SBA 504 Feasibility Study Case Study: A Main-Street Mixed-Use Acquisition and Historic Rehabilitation on Washington Street in Columbus, Indiana, Ineligible as Proposed and Feasible as Restructured

A restaurant and taproom operator proposes to buy a three-level commercial block on Washington Street in the Columbus Historic District of Columbus, Indiana, occupy the storefront and convert the upper floor to four apartments, financed under SBA 504 in a downtown that has lost 22 percent of its daily visitors and 41 percent of its daily employees since 2019 and whose own 2025 strategic plan names apartments as its strongest short-term demand. The proposal fails before the market is consulted: on the published floor plates of the street's building type, 4,045 SF on the main floor, 3,743 on the second and 3,972 in the lower level, a storefront-only operator occupies 34.4 percent of the building against the 51 percent that 13 CFR 120.131(b) requires, and the apartments above cannot cure it. Restructured so that the operator occupies the main floor and the lower level, 8,017 SF or 68.2 percent, for a 2,100,000-dollar brewpub with production, cold storage and prep below, and converts the 3,743 SF upper floor to two one-bedroom and two two-bedroom apartments, the building is eligible, but at a $5,304,527 total project cost and the 15 percent borrower contribution it covers at 1.12x in Year 3 and 1.19x in Year 5. Applying the net proceeds of the federal 20 percent historic rehabilitation tax credit, $462,976 on $2,893,601 of qualified expenditures, against the first mortgage at cost certification lifts coverage to 1.05x in Year 2, 1.25x in Year 3, 1.29x in Year 4 and 1.33x in Year 5. Determination: ineligible as proposed; feasible as restructured, conditioned on the operator's occupancy of the lower level measured on rentable area, the lender's and CDC's reading of the residential floor under SOP 50 10 8.1, the application of the credit proceeds to the first mortgage, the National Park Service Part 1 and Part 2 approvals, and an appraisal supporting the acquisition price.

Model study prepared by MMCG Invest | Michal Mohelsky, J.D., FMVA | October 3, 2026

MMCG concludes that the proposed acquisition and rehabilitation of a Washington Street commercial block in Columbus, Indiana is ineligible as proposed and feasible as restructured. The proposal fails on eligibility rather than on market or cost. Under 13 CFR 120.131(b) a borrower whose SBA loan acquires, renovates or reconstructs an existing building must permanently occupy and use at least 51 percent of the Rentable Property and may permanently lease up to 49 percent. On the one Washington Street building with a published floor-by-floor split, the main floor is 4,045 SF of 11,760 SF in total, 34.4 percent, and a restaurant that occupies the storefront and leases the lower level for storage and the upper floor as apartments is a landlord with a restaurant attached. The apartments cannot cure the shortfall, because they are the leased space the test limits, and no reading of the SOP's treatment of residential area changes a 34.4 percent occupancy into a 51 percent one.

Restructured so that the Operating Company occupies the main floor and the lower level, 8,017 SF or 68.2 percent, with the brewhouse, cellar, cold storage, prep kitchen and office below and the dining room, bar and kitchen above, the building passes the test with 14 points to spare and the second floor's 3,743 SF, 31.8 percent, is free to lease as four apartments. The restructured program is a $5,304,527 project: $870,000 of acquisition and closing, $3,181,527 of rehabilitation hard cost including a new elevator, a second egress stair, fire separation between the commercial and residential occupancies and sprinklers throughout, $655,000 of brewhouse, kitchen and bar equipment, and $598,000 of financing, credit and reserve cost. At the 15 percent borrower contribution the program requires of a new Operating Company, a $2,652,264 first mortgage and a $1,856,584 debenture cost $390,829 a year and the building covers at 1.12x in Year 3 and 1.19x in Year 5, a credit a CDC may carry but a first-mortgage lender will not. The building is a contributing structure in a National Register district and the rehabilitation qualifies for the federal 20 percent historic rehabilitation tax credit on $2,893,601 of qualified expenditures; carried at $462,976 net of syndication cost and applied against the first mortgage at cost certification, the credit reduces the first mortgage to $2,189,288 and annual debt service to $348,865, and the building covers at 1.05x in Year 2, 1.25x in Year 3, 1.29x in Year 4 and 1.33x in Year 5. Indiana eliminated its commercial historic credit in 2016, so the federal credit is the only credit in the stack. The Year 1 shortfall of $66,922 is funded from a $200,000 reserve in the project cost. The determination is conditioned on the operator's occupancy of the lower level measured on rentable area, the lender's and CDC's written reading of the residential floor under SOP 50 10 8.1, the application of the credit proceeds to the first mortgage, the National Park Service Part 1 and Part 2 approvals, and an appraisal supporting the acquisition price.

This is an MMCG model study: a complete feasibility analysis of a main-street mixed-use acquisition and rehabilitation on a model building in a real market, prepared with public data to show SBA 504 lenders, CDCs and sponsors how MMCG tests the occupancy allocation, the historic credit, the two markets and the rehabilitation cost of a building with a business below and apartments above before the purchase agreement is signed. It is not a client engagement. The building is a model block whose floor plates are taken from the published listing record of 301 Washington Street and whose acquisition price is an MMCG estimate; MMCG has no relationship with any owner, broker, tenant or sponsor on Washington Street, and the analysis does not represent an offer, an appraisal or a recommendation to buy any building. Figures drawn from the U.S. Census Bureau, the Columbus Downtown 2030 Strategic Plan and its press coverage, the National Register nomination for the Columbus Historic District, the Bartholomew County Auditor's tax rate cards, the Indiana Department of Local Government Finance, HUD's fiscal 2026 Fair Market Rent schedule, Columbus City Utilities, the Bureau of Labor Statistics, the Ohio Department of Development's historic credit award list, Indiana Landmarks and the public filings and franchise disclosures of restaurant chains are identified as such. Figures labeled MMCG assumption or MMCG estimate are underwriting inputs set by MMCG from industry benchmarks, and items that could not be verified from a primary source at the study date are listed in the Conditions and Limitations section rather than estimated silently. In particular, the acquisition price, a recorded 2024 to 2026 sale of a downtown mixed-use building, a rehabilitation cost per square foot for an Indiana main-street block, the 2024 Columbus Housing Study's rent and vacancy tables, the Downtown 2030 plan's market tables, Bartholomew County's commercial permit fees, downtown vacancy, and the terms of any economic revitalization area abatement were not confirmed from primary sources at the study date and are carried as stated assumptions or gaps.

The Project will operate as a restaurant and taproom with an on-premises brewery owned and occupied by the borrower's Operating Company on the main floor and lower level of a rehabilitated three-level commercial block on Washington Street in downtown Columbus, with four apartments on the second floor leased at market. The physical program as restructured comprises, on the 4,045 SF main floor, a 120-seat dining room and bar with the storefront restored to the Secretary of the Interior's standards, a 900 SF kitchen with a Type I hood and grease interceptor, restrooms and a host stand; in the 3,972 SF lower level, a seven-barrel brewhouse with four fermenters and two brite tanks, a walk-in cooler, keg and can storage, a prep kitchen, dry storage, an office and the building's mechanical room, with a grain delivery chute at the alley; on the 3,743 SF second floor, two one-bedroom apartments of about 700 SF and two two-bedroom apartments of about 900 SF around a 543 SF corridor and stair, each with in-unit laundry and separate metering; and throughout, a new three-stop elevator serving all levels, a second egress stair, two-hour fire separation between the commercial and residential occupancies, sprinklers, separate electrical services and an alley-side service entrance. The taproom will operate from 11:00 a.m. to 11:00 p.m. seven days a week with a general manager, a head brewer, two assistant managers and about 24 full-time-equivalent kitchen, bar and service staff for 28 FTE. The sponsor will hold the building in an Eligible Passive Company that leases the whole property to the Operating Company on a written lease subordinate to SBA's lien for the term of the loan, with the Operating Company occupying the main floor and lower level and the EPC leasing the four apartments to residential tenants, and the principals providing the personal guarantees the program requires. The Project is positioned as the full-service, locally brewed anchor that the city's Downtown 2030 plan calls for on Washington Street, serving the architecture visitors the city draws, the downtown and Cummins workforce, and the residents the plan wants to bring downtown, with the apartments above as the first of the housing the plan's consultants told the city it needs.

Marketing and Sales Strategy

The launch runs on the city's architecture tourism, the downtown employer base and the regional craft beer market. Pre-opening, the operator joins the Columbus Area Visitors Center's partner program and the downtown merchants' events calendar, places the taproom on the regional brewery trail and the beer apps, and markets the private event space to Cummins, the hospital and the schools. The food program is a scratch kitchen at a mid-price check that serves lunch to the downtown workforce and dinner to residents and visitors, and the beer program sells on premises first, with a limited distribution of kegs to four or five downtown accounts in Year 2 inside the brewpub's TTB and Indiana permits. The apartments are marketed by a local property manager from the start of construction at rents positioned between HUD's fiscal 2026 Fair Market Rent and the new-build asking rents downtown, to Cummins and hospital professionals and to the downsizing residents the plan identifies.

Amenities

The subject is a model three-level commercial block on Washington Street between Fourth and Seventh Streets, inside the Columbus Historic District, carried at an acquisition price of $850,000, or $72 per SF of building, as an MMCG estimate. The only downtown price evidence retrieved is an asking price of $799,000, or $182.63 per SF, for a renovated 4,375 SF single-tenant showroom at 1201 Washington Street, and an assessed value of $562,500 on a former post office at 703 Washington Street converted to seventeen apartments; no recorded 2024 to 2026 sale of a downtown mixed-use building was found, and the price is a disclosed assumption conditioned on the appraisal. The floor plates are taken from the published listing record of 301 Washington Street, 4,045 SF on the main floor, 3,743 SF on the second and 3,972 SF in the lower level, 11,760 SF in total, and are the one measured floor-by-floor split for the street's building type in the public record. The National Register nomination for the district, listed in 1982 with 574 contributing buildings, describes Washington Street north to Seventh as lined with two- and three-story commercial buildings, and a contributing building qualifies as a certified historic structure for the federal credit, reviewed by the Indiana Division of Historic Preservation and Archaeology and the National Park Service.

Columbus is the seat of Bartholomew County, a city of 52,655 at the July 1, 2025 estimate and 50,474 at the 2020 Census, the headquarters of Cummins Inc. and a city known nationally for its modern architecture. Washington Street is its historic main street and the subject of the Columbus Downtown 2030 Strategic Plan, prepared by Sasaki with SB Friedman and Storyboard for the City and the Columbus Redevelopment Commission and presented on July 21, 2025. The plan's market analysis found that average daily downtown visitors fell 22 percent and downtown employees fell 41 percent between 2019 and 2024, that just under 2 percent of the city's residents live downtown against up to 30 percent in peer communities, and that the strongest short-term demand downtown is for multifamily residential, with hotel demand medium-term and office and retail demand longer-term. One of its three primary development objectives is to activate historic Washington Street through strategic infill, redevelopment and public realm programming, with active ground-floor uses concentrated on Washington, Fourth and Fifth Streets, and its implementation items include incentivizing housing development and prioritizing plan projects for TIF funding. The subject is the plan's program in one building.

The brewpub's market. The commercial floor serves three demand segments the study measures separately: the downtown workforce, which the plan's own analysis says has fallen by 41 percent since 2019 and which the subject serves at lunch; the architecture visitor, whom the Columbus Area Visitors Center brings downtown and whom the subject serves at dinner and on weekends; and the county resident, who drives to Washington Street for a sit-down meal. The Brewers Association's 2025 national data counts 3,784 taprooms in the United States, down 2.7 percent from 3,936 in 2024, so the segment is contracting nationally and a new taproom wins on food and location rather than on novelty. The study carries a brewpub revenue mix of 53.0 percent food, 35.4 percent house beer, 4.0 percent guest beer and 7.6 percent other bar and merchandise from the Brewers Association's benchmarking survey, a dated 2009 mix that the study uses for the structure of the margin rather than its level and flags as such. The Brewers Association's 2025 financial benchmarking data were released in 2026 to members only and were not available to the study.

The apartments' market. The published rent evidence runs from a citywide median gross rent of $1,157 in the 2020 to 2024 American Community Survey, through HUD's fiscal 2026 Fair Market Rents for the Columbus metropolitan area of $1,233 for a studio, $1,257 for a one-bedroom, $1,415 for a two-bedroom and $1,697 for a three-bedroom, to dated downtown listings: The Cole at 200 East Jackson Street lists one-bedrooms of 808 to 895 SF from $1,280 to $1,322 and a 1,143 SF two-bedroom at $1,899, about $1.46 to $1.66 per SF per month for new downtown product, while St. Barts at 725 Sycamore Street lists one-bedrooms of 532 to 688 SF from $1,075 and Ashford Park, which the listing platform classifies as downtown, lists a 740 SF one-bedroom at $935. The 2024 Columbus Housing Study by RDG Planning and Design found that the city needs an average of 288 new units a year from 2025 to 2035; its rent and vacancy tables were not retrieved. The study positions the subject's units between the Fair Market Rent and The Cole: $1,250 for a 700 SF one-bedroom and $1,450 for a 900 SF two-bedroom, $1.79 and $1.61 per SF per month, which a historic rehabilitation with elevator access, in-unit laundry and a taproom downstairs supports and a walk-up conversion without an elevator would not. The one new-build comparator downtown, the planned 120-unit Rubicon building at Eleventh and Washington with structured parking and commercial space, was estimated at $30.9 million in March 2025, about $257,500 per unit, which is the ceiling against which the subject's conversion cost per unit is tested.

MMCG identified the downtown's food and beverage supply and its residential supply from the city's records, listings and the operators' pages. The downtown restaurant census is carried in the lender's file; the entries below are the ones that frame the subject.

Competitor Number 1 Downtown Washington Street restaurants and bars, Fourth to Seventh Streets The existing sit-down and bar supply on the street the plan wants activated. The plan's finding that daily visitors fell 22 percent since 2019 is the demand side of this supply, and the subject's lunch trade competes directly with it.

Competitor Number 2 Regional craft breweries and taprooms, Columbus and Bartholomew County The subject's house-beer competition. The study carries the segment as contracting nationally and does not assume the subject takes share from an existing local taproom; its beer volume is sold to its own dining room.

Competitor Number 3 The Cole, 200 East Jackson Street New downtown apartments listing one-bedrooms at $1,280 to $1,322 and a two-bedroom at $1,899, the ceiling for the subject's rents and the product the subject's finish level is positioned below.

Competitor Number 4 St. Barts Apartments, 725 Sycamore Street, and Ashford Park Apartments, 1001 Ashford Park Place Older downtown and near-downtown product from $935 to $1,075 for a one-bedroom, the floor for the subject's rents.

Competitor Number 5 217 Washington Street A 22,500 SF 1901 building renovated in 2018 with nine apartments on the second level and storefront suites asking $12 per SF for an 800 SF white box. It is the street's existing example of the subject's program and the evidence that upper-floor apartments over Washington Street storefronts lease.

Competitor Number 6 Rubicon, Eleventh and Washington Streets (planned) A five-story, 120-unit new building with garage and commercial space estimated at $30.9 million in March 2025. If built on the plan's schedule it adds 120 units to a downtown with few, and the study's 7 percent vacancy and credit loss and its positioning below The Cole are set against that supply.

No other mixed-use conversion on Washington Street was identified as announced or permitted between 2024 and 2026 beyond the Redevelopment Commission's downtown grant program, which has funded 22 projects with $2.4 million of total private investment at four private dollars per public dollar, with a Tier 1 match of up to $15,000, and which the commission refueled with a third $250,000 tranche of central-area TIF funds in July 2026.

Under 13 CFR 120.131(b), where SBA financing acquires, renovates or reconstructs an existing building, the borrower must permanently occupy and use at least 51 percent of the Rentable Property and may permanently lease up to 49 percent. The regulation measures occupancy on Rentable Property and is silent on residential use; whether apartments above an owner-occupied storefront are counted as ordinary leased space within the 49 percent, and how stairs, corridors, shafts and a shared lobby are treated, are questions the lender and CDC answer under SOP 50 10 8.1. The study measures the allocation on the published floor plates and reports it under the reading that treats the residential floor as leased space, which is the reading the study recommends the lender confirm in writing.

The measured facts are the determination. On Washington Street's two- and three-story stock the ground floor alone is a third of the building, and an operator who needs only a storefront cannot use SBA financing to buy the block. A brewpub can, because its production, cellar, cold storage and prep belong in a lower level, and the study's restructured program puts them there. The study recommends that the architect's rentable area measurement, the operator's lease with the EPC and the occupancy certificate at completion all state the 68.2 percent, that common area be allocated by the method the lender confirms, and that the lender's and CDC's reading of the residential floor be in the file before application.

The sponsor holds the building in an Eligible Passive Company under 13 CFR 120.111 and operates the brewpub through a newly formed Operating Company. The study documents each condition: the EPC uses proceeds only to acquire and rehabilitate property it leases to the Operating Company; both entities are small; the lease is written, subordinate to SBA's lien, with rents assigned and the Operating Company's rent capped at the loan payment plus taxes, insurance and maintenance; the lease term including options is at least 25 years; the Operating Company guarantees; every 20 percent owner guarantees; and the loan counts against both entities' limits. The four apartment leases are EPC income and the study carries them separately from the brewpub, because the lender underwrites a regulated rent backed by a business and a market rent backed by a submarket differently.

A storefront with apartments above is general-purpose collateral and not on SBA's special-purpose list. The tier that applies is 13 CFR 120.910(a)(1), 15 percent because the Operating Company has operated two years or less; the building is not limited or single purpose, so the 20 percent tier does not reach it. The 504 job standard of one job per $95,000 of debenture requires 19.5 jobs on the $1,856,584 debenture and the brewpub's 28 FTE meet it. Were the operator a smaller user, the public policy goal of 120.862(b)(1), revitalizing a business district of a community with a written revitalization or redevelopment plan, is available on the Columbus Downtown 2030 Strategic Plan, and the study names the plan, its presentation date of July 21, 2025 and its Washington Street objective so that the CDC can cite it. Fiscal 2027 debenture fees are 0.50 percent upfront and 0.203 percent annually, and the 25-year debenture applies because real estate exceeds 51 percent of proceeds.

The building is a contributing structure in a district listed on the National Register in 1982 and is a certified historic structure for the federal 20 percent rehabilitation tax credit on income-producing property under Internal Revenue Code section 47, provided the work meets the Secretary of the Interior's Standards for Rehabilitation and the qualified rehabilitation expenditures exceed the greater of $5,000 or the building's adjusted basis in the 24-month measuring period. The Indiana Division of Historic Preservation and Archaeology reviews the Part 1 certification of the structure and the Part 2 description of the work before the National Park Service approves them, and the Part 3 certification of completed work follows the cost certification. Qualified expenditures exclude acquisition, site work, furniture, equipment and financing; the study carries the rehabilitation hard cost less permits, $2,893,601, as the qualified base, a credit of $578,720, and net proceeds of $462,976 at $0.80 per credit dollar after syndication, bridge and legal cost, with the credit's own application and cost certification fees of $40,000 carried in the project cost. Indiana has no state commercial historic credit to stack: the state's commercial credit was eliminated in 2016, the 2023 bill to revive it at 25 percent shows no enactment, and the residential credit that remains is capped at $10,000 under the 2025 amendment, so the study carries the federal credit alone and confirms the Indiana position with the Indiana Economic Development Corporation as a condition.

The credit changes two things. It constrains the design: the storefront, cornice and window pattern are restored rather than replaced, the main floor's volume is kept, and the second-floor corridor follows the original circulation, which is why the study carries $280,000 of masonry, roof, storefront and window work and an architect and historic consultant at 8 percent. And it changes the capital stack: the study presents the stack with and without the credit because lenders differ on whether its proceeds count toward the borrower's contribution, and recommends that the proceeds be applied against the first mortgage at cost certification, which is the application that moves Year 3 coverage from 1.12x to 1.25x.

Washington Street's downtown zoning permits restaurants, taprooms and upper-floor residential; the City's planning fee schedule carries a $10 zoning compliance letter, a $250 site development plan and a $250 conditional use, and the study carries no rezoning. The brewpub's brewer's notice to the Alcohol and Tobacco Tax and Trade Bureau and its Indiana brewer's and retailer's permits run on their own track and are carried inside the construction schedule. Exterior work in the historic district is reviewed under the district's guidelines and, for the credit, under the Secretary's standards through the Part 2 application; the study conditions the determination on Part 1 and Part 2 approval before the rehabilitation contract is let. Bartholomew County Technical Code Enforcement issues the building permit; its commercial fee schedule could not be retrieved and the study carries $12,000 as an estimate inside the permit line.

Water and sewer are Columbus City Utilities services. The published water system development charge for a 2-inch meter is $7,920, the sewer tap fee is $70, commercial water taps are billed at actual labor and material, and sewer rates from January 1, 2026 carry a $55.70 monthly base on a 2-inch meter and $9.57 per thousand gallons; the study carries the 2-inch meter and separate residential meters. The building's age places lead paint and asbestos inside the selective demolition and abatement line at $120,000, and a Phase I Environmental Site Assessment under ASTM E1527-21 is carried in the closing line. Property tax is carried on an assessed value of $2,800,000 after rehabilitation, an MMCG estimate of market value-in-use, at the City of Columbus taxing district's pay-2026 rate of 2.5619 per $100 of assessed value, up from 2.5430 for pay 2025, allocated 68.2 percent to the commercial floors and 31.8 percent to the residential floor by area. Indiana's constitutional caps bind differently on the two: the commercial floors carry the full rate, $48,922, because 2.56 percent is below the 3 percent nonresidential cap, while the residential floor is capped at 2 percent of gross assessed value, $17,808, because a building with two or more dwelling units is residential property under the cap. The economic revitalization area abatement the City may offer was not confirmed and is not carried.

Source: U.S. Census Bureau; City of Columbus, Downtown 2030 Strategic Plan and 2024 Housing Study; HUD; Apartments.com and Redfin listings accessed October 3, 2026; Bureau of Labor Statistics; National Park Service.

The downtown workforce supplies the lunch trade, the architecture visitor and the county resident supply dinner and weekends, and the city's own housing need supplies the four apartments.

Brewpub sales are modeled at $2,100,000 at stabilization in Year 3, $519 per SF of main floor and about $17,500 per seat on 120 seats, ramping from $1,680,000 in Year 1 and $1,932,000 in Year 2 and growing 3 percent in Year 4 and 2.5 percent in Year 5. The figure sits above the family-dining benchmarks the study uses for its New Bern case because a taproom's bar sales and higher check carry it, and it is reasoned from the main floor's seat count and the three demand segments rather than from a chain analog. The revenue mix is 53.0 percent food, 35.4 percent house beer, 4.0 percent guest beer and 7.6 percent other, and cost of goods is modeled by line at 30 percent of food, 25 percent of house beer, 30 percent of guest beer and 35 percent of other, a blended 28.6 percent of sales, against Cracker Barrel's 26.4 percent restaurant cost of goods and the higher margin of beer brewed on premises. Payroll and burden is modeled at 33 percent of sales at stabilization, 35 percent in Year 1 and 34 percent in Year 2, including the head brewer, on a Columbus wage base whose food preparation and serving group earned a mean of $14.89 an hour in May 2025 against a national $17.86, with a general manager at $70,000, a head brewer at $62,000 and two assistant managers at $45,000. Other operating expense is modeled at 14 percent of sales: utilities at 2.5 percent, card fees at 2.3 percent, marketing and events at 1.7 percent, supplies and glassware at 1.6 percent, administrative and licenses at 1.4 percent, repairs at 1.0 percent, brewing compliance and TTB excise at 0.8 percent, the restaurant's share of insurance at 0.7 percent and other at 2.1 percent. The resulting EBITDAR of 24.4 percent of sales at stabilization is above a family restaurant's because of the house beer margin and is tested in the sensitivity table. An imputed market rent of $14 per SF on the operator's 8,017 SF, $112,238 or 5.3 percent of sales, is carried as a check against the street's $12 ask for a white-box storefront and shows that the business could pay a third party for the space.

The four units are modeled at $1,250 for each one-bedroom and $1,450 for each two-bedroom, $64,800 a year at full occupancy, with 85 percent economic occupancy in Year 1 as the units lease up after completion, 93 percent from Year 2, and 3 percent rent growth from Year 3. Residential expenses are the floor's share of property tax at the 2 percent cap, $7,000 of the building's insurance, $3,000 of common utilities, $4,000 of repairs, management at 8 percent of collected rent, $2,000 of leasing and turnover and a $300 per unit reserve, which leaves residential net operating income of about $22,000 at stabilization, 5 percent of the Project's cash flow. The apartments do not carry the building; they carry their own share of its cost and give the lender a second income stream whose vacancy case is run.

Location: Washington Street, Columbus Historic District, Columbus, IN 47201 Size in SF (Gross): 11,760 on three levels

Source: Marshall & Swift CoreLogic, MMCG

The rehabilitation hard cost of $3,181,527, $270 per SF, is tested against the public record for the building type. The Ohio Department of Development's December 2025 Round 35 historic credit awards list projects of exactly this program, a ground-floor restaurant or bar and four to twelve apartments above in two- to four-story blocks, at total project costs of $1,300,000 for the Miller Building in Cleveland with five apartments, $2,150,000 for Clock and Boyd in Mount Sterling with six, $2,862,596 for Reid Flats in Cincinnati with four, and $4,961,625 for the Alkemeyer Building in Cincinnati with twelve and a new elevator; none publishes building area, so they support a total-budget check rather than a cost per square foot, and the subject at $5,304,527 all-in including a brewhouse sits at the top of that range. The one Indiana cost per square foot in the record, Ivy Alley Social House in South Bend, a 17,000 SF 1926 garage converted to a brewery, restaurant and duckpin bowling for more than $2.9 million, at least $171 per SF, is a single-volume building without the egress, separation and elevator a multi-story block needs, and the subject's $270 per SF above it is where those items sit. The elevator at $190,000 and the separation and egress at $220,000 are the mixed-use premium, and Cushman & Wakefield's Midwest in-line retail fit-out benchmark of $120 per SF is the floor under the main floor's $160. Rider Levett Bucknall's index rose 4.45 percent in the year to July 2026 with the Central region's Chicago, Minneapolis and Denver cities at 1.4, 4.8 and 4.6 percent, and the 10 percent contingency carries the unknown conditions behind a century-old building's walls. The reserve of $200,000 is sized to the Year 1 shortfall of $66,922 with the credit applied and $108,885 without it. The conversion cost per apartment, allocating the residential fit-out, its share of the shared systems and its share of acquisition, is about $285,000 per unit, above the $257,500 per unit of the planned new-build downtown, which is the arithmetic that says the apartments are the amenity and the brewpub is the credit.

Loan Assumptions (restructured, credit applied)

The study presents the alternative because a lender that will not count the credit can reach the same coverage by requiring a 25 percent cash contribution, and the sponsor's choice between the two is a commercial one.

The Project is an eligible acquisition and rehabilitation of an existing building under the SBA 504 program at 13 CFR 120.880 through 120.882, with the Eligible Passive Company leasing the Project Property to the Operating Company as 120.880 permits. The occupancy test of 120.131(b) is met at 68.2 percent as restructured and fails at 34.4 percent as proposed. The borrower contribution is the 15 percent that 120.910(a)(1) requires of an Operating Company that has operated two years or less. The debenture is within the $5,000,000 limit of 120.931 and the 25-year maturity applies. The job standard is met by the brewpub's 28 FTE and the public policy goal of 120.862(b)(1) is available on the Downtown 2030 plan. Each EPC condition of 120.111 is documented, the Operating Company guarantees, and every 20 percent owner guarantees. SBA may require a feasibility study under 120.160(b) and the lender has requested one because the file is a startup underwritten on projections for two uses; SOP 50 10 8.1, in force for loans numbered on or after October 1, 2026, leaves the decision with the lender and CDC, and the lender's and CDC's written reading of the residential floor under that SOP is a condition. Fiscal 2027 fees of 0.50 percent upfront and 0.203 percent annually on the debenture are carried.

Payroll of $693,000 at stabilization covers a general manager at $70,000, a head brewer at $62,000, two assistant managers at $45,000 and about 24 FTE of cooks, bartenders, servers and brewery staff at a blended $15.50 an hour plus reported tips against the Columbus food service mean of $14.89, with an 18 percent burden, escalating 3 percent a year. Year 3 operating expenses are 78.7 percent of total revenue. Property tax is the largest building line at $66,730, which is the Indiana difference: at 2.56 percent of assessed value on the commercial floors it is three times the New Bern rate on the same value, and the 2 percent residential cap is worth $5,003 a year on the apartments. The brewing compliance line carries the TTB excise at the reduced small-brewer rate on the subject's own barrelage, the Indiana permits and the annual label and reporting cost.

The Year 1 shortfall of $66,922 is funded from the reserve. With the credit applied the Project covers from Year 2 at 1.05x, reaches 1.25x in Year 3 and builds to 1.33x by Year 5; without it the Project reaches 1.12x in Year 3 and 1.19x in Year 5 and does not reach 1.25x within the projection. Year 3 EBITDA of $461,566 is an 8.7 percent yield on total project cost. Decomposed by floor, the brewpub's cash flow after its own costs and its share of the building carries about 95 percent of debt service in Year 3 and the apartments about 5 percent; the ground-floor-dark case in the sensitivity table shows that the apartments alone cover none of the debt, which is the finding a lender expects on a main-street block and the reason the operator's lease, not the rent roll, is the credit.

At Year 3 cost ratios the brewpub's fixed cost, salaried management and the head brewer, minimum staffing, utilities, insurance, administration, compliance and marketing, is $483,000, and its variable cost of goods, hourly labor, card fees and supplies is 52.6 percent of sales, so each dollar of sales contributes 47.4 cents before the 1 percent FF&E reserve. The building's commercial tax, insurance and common area cost net of the apartments' net operating income is $50,624, and the building and unit reserves are $3,552. Thresholds are stated as a share of the Year 3 forecast of $2,100,000 of brewpub sales.

The brewpub covers its operating cost at 55 percent of forecast and its debt at 91 percent with the credit applied. The credit is worth about four points of break-even sales at 1.0x and five at 1.25x. That is the shape of a sound main-street mixed-use credit: the operator's business clears its costs with a wide margin, the apartments pay their own way, and the historic credit is the difference between a debenture a CDC carries alone and a first mortgage a bank will fund.

The restructured Project with the credit applied holds coverage above 1.0x in every single-factor case except a brewpub sales shortfall of 10 percent or more, at 0.97x and 0.83x, and reaches 1.25x only at the base case and above. The combined case of a 10 percent sales shortfall and a 3-point labor overrun falls to 0.81x. Without the credit the same cases fall below 1.0x in six of eight. The ground-floor-dark row is the structural fact of the building type, and the as-proposed row is the determination.

The determination of ineligible as proposed and feasible as restructured is subject to the following conditions precedent on the restructured program:

The following items could not be verified from a primary source at the study date and are disclosed: the acquisition price, in place of which the study carries an estimate against a renovated single-tenant asking price and an apartment conversion's assessed value; any recorded 2024 to 2026 sale of a downtown mixed-use building; a rehabilitation cost per square foot for an Indiana main-street block, in place of which the study carries the Ohio Round 35 total costs and the South Bend garage; the floor plates of the target building, in place of which the study carries the published 301 Washington Street split; the Downtown 2030 plan's market tables and the 2024 Housing Study's rent and vacancy tables, which sit in files the study could not open; downtown residential and commercial vacancy; the Bartholomew County commercial building permit fee; the downtown grant program's current guidelines; the economic revitalization area abatement terms; the current Brewers Association financial benchmarks, which are member-only; detailed May 2025 Columbus wages for brewery and restaurant occupations; and the primary text of SOP 50 10 8.1 on residential area, in place of which the study states the allocation under the reading it recommends and conditions the determination on the lender's own.

This model study applies the methodology described on MMCG's SBA mixed-use feasibility study and mixed-use feasibility study pages. MMCG prepares mixed-use, retail and restaurant feasibility studies for SBA 7(a) and 504, USDA Business and Industry and conventional lenders nationwide, with engagements from $4,900 and delivery in 9 to 16 business days.