, prepared to show CDCs, SBA lenders and operators how MMCG underwrites a small owner-operated data center under SOP 50 10 8 and 8.1 when the facility cannot carry its own debt and eligibility runs through the energy public policy route rather than job creation. The borrower is a hypothetical, unnamed regional MSP; its revenue, headcount, racks, customer base and financial statements are MMCG assumptions set without a sourced industry benchmark, which is disclosed. MMCG has no relationship with the seller or listing broker, and the analysis is not an offer, an appraisal or a recommendation to buy the building. Real companies appear only as competitors or cited comparables. Every figure carries a documentary source or is labeled MMCG assumption. Items not verified from a primary source are listed in Conditions and Limitations. All SOP 50 10 8.1 content, including DSCR floors, is carried as reported by lender trade summaries of Information Notices 5000-880695 and 5000-882227 and must be confirmed against the SOP text in the lender's file.

The borrower, an established MSP operating for 12 years, moves its hosted platform of 40 cabinets and 200 kW contracted (140 kW drawn) from a leased third-party facility into a building it owns, and sells the balance of a 600 kW critical load as retail colocation to Treasure Valley businesses. The physical program converts the 2005 flex building into two data halls, a 1,500-square-foot hall for the borrower and a 2,700-square-foot hall for third-party cabinets, with new electrical, UPS and battery rooms, a NOC, 3,000 square feet of MSP office, a telecom entrance room, an exterior generator yard and cooling plant pad. The electrical design is a new 2,000-amp, 480-volt service on a utility pad-mount transformer, N+1 switchgear, UPS with lithium-ion batteries, and two 1,000 kW generators with 24-hour fuel. Cooling is a closed-loop plant with containment at a design PUE of 1.35. A 120 kWdc rooftop array supplies part of the facility's own consumption. The borrower occupies its hall, office and NOC; third-party customers occupy assigned cabinets in hall B. The real estate sits in an Eligible Passive Company that leases 100 percent of the building to the operating company for at least the loan term at rent capped at debt service plus holding costs, with the operating company as co-borrower and every 20 percent owner as guarantor.

Marketing and Sales Strategy

The anchor is the borrower's own migrating load, which fills a third of the facility on day one and is why occupancy clears in every year. Third-party sales target the regulated institutions in the valley that carry disaster recovery and compliance drivers: regional banks and credit unions, hospital systems, insurers, Ada County and city government, and school districts. The sales case against the incumbent is price, at 23 percent below the published $300 per kW per month, and the operator's existing relationships as the valley's MSP. A half-time sales position sits in facility payroll; commissions are carried at 3 percent of third-party revenue.

Amenities

The subject is Building 9 at 10051 W Emerald Street in west Boise, a 13,140-square-foot flex building built in 2005, listed on LoopNet by TOK Commercial at $2,700,000; CityFeet names the broker as Tyler Martin. The building's slab capacity, clear height, column spacing, roof age, existing amperage and voltage, and HVAC are not published and the assessor record was not reached; the budget carries a new 2,000-amp service, $60,000 of slab reinforcement under the UPS and battery rooms, and $180,000 of structural and roof modification as MMCG assumptions. Yelp lists a tenant in Suite 120, so vacant delivery must be confirmed, because the occupancy test must be met within one year of closing.

The corridor is the strongest evidence for the use. ValorC3 Boise 1 at 10215 W Emerald Street, on the same street, advertises a 46 MW dedicated substation with 22 MW of redundant service, and the City of Boise approved ValorC3's 38,000-square-foot, 10 MW data center at 9601 W Emerald Street (BoiseDev, 26 March 2026), with an expansion application filed before opening. The trade area is the Treasure Valley, Ada and Canyon Counties, defined by latency; the incumbent markets sub-5-millisecond latency to the valley from its Boise facility.

A new-build alternative was priced and rejected: a 1.09-acre commercial lot at 1471 S Eagle Flight Way, listed at $1,000,000 by TOK Commercial beside Ark Data Centers Boise 2. Under the conservative space classification the new build fails the 60 percent test with its 20 plus 20 leasing allowance once third-party load passes about 100 kW, which is why the existing building governs.

The subject's district is inferred as I-1, Industrial: Light, because a neighboring Emerald Street parcel is marketed as M-1D and Boise's code rewrite maps M-1 into I-1; the district is unverified. Boise describes I-1 as accommodating technology-related land uses with a 55-foot height maximum. Table 11-03.1 has no data center row in the portions reviewed, and Section 11-03-01 sends unlisted uses to a Planning Director interpretation, which the study treats as a condition. I-1 bars uses that store hazardous substances regulated under 40 CFR, which bears on diesel storage and battery chemistry and is carried as a condition. Generator-testing noise limits, screening standards and solar permitting under Title 11 were not researched. ValorC3's approval at 9601 W Emerald is the strongest local evidence that the use is approvable on this corridor.

Electric. Peak facility load is about 810 kW (600 kW IT at a 1.35 PUE), below the 1,000 kW threshold of Idaho Power Schedule 19, so initial service is Schedule 9 Large General Service, secondary, effective 1 January 2026: a $25 monthly service charge, a $1.84 per kW basic charge, demand of $9.49 per kW in summer and $7.75 in non-summer, and energy of 5.0908 cents per kWh in summer and 4.9875 cents in non-summer. Schedule 19 becomes mandatory at 1,000 kW or more in three of twelve billing periods, with billing demand floored at 1,000 kW, a $110 service charge, a $2.27 basic charge, demand of $14.46 summer and $13.05 non-summer plus an on-peak charge of $2.51 in summer, and energy of 4.1894 to 5.9565 cents. Schedule 19 is available where existing facilities of adequate capacity exist; substation or transmission additions need a separate agreement. Line extensions fall under Rule H, whose three-phase allowance for Schedule 9 is $8,921. Idaho Power's Schedule 20, Speculative High-Density Load, was not reviewed and is carried as a condition. The modeled effective cost is about 7.2 cents per kWh including an assumed 10 percent rider adder, against the EIA US commercial average of 13.51 cents (April 2026).

Solar. A 120 kWdc fixed rooftop array at 10 degrees tilt on about 60 percent of the roof, output 165,600 kWh a year on an engineering estimate of 1,380 kWh per kWdc (PVWatts was not run; MMCG assumption), installed at $2.25 per watt, $270,000 (MMCG assumption). Idaho Power Schedule 84 provides real-time net billing for large general service customers with an annually updated export credit rate under IPUC Order No. 36785 (30 September 2025); the facility's load always exceeds the array's output, so exports are about zero and the solar value is avoided energy at the Schedule 9 rate. Treatment of any federal credit is a question for the borrower's tax counsel; the model assumes none.

Energy baseline for 13 CFR 120.862(b)(11). The method compares the borrower's own load, 140 kW average IT, at its current leased facility with the same load at the subject.

The modeled reduction of 15.6 percent clears the 10 percent test. It is not settled that a leased third-party facility counts as the existing facility, or that the test is measured per unit of IT load, because total site consumption rises when third-party load is added. Both points are judgement calls for the CDC.

Property tax. $60,500 a year on an assumed $5.5 million real property assessed value at a 1.1 percent effective levy (MMCG assumption); Ada County's levy and the personal property treatment were not sourced.

Measurement standard: BOMA 2018 Industrial, applied to an MMCG schematic plan because no floor plan is published; the areas are MMCG assumptions.

Test results at Year 5 under the 51 percent existing-building rule (SOP 50 10 8, Section A, Chapter 3, Paragraph C.1; 13 CFR 120.131). Case A counts only data hall B as leased, 2,700 square feet: borrower occupancy 81.4 percent, a 30.4-point margin. Case B counts hall B plus shared space allocated by the third-party share of contracted kW (340 of 540 kW, 63.0 percent): 5,281 square feet leased, occupancy 63.7 percent, a 12.7-point margin. Case C treats the electrical, UPS and battery rooms as mechanical, removing 2,000 square feet for a 12,540-square-foot denominator and allocating the exterior pads pro rata: occupancy 67.4 percent. Moving the electrical, UPS and cooling rooms between operational and mechanical swings the result by several points, and the classification is a judgement call for the lender.

Under the new-construction alternative's 60 percent test with 20 percent permanent and 20 percent temporary leasing, Case A puts third-party space at 18.6 percent of Rentable Property, inside the permanent allowance, but Case B puts it at 36.3 percent, which exceeds the permanent allowance and depends on temporary space the borrower would have to absorb within 3 and 10 years, not credible for a permanent colocation business. That is why the existing building is selected.

The trade area is the Treasure Valley, Ada and Canyon Counties, by latency. Census County Business Patterns establishment counts were not retrieved. MMCG's target list of regulated institutions, regional banks and credit unions, hospital systems, insurers, county and city government and school districts, is unverified as to demand and is carried as a condition. The demographic fact that matters is the borrower's own customer base of Treasure Valley small and medium businesses, which supplies the anchor load.

Anchor load. The borrower's 200 kW contracted, 140 kW drawn, and $210,000 of monthly recurring managed hosting revenue are MMCG assumptions. Benchmarked at the incumbent's published $300 per kW per month, the same load costs $60,000 a month, $720,000 a year, to lease, which is the avoided cost that carries the global case.

Third-party demand. Published local evidence is supply-side: ValorC3 is building 10 MW at 9601 W Emerald and applied to nearly double it before opening. No demand-side kW figure for the valley was found, so the penetration test uses a supply proxy of about 7 MW, the sum of the incumbent's 1.4 MW, ValorC3 Boise 1's 1.15 MW critical and Centeris' 4.5 MW utility capacity.

Penetration test. Each Year 5 third-party kW contributes $2,764.80 a year of global cash flow after power and percentage costs. At zero third-party load, global cash flow after distributions is $1,217,702 against global debt service of $1,248,201.

Arithmetic for the 1.25x row: (1.25 × $1,248,201 less $1,217,702) ÷ $2,764.80 = 124 kW. At the 400 kW third-party design cap, the existing building stays at or above 62.6 percent borrower occupancy under Case B.

Rates are quoted only where an operator publishes them. All sites were accessed 4 October 2026.

Competitor Number 1 IDACORE Boise This facility is located at 2653 S Victory View Way, Boise, operated by IDACORE (Lincoln Freedom Group, LLC). It offers 1.4 MW of facility power in 34,000 square feet, N+1 UPS and cooling and 7 on-net carriers; cabinet count and density are not published. Its own website publishes $300 per kW per month on 12-month terms, with IP transit at $170 (100M), $600 (1G), $2,000 (10G) and $11,050 (100G); cross-connect pricing is not published. Its homepage also cites $125 per U per month, which conflicts with the per-kW billing statement, and the per-kW figure is used. A directory lists Ark Data Centers Boise 1 at the same address; the relationship is unverified. This is the facility the hypothetical borrower leaves.

Competitor Number 2 ValorC3 Boise 1 This facility is located at 10215 W Emerald Street, 1.15 MW critical load in 45,000 square feet, offering cabinets, cages and suites, with a 46 MW dedicated substation advertised. Rates not published.

Competitor Number 3 ValorC3 Boise 2 This facility is located at 9601 W Emerald Street, 38,000 square feet, 10 MW, valued above $20 million, approved by the City of Boise, with an expansion application filed March 2026 and the campus stated as coming in 2027. Announced and under-construction supply. Rates not published.

Competitor Number 4 Centeris / DataSite Boise This facility is located at 9700 W Bethel Court, 4.5 MW utility power expandable to 7 MW with 7.75 MW of diesel generation; the source is dated. Rates not published.

Competitor Number 5 Ark Data Centers Boise 2 (formerly Involta) This facility is located at 1450 S Eagle Flight Way, Tier III, offering third, half and full cabinets. Rates not published.

Competitor Number 6 Lumen Boise 1 This facility is located at 2223 W Airport Way. Rates not published.

Competitor Number 7 Syringa Networks This facility is located at 3795 Development Avenue. Rates not published.

Competitor Number 8 CenterServ and Synoptek Directory listings at 950 W Bannock Street and 412 E Parkcenter Boulevard. Rates not published.

Competitor Number 9 T5 Data Centers Nampa An approved industrial conversion at 8300 Birch Lane, planned.

Competitor Number 10 Meta Kuna A 120 MW hyperscale campus; not retail competition.

The nearest alternative markets are IDACORE North in Coeur d'Alene and IDACORE East in Eastern Oregon, which publishes $175 per kW plus utility pass-through on a 1 MW minimum for an AI product targeted at Q4 2026. Neither substitutes for low-latency Treasure Valley retail colocation. Boise has one operator-published rate card, not the two the selection criteria asked for, and that shortfall is carried as a condition.

The subject's rate card is all-in with power to contracted kW: $250 per kW per month under 20 kW, $225 for 20 to 100 kW, $200 above 100 kW, a modeled blend of $230, which is $1,150 per 5 kW cabinet. Cross-connects are $150 per month, remote hands $150 per hour, IP transit resold at the incumbent's tiers, terms of 1 to 3 years with a 3 percent annual escalator, churn handled in the kW ramp plus a 2 percent credit loss. The blend sits 23 percent below the incumbent's $300, 21.5 percent below Digital Realty's Q2 2026 Americas achieved $293 for 0 to 1 MW, and inside CBRE's Q1 2026 Northern Virginia band of $190 to $235 for 250 to 500 kW. The discount is deliberate: customers must move from an established incumbent, pricing on contracted rather than drawn kW raises the effective rate per drawn kW by about 1.4x at 70 percent utilization, and no in-market second rate card supports parity.

The borrower's own 200 kW is carried at a shadow transfer price of $230 at the project level only and eliminated in the global cash flow, where the benefit is the avoided $720,000 of rent. Third-party revenue is the only revenue that counts as leased for the occupancy test and is classified as service revenue for the passive-business test.

Closing is modeled in the first quarter of 2027 with a nine-month conversion and two months of overlapping rent at the incumbent during migration.

Location: 10051 W Emerald Street, Boise, ID 83704 Building: 13,140 square feet, existing | Critical IT load: 600 kW

Source: Marshall & Swift CoreLogic, MMCG

The 7(a) guaranty fee is 3.5 percent of the first $1,000,000 guaranteed plus 3.75 percent of the $200,000 above it, on a 75 percent guaranty of $1,600,000, at the FY2026 schedule. Interim interest is 90 percent of an average balance of $5.8 million at 8.0 percent for 9 months. The ramp reserve is the Year 1 shortfall to a global 1.25x ($284,498) plus two months of overlapping incumbent rent during migration ($120,000), rounded to $417,500.

Excluding the borrower's servers, the reserve and the 7(a) fee, facility all-in cost is about $9.72 million, or $16.2 million per MW, below Cushman & Wakefield's $17.6 million per MW greenfield all-in (3 September 2026; range $8.9 million to $23.3 million) because an existing shell replaces land and ground-up construction. Hard cost plus facility equipment is about $10.7 per watt, against Turner & Townsend's 2025 air-cooled figures of $10.9 for Portland and $9.8 for Phoenix and Columbus; Turner & Townsend does not list Boise and measures larger new builds. No published 2026 edge benchmark exists, so the build-up is project-specific.

Basis: SOP 50 10 8, Section A, Chapter 3, Paragraph A.1; 504 fixed assets need a useful life of at least 10 years.

Loan Assumptions

The restructured total exceeds uses by $1 on debenture rounding. The 10 percent tier applies in the proposal because the borrower is not a new business and MMCG's judgement is that the property is not special purpose; the 15 percent tier applies in the restructured case if the CDC, lender or appraiser treats the improved property as limited-market. The 20 percent tier does not apply because the business is not new. The injection source is operating company balance-sheet liquidity (MMCG assumption).

Stabilized Year 5 at 540 kW contracted (378 kW drawn) and 108 cabinets. Facility payroll: facility manager 1.0, critical facilities technicians 2.0, NOC operator 1.0 (allocated), sales 0.5; benefits at 28 percent.

The margin sits below the retail colocation range of 40 to 50 percent because a 24-hour staffing floor is spread over 600 kW, so payroll alone is 30 percent of revenue, and because the internal transfer is priced 23 percent below the incumbent. Power and property tax are within normal ranges.

Global cash flow. Lender sizing uses global cash flow, which in Year 5 is $2,607,750 before distributions: operating company EBITDA of $2,025,916, plus avoided incumbent rent of $810,366, less the facility's third-party net shortfall of $228,532.

Project level, with 3 percent escalation.

Global level.

Year 1 sits below the 1.15x floor; the shortfall of $159,678 is covered by the $417,500 ramp reserve.

Year 5 basis, third-party kW against the 400 kW third-party capacity.

The global floor clears at 20 percent third-party utilization against a 85 percent forecast. The project-level 1.00x threshold exceeds the facility's third-party capacity, which is the credit fact: the building is a cost center for the MSP that becomes cheaper than leasing, not a data center that pays for itself.

Year 5 global DSCR after distributions; base case 1.73x.

The project is insensitive to its own revenue and sensitive to the operating company's. Loss of the top three customers is the case that breaks it, which is why customer concentration is a condition.

The determination of feasible as restructured is subject to the following conditions precedent:

The following items could not be verified from a primary source at the study date and are disclosed: the subject's listing ID, days on market, acreage, zoning district, Ada County parcel, power service, slab, clear height, column spacing, roof and HVAC; data center use, generator noise limits, screening and solar permitting under Boise Title 11; the I-1 hazardous-substance limit as applied to diesel and batteries; whether the Suite 120 tenant vacates; the Rentable Property schedule, which is a schematic MMCG plan; the absence of a second operator-published rate card in Boise; the conflict between the incumbent's per-U and per-kW statements and its relationship to the Ark facility; competitor capacities from dated directories; County Business Patterns and named-institution demand; the PVWatts run, the solar yield and the $2.25 per watt cost; Idaho Power's 2026-27 export credit update, Schedule 20 applicability and rider percentages (the current export credit rates are 15.6836 cents summer on-peak, 3.3920 cents summer off-peak and 2.9019 cents non-summer under Order No. 36785, covering 1 June 2025 to 31 May 2026); the 1.54 PUE baseline as an industry average; the 15 percent renewable-generation threshold some practitioners cite, not used; the FY2026 504 upfront guaranty fee of 0.50 percent, up from 0 percent in FY2025 per the Northwest Business Development Association; all SOP 50 10 8.1 content changes including DSCR floors; the borrower's revenue, headcount, EBITDA, distributions, existing debt, tangible net worth and customer concentration, which are MMCG assumptions without a sourced industry benchmark; Ada County's levy and personal property treatment; and federal energy credit treatment, which is for the borrower's tax counsel.

Judgement calls: the colocation space-rental classification, the special purpose determination, the energy-baseline comparator and the shared-space occupancy classification. Each must be confirmed with the lender and CDC.

This model study applies the methodology described on MMCG's Data Center Feasibility Study and SBA Data Center Feasibility Study pages. MMCG prepares data center feasibility studies for SBA 7(a) and 504, USDA Business and Industry and REAP, and conventional lenders nationwide, with engagements from $4,900 and delivery in 9 to 16 business days.