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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 14 <br />Financial Gap Calculation <br />Based on the preceding analysis, KMA estimates the Project's financial gap as follows: <br />Total Development Costs $46,749,000 <br />(Less) Total Available Funding Sources (43,550,000) <br />Financial Gap $3,199,000 <br />Per Unit $34,400 <br />As shown in the preceding analysis, KMA estimates that the Project exhibits a $3.20 <br />million financial gap. In contrast, the Developer is requesting $3.17 million in financial <br />assistance from the City. This represents a $28,000 differential, which is an <br />approximately 1% difference. It is the KMA opinion that a difference of this magnitude <br />can be considered insignificant. <br />CONCLUSIONS / RECOMMENDATIONS <br />The following summarizes the conclusions of the KMA analysis: <br />1. The Developer will be ground leasing the Site from the Church. The City <br />Attorney should review the ground lease agreement and specific ground lease <br />terms prior to executing loan documents with the Developer. <br />2. Based on the KMA cash flow analysis (Table 4), the Project's NCI is estimated to <br />go negative in Year 31.7 Thus, the Project may require financial restructuring <br />during the City's 55 -year loan term. <br />3. Based on the KMA cash flow analysis, it is unlikely that there will be sufficient <br />residual receipts to fully repay the City's loan within the 55 -year loan term. As <br />such, there will likely be an outstanding loan balance due and payable at the end <br />of Year 55. <br />7 The cash flow analysis utilizes the typical underwriting assumptions of escalating income at 2.5% per <br />year and operating expenses at 3.5% per year. <br />1812009:SA:TRB <br />19090.017.008 <br />