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EXHIBIT 2 <br />III. PROJECT UNDERWRITING ASSESSMENT <br />KMA prepared a pro forma analysis to assist in evaluating Developer's proposal. The analysis is <br />in Appendix A located at the end of this report and is organized as follows: <br />Table 1: <br />Estimated Development Costs <br />Table 2: <br />Stabilized Net Operating Income <br />Table 3: <br />Financial Gap Calculation <br />Table 4: <br />Cash Flow Analysis <br />Table 5: <br />Cost Allocation Analysis <br />A. Estimated Development Costs (Table 1) <br />KMA reviewed Developer's cost estimate provided in July 2018, which is based on a cost <br />estimate provided by Advent Companies dated May 25, 2018. Advent Companies is a third - <br />party contractor. After reviewing the proposed scope of work and the acquisition costs, KMA <br />found the assumptions to be reasonable and necessary to complete the proposed Project. The <br />resulting estimated development costs are as follows: <br />LandAssemblage Casts <br />Total land assemblage costs are estimated to total $4,400,000, or $66 per square foot of land <br />area or $57,900 per unit. The Developer entered into a Purchase and Sale Agreement on <br />November 21, 2016 with 3312 W. First Street, LLC, a third -party owner, to purchase the Site for <br />$4,400,000. According to an appraisal prepared by Lea & Company, dated February 7, 2017, <br />the fair market value of the Site was set at $4,940,000. On January 10, 2018, the Developer <br />closed escrow on the Site with the assistance of a $4,400,000 acquisition loan from Century <br />Housing Corporation. <br />Given that the purchase price was approximately 11% lower than the appraised value, KMA <br />concludes that the purchase price of $4,400,000 for the Site is reasonable. <br />Direct Casts <br />The direct cost estimates assume that the Project will be subject to both federal and state <br />prevailing wage requirements. The direct costs are estimated at $17,265,000, or $227,200 per <br />unit and $278 per square foot of GBA. <br />1. Onsite costs are estimated at $972,000, or $14 per square foot of land area. <br />2. Building construction costs are estimated at $13,275,000, or $214 per square foot of <br />GBA. This cost estimate is on the high side of the typical range. However, it considers <br />the smaller units, meeting GreenPoint standards, and installation of solar hot water and <br />PV energy generation. <br />3. Furnishings, fixtures and equipment are estimated at $439,000, or $5,800 per unit. <br />City of Santa Ana Underwriting & Subsidy Layering Review: Veteran's Village Page 14 <br />25L-14 <br />