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On July 5, 2017, the City of Santa Ana (City) entered into a HOME Loan Agreement with Meta <br />Housing Corporation (Developer) for the purposes of providing HOME Program (HOME) funds <br />for the construction of a 58 -unit apartment project (Project) located at 1666 North Main Street <br />(Site). The 2017 HOME Loan Agreement required the City to provide $2,219,760 in HOME <br />funds to the Project that are allocated to the City by the United States Department of Housing <br />and Urban Development (HUD). <br />However, due to unforeseen issues with the proposed adaptive reuse of an existing building as <br />well as construction cost increases, the Project's budget has changed materially since the 2017 <br />HOME Loan Agreement was executed. The City intends to amend the 2017 HOME Loan <br />Agreement to reflect the revised Project budget, and to increase the amount of HOME funds <br />being provided by the City. <br />At the City's request, Keyser Marston Associates, Inc. (KMA) prepared the following HOME <br />Underwriting & Subsidy Layering Review for the Project. This analysis is prepared in compliance <br />with the requirements imposed by the HOME Program and the City's HOME Project <br />Underwriting and Subsidy Layering Review Guidelines. <br />The KMA analysis includes the following components: <br />1. An underwriting review to determine the feasibility and to ensure that no more than the <br />necessary amount of HOME funds, in combination with other governmental assistance, <br />is invested by the City in order to provide affordable housing. This section also provides <br />an assessment of the reasonableness of the Developer Fee, cash flow, equity <br />appreciation and profit anticipated to be generated by the Project. <br />2. An evaluation of the Developer's capacity to develop and operate the Project. <br />3. A review and summary of the residential rental market for the Project. <br />4. An assessment of other HOME requirements and deadlines, including the financial <br />commitment documentation submitted by the Developer. <br />EXECUTIVE SUMMARY <br />The Developer proposes to develop the 58 -unit Project on the 0.99 -acre Site, currently owned <br />by the Developer. The Project is currently under construction and will be financed with the <br />following funding sources: <br />City of Santa Ana HOME Subsidy Layering Review: Santa Ana Arts Collective Page I 1 <br />25J-23 <br />