RSC-y business

The Tribune said something interesting:

Council members justified the additional incentives by explaining that the Chicago firm had incurred $7 million in extra costs for demolition and cleanup of a former department store and relocation of a cell phone company's antenna.

This is intriguing, because if RSC already sank $7M into their downtown condominium project, they would not have walked. I don't know why Elgin city manager Femi Folarin suggested otherwise:

"If we didn't feel this is necessary to get the project to move ahead, we wouldn't do it," he said. "We took a hard look at it."

If the city said no to the extra $2.5M, RSC's worst case scenario at project completion would have been a loss of $2.5M. If they refused to complete the project, however, they would have been stuck with a loss of $7M, what they've already spent on demolition, etc. Which is worse: a loss of $7M or a loss of $2.5M? They would no doubt have chosen to complete the project, with or without the city's charity.

Folarin also suggested that it would be hard to find another developer if RSC backed out. But why would a new developer hesitate? $7M in construction--actually demolition--work has already been done for them.

Am I missing something here?