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Judson Brown, City of Santa Ana EXHIBIT 5 November 8, 2018 Cornerstone Apartments Rehabilitation Analysis Page 3 C. Is the proposed modification to the rent setting methodology necessary to support the proposed acquisition and rehabilitation activities? 6. Is it reasonable for the City and Authority to agree to subordinate the City Loans to up to $8.7 million in Bond financing? Proposed Acquisition Price The newly formed partnership is proposing to acquire the Project for $17.56 million. In an appraisal dated August 16, 2018, the Kinetic Valuation Group, Inc. (KVG) determined that the Project's fair market value is $17.5 million. The less than 1% difference between the appraised value and the proposed acquisition cost can be considered inconsequential. Sales Proceeds Allocation The $17.56 million in sales proceeds are proposed to be distributed as follows: 1. The sales price is offset by a credit to reflect immediate capital repair needs required by the Project. 2. The principal and interest balance on the existing Bonds will be repaid. 3. The prepayment penalty that is imposed on the existing Bonds will be paid. 4. The exit taxes incurred by the Limited Partner will be paid. 5. The City will receive a $500,000 payment that will be used to reduce the principal balance of the City Loans. 6. The remaining principal and interest balance on the City Loans is deducted from the sales proceeds, and will be assumed by the newly formed partnership. A JHC note and accrued interest related to capital repairs costs are deducted from the sales proceeds, and will be assumed by the newly formed partnership. 8. The remaining balance of the sales proceeds will be structured as a seller carryback loan. The seller carryback loan will be repaid over time from the 50% of the Project's cash flow that JHC is entitled to receive. 1810020.SNA:KHH 19190.017.003