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Relocation Costs <br />The building was approximately 50% occupied with office tenants when it was acquired by the <br />Developer. A relocation plan prepared by LACAL Consulting, Inc., dated May 31, 2016, <br />estimated the relocation costs at $907,000. However, it was later determined that there were <br />lease termination options that were understated by the Developer's appraiser. The Developer <br />estimates the current relocation costs at $1.47 million.z <br />Closing Costs <br />The Developer estimates closing costs at $34,000, or 0.5% of the purchase price. <br />cae M <br />The direct cost estimates assume that the Project will be not be subject to Federal or State <br />prevailing wage requirements. The direct costs are estimated at $17,886,000, or $308,400 per <br />unit and $240 per square foot of GBA. <br />1. The off-site improvement costs are estimated at $376,000. <br />2. The on-site improvement costs are estimated at $469,000, or $11 per square foot of <br />land area. <br />3. The adaptive reuse and new building construction costs are estimated at $14.08 million, <br />or $189 per square foot of GBA. <br />4. The Developer included a $350,000 allowance for furnishings, fixtures and equipment. <br />5. A 12% allowance for contractor fees and general requirements is included, which is <br />lower than the maximum 14% allowed by ICAC. The construction is being undertaken <br />by a third party general contractor. <br />6. A 2% allowance for construction insurance and bonds is included. <br />KMA included a 3% direct cost contingency allowance.3 <br />KMA concludes that the proposed direct costs are reasonable and necessary for the <br />construction of the Project per the proposed scope of work. <br />Indirect Costs <br />KMA utilized the following assumptions for the indirect costs: <br />'The Developer provided a breakdown of relocation payments that total $1.41 million. KMA assumes that the <br />additional $63,000 in costs are related to administering relocation activities. <br />z A 5% to 10% direct cost contingency allowance would be more typical for underwriting purposes. However, given <br />that the Project is already under construction, KMA reduced the direct cost contingency allowance amount. <br />City of Santa Ana HOME Subsidy Layering Review: Santa Ana Arts Collective Page 15 <br />25J-27 <br />