25L - AGMT VETERANS VILLAGE PROJ

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EXHIBIT 2 4. The general conditions and contractor fees are estimated at 5% of construction costs, which is lower than the maximum 14% allowed by TCAC and the typical 10-12% allowance. The Developer plans to use Quality Development and Construction, Inc., a related party, as the Contractor for the Project. 5. Construction insurance is estimated at 2% of construction costs. 6. A 10% contingency allowance is provided. KMA concludes that the proposed direct costs are reasonable and necessary for the construction of the Project per the proposed scope of work. /ndim-ctCasts KMA and Developer utilized the following assumptions for the indirect costs: 1. Architecture, engineering and consulting costs are estimated at 8% of direct costs, or $1,345,000. 2. Developer estimated the public permits and fees costs at $1,193,000, or $15,700 per unit. 3. The taxes, insurance, legal and accounting costs are estimated at 3% of direct costs, or $487,000. 4. The marketing and leasing budget equates to $110,000, or $1,447 per unit. 5. The Developer will receive a $2,200,000 developer fee, which is the maximum allowed by TCAC. 6. A 6% indirect cost contingency allowance is provided. The total indirect costs are estimated at $5,661,000, which KMA concludes are reasonable and necessary for the development of the Project. Financing Costs The financing costs for the Project are estimated as follows: 1. Century Housing Corporation, provided a $4,400,000 acquisition loan to the Project, which closed escrow in January 2017. The loan has a 6.59% interest rate. Assuming a 13 -month loan term, the interest owed during the development period is estimated at $314,000. 2. The construction period and absorption period debt service payments are estimated at $974,000. This estimate is based on the following assumptions: City of Santa Ana Underwriting & Subsidy Layering Review: Veteran's Village Page 15 25L-15