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EXHIBIT 3 Judson Brown, City of Santa Ana January 3, 2019 Santa Ana United Methodist Church: Financial Gap Analysis Page 11 A 5% vacancy and collection allowance is applied to the gross income generated by the non -PSH units, the Section 8 Subsidy, and the laundry/miscellaneous income; and b. A 10% vacancy and collection allowance is applied to the gross income generated by the PSH units that will not receive a PBV. Estimated Operating Expenses The operating expenses are estimated at $871,500 based on the following: 1. The general operating expenses are estimated at $5,505 per unit per year. 2. KMA assumes that the Developer will apply for the property tax abatement that is accorded to non-profit housing organizations that own and operate apartment units restricted to households earning less than 80% of the area median income. The property tax assessment overrides are estimated at $5,000. 3. The social services expenses are estimated at $123,100, which includes $89,630 for case management services for the PSH units. 4. The Developer will ground lease the Site from the Church for a base annual ground rent payment of $96,000 per year. The ground rent payments will escalate annually at the lesser of CPI or five percent (5%). 5. The Bond Issuer Fee is estimated at $5,000 per year. 6. The AHSC Loan has a required debt service payment equal to 0.42% of the AHSC Loan amount, which equals $84,000 per year. The replacement reserve deposits are set at $500 per unit per year, which is required by the AHSC Program. Estimated Stabilized Net Operating Income The Project's EGI is estimated at $1.01 million, and the operating expenses are estimated at $871,500. This results in estimated stabilized net operating income of $138,000. 1812009:SA:TRB 19090.017.008 80A-31