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EXHIBIT 2 <br />Therefore, it is concluded that the Project will have a positive cash flow during the term of the <br />HOME affordability and loan terms. <br />E. Profit and Returns <br />The following analyzes the anticipated profit to the Developer/Owner. <br />Developer Fees <br />$2,200,000, which is the maximum allowed per TCAC. <br />Cash Flow <br />Residual receipts after payment on the soft loan will <br />go to Developer, which is estimated to total $24 <br />million over 55 years, or a net present value of $2.18 <br />million. This equates to an estimated 14% IRR based <br />on the $650,000 deferred fee provided by the <br />Developer. <br />Tax Benefits <br />The Project will generate $12.65 million in federal tax <br />credits that will be sold to Union Bank and the cash <br />will be used as equity in the Project. <br />Equity Appreciation <br />The equity appreciation is not expected to be <br />significant until year 56 when the units are converted <br />to market rate units. <br />Identity of Interest Roles <br />Quality Development & Construction, Inc., a subsidiary <br />of the Developer, is estimated to earn a $697,000, or <br />5% of construction costs contractor fee. This amount <br />is below the 10% to 14% range typically required by <br />contractors. <br />As the general partner, the Developer/Owner will also <br />share an Ownership Partnership /Asset Management <br />Fee with the limited partner (Tax Credit Investor). The <br />fee is limited to 5% of gross rents, which is estimated <br />to total $1,674,000 in present value terms, assuming a <br />6% discount rate, over a 55 year term. This fee is paid <br />out of cash flow after the annual debt service <br />payments have been made. <br />In conclusion, the developer fee, cash flow projection, equity appreciation and profit <br />anticipated to be generated by the Project are appropriate. <br />IV. DEVELOPER ASSESSMENT <br />Founded in 1990 and based in Irvine, CA, Jamboree Housing Corporation (JHC) is a non-profit <br />organization that develops and manages affordable housing throughout California with the goal <br />of serving working families, seniors, veterans and people with special needs. JHC's model for <br />success is based around providing not only quality housing but responsive social services that <br />are tailored to serve residents' needs. JHC has provided affordable housing for veterans for <br />City of Santa Ana Underwriting & Subsidy Layering Review: Veteran's Village Page 112 <br />25L-22 <br />