A Step-by-Step Framework for Early-Stage Feasibility Screening

Feasibility screening is one of those processes that most development teams do consistently but rarely document. Everyone has their version of it — the mental checklist, the order in which they pull information, the threshold at which a site earns more time. But it usually lives in people's heads, which means it's hard to train, hard to scale, and hard to apply consistently under pipeline pressure.

What follows is a practical framework for early-stage feasibility screening in affordable housing — not a definitive methodology, but a structured starting point that can be adapted to how your team actually works.

Why the sequence matters

The goal of early-stage screening is efficient triage, not thorough due diligence. That means the sequence in which you ask questions matters almost as much as the questions themselves.

If you start with construction cost modeling before you've confirmed program eligibility, you may spend hours on a deal that was never viable. If you confirm program eligibility but skip the density check, you might advance a site that looks good on paper but can't physically support the deal you need to build.

The framework below is ordered to catch disqualifying factors as early as possible — so you stop spending time on deals that won't work and concentrate effort on the ones that might.

Step 1: Program eligibility check (15–30 minutes)

Before anything else, establish whether this site could plausibly qualify for the subsidy programs your team works with.

For most affordable housing developers, this means starting with the tax credit landscape:

• Is this a market where 9% LIHTC is the primary path, or does the scale and cost structure point toward 4% with tax-exempt bonds?
• Does the site fall within a Qualified Census Tract or Difficult Development Area? (This affects eligible basis and therefore how much equity the deal can support.)
• Are there state-specific programs — additional state tax credits, housing trust fund allocations, preservation set-asides — that might apply?
• What's the realistic AMI profile for this market, and is it compatible with the income targeting the programs require?

If the program eligibility picture is fundamentally unclear or unfavorable at this stage, the site doesn't advance.

Step 2: Density and zoning check (20–30 minutes)

Once you have a working hypothesis about the deal type, assess whether the site can physically support it.

• What does current zoning allow? Focus on height, FAR or units-per-acre limits, setbacks, parking minimums, and permitted uses.
• What unit count does the deal need to be financially viable at the program you're targeting? Run a rough back-of-envelope: what's the minimum unit count for a deal of this type in this market to have a workable cost-per-unit?
• Does the site's density capacity (under current zoning) get you to that threshold?
• If not, is there a realistic path to a variance, rezoning, or density bonus? And does that path fit within the timeline the deal requires?

Flag zoning mismatches explicitly. Don't let them become hidden assumptions.

Step 3: Site conditions scan (15–20 minutes)

A rapid scan for physical and environmental flags that could materially affect cost or timeline:

• Is the site in a flood zone? What's the FEMA designation?
• Is there environmental history — prior industrial use, underground storage tanks, known contamination?
• Are there obvious topographic challenges — significant grade changes, irregular geometry, access constraints?
• What's adjacent to the site, and does it create any livability, noise, or air quality concerns?

None of these are necessarily disqualifying at this stage. But they need to be visible and factored into the go/no-go decision, not discovered during Phase I environmental review.

Step 4: Capital stack rough-cut (20–30 minutes)

With program, density, and site conditions established, do a rough capital stack check. The goal isn't a full underwriting — it's a sanity check on whether the numbers are in the universe of possible.

Work backward from what you know:

• Estimated unit count × average unit size → rough gross square footage
• Hard cost per square foot benchmark (use recent comparable projects, not historical averages) → rough construction cost
• Program equity estimate (based on eligible basis and current tax credit pricing) → rough equity amount
• Gap between estimated total development cost and equity → soft debt and conventional debt required
• Is that gap realistically fillable given what you know about local soft loan availability?

If the rough capital stack shows a gap that can't be bridged under any plausible scenario, the deal doesn't advance.

Step 5: Competitive context check (15 minutes)

The last step before deciding whether to invest further is a quick read on the competitive environment:

• In competitive credit states, how has this type of site scored in recent allocation rounds? What land basis are comparable deals running?
• Is there a realistic path to competitive scoring for this deal under the current QAP?
• Are there other parties likely to be interested in this site? If so, can you differentiate on dimensions other than price?
• Is local government supportive of affordable housing development in this area? Are there relationships or commitments that could strengthen a competitive application?

What this framework produces

Completed for a given site, this five-step screen should give you one of three outputs:

Clear no: A disqualifying factor identified in steps 1–4 makes the deal non-viable. Move on.

Promising yes: The site passes all five steps with no major flags. Advance to more detailed feasibility work.

Conditional maybe: The site has potential but has one or more factors — a zoning issue, a soft debt question, a competitive scoring concern — that need to be resolved before the deal earns full underwriting attention. Document what needs to be resolved and by when.

The value of this framework isn't that it replaces judgment. It doesn't. It structures the application of judgment so that it gets applied consistently, in the right sequence, before you've committed resources that can't be recovered.

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Alpha Deal is built to support early-stage feasibility screening — surfacing program eligibility, zoning constraints, and capital stack signals so your team can run this process faster and more consistently.