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EXHIBIT 3 <br />Judson Brown, City of Santa Ana January 3, 2019 <br />Santa Ana United Methodist Church: Financial Gap Analysis Page 12 <br />Financial Gap Calculation <br />The financial gap is estimated by deducting the available outside funding sources from <br />the Project's total development costs. The outside funding sources anticipated to be <br />received by the Project are described in the following sections of this memorandum. <br />Available Outside Funding Sources <br />Tax -Exempt Multifamily Bonds <br />To estimate the maximum Bonds that can be supported by the Project's NO[, KMA <br />assumed that the Bonds would be underwritten based on the following requirements: <br />1. A 146% debt service coverage ratio;6 <br />A 5.60% interest rate; and <br />3. A 20 -year amortization period. <br />KMA estimates that the Project's stabilized NOI can support $1.13 million in Bonds. <br />Tax Credit Proceeds <br />KMA estimates the net Federal Tax Credit proceeds at $16.12 million. This estimate is <br />calculated based on the following assumptions: <br />1. The Project's eligible Tax Credit basis is equal to the lesser of the depreciable <br />costs for the 93 Tax Credit units, or the threshold basis limits established by <br />TCAC. In this case, the depreciable costs of $39.98 million are less than the <br />threshold basis limits. <br />2. The Project is located in a 2019 Qualified Census Tract. This allows the <br />requested eligible basis to be increased by 30%. <br />The Developer set the annual Federal Tax Credit rate at 3.30%. This rate is <br />applied over the 10 -year Federal Tax Credit period. <br />'The cumulative debt service coverage ratio inclusive of the Bonds, AHSC mandatory loan payment and <br />Issuer Fee is 120%, which is typical for affordable housing transactions. <br />1812009:SA:TRB <br />19090.017.008 <br />80A-32 <br />