25J - AGMT ARTS COLLECTIVE GRANT

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EXHIBIT 2 Meta Housing Corporation July 23, 2018 Judson Brown City of Santa Ana, Community Development Agency 20 Civic Center Plaza Santa Ana, CA 92701 Re: Santa Ana Arts Collective -1666 N. Main St. Project Cost Increases since July 2017 Dear Mr. Brown, Thank you for this opportunity to update you on our progress at Santa Ana Arts Collective (SAAC). As you know, SAAC Is the first project entitled under the City of Santa Ana's Adaptive Reuse Ordinance, which was adopted in December 2014, to encourage the recycling of historic, underutilized, commercial buildings into housing. Though challenges are common for adaptive reuse buildings, we have found cost effective ways of overcoming many of them. Still, for reasons described below, the project Is in need of $407,871 in gap financing. Because limited performance information could be gathered about the existing structural system, the path and cost to upgrade the building to modern seismic standards were previously ill-defined. Although July 2017's structural engineering aided in meeting a tax credit deadline, if implemented project costs would have immediately made the project infeasible. A more economic approach was permitted in Spring 2018, which limited hard cost increases related to structural modifications to approximately $1.3 million. The creation and plan check of the new structural engineering system delayed construction completion by six months, costing $401,833 in equity timing adjusters and $176,000 in Contractor General Conditions. The project is now back under construction and expected to open June 2019. While value engineering has been an important cost -control strategy, we've pursued this as far as possible without Interfering with the integrity of design and arts programming. We remain committed to finding a solution to bridge the remaining funding gap and appreciate any assistance the City can provide to that end. Please feel free to contact me or Michelle Coulter at (310)575-3543 x 127 if you need any additional information or have any questions. Thank you again, Christopher Maffris Executive Vice President Meta Housing Corporation 25J-9