25J - AGMT ARTS COLLECTIVE GRANT

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1. The gross potential rental income is estimated at $714,900 The laundry and miscellaneous income is estimated at $7,200 per year, or $10 per unit per month. A vacancy and collection allowance equal to 5% of gross income is deducted. The residential operating expenses are estimated at $417,300 based on the following assumptions: 1. The general operating expenses are estimated at $5,660 per unit per year. 2. KMA assumes the Developer will apply for the property tax abatement that is accorded to non-profit housing organizations that own income -restricted apartments. The Developer estimated the property tax assessment overrides at $13,400 per year. 3. The annual social services budget is estimated at $20,000, or $345 per unit. 4. The mandatory HCD debt service payment for the AHSC loan is equal to 0.42% of the initial AHSC loan amount, or $20,800 per year. 5. The annual capital replacement reserve deposits are estimated at $600 per unit, which is the requirement of the AHSC Program. When the Project's $417,300 in operating expenses are deducted from the Project's $686,000 EGI, KMA estimates the stabilized NO[ at $268,700. C. Financial Gap Analysis (Table 3) Aval/able Funding Sources.• The following summarizes the available funding sources: Conventional Permanent Loan California Community Reinvestment Corporation (CCRC) provided the Developer with an executed Loan Purchase Agreement, dated July 2, 2017, for a permanent loan with an estimated principal amount of $3,043,100. The Loan Agreement stipulates that the final loan amount will be calculated prior to conversion based on the terms included in the Loan Agreement. The Developer estimates that the permanent loan amount will be increased to $3.44 million by utilizing 2018 rents and the following loan terms: 1. A 30 -year loan term with a 30 -year amortization; 2. A 1.16 debt service coverage ratio; and 3. A 5.36% interest rate. City of Santa Ana HOME Subsidy Layering Review: Santa Ana Arts Collective Page 19 25J-31