80A - HABITAT FOR HUMANITY GROUND LEASE

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Judson Brown, City of Santa Ana EXHIBIT 2 January 18, 2019 Lacy Street Project: Preliminary Financial Gap Analysis Page 6 b. Per Habitat, the construction period interest costs are based on an 8% interest rate, a 12 -month construction period, and a 30% average outstanding balance. 2. Per Habitat, the financing fees for the construction loan are estimated at 1.0 point, or $10,000. 3. The closing costs are estimated at 2% of sales revenue, or $17,000. 4. The warranty costs are estimated at $10,000 per unit, or $20,000. KMA estimates the total financing costs at $67,000. Total Construction Costs As shown in Table 1, KMA estimates the total construction costs at $1.19 million, which equates to approximately $594,500 per unit. In comparison, Habitat estimates the total construction costs at $1.20 million. This equates to a less than 1% differential. Project Revenues (Table 2) The Project Revenues are estimated as follows: Affordable Sales Price Calculations Habitat is proposing to sell both units to moderate income households. KMA estimates the Affordable Sales Prices based on the H&SC Section 50052.5 calculation methodology and the following assumptions (Table 5): The household income used in the calculations is based on the 2018 Orange County median incomes distributed by the California Department of Housing and Community Development (HCD). 2. The Project will not include a homeowner's association, and each homeowner will be required to maintain and repair their own properties. However, given the increased maintenance requirements associated with the architectural elements proposed for the houses, Habitat proposes to require the homeowners to establish a monthly maintenance reserve account. This "forced savings" structure would ensure that funds are available to provide maintenance for the 1901009:SA:TRB 80A-18 19090.017.011