80A - HABITAT FOR HUMANITY GROUND LEASE

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EXHIBIT 2 Judson Brown, City of Santa Ana January 18, 2019 Lacy Street Project: Preliminary Financial Gap Analysis Page 8 Total Available Revenue The Project's total available revenue is equal to the sum of the Affordable Sales Price revenue and the Project's additional revenue. KMA estimates the total available revenue as follows: Affordable Sales Price Revenue $870,000 Additional Revenue 56,000 Total Available Revenue $926,000 Financial Gap Calculation The financial gap is estimated by deducting the Project's available revenue from the Project's total construction costs. Based on the preceding analysis, KMA estimates the Project's financial gap as follows: Total Construction Costs $1,189,000 (Less) Total Available Funding Sources (926,000) Financial Gap $263,000 Per Unit $131,500 As shown in the preceding table, KMA estimates the Project's financial gap at $263,000. Comparatively, Habitat estimates the Project's financial gap at $326,000. This equates to a $63,000 differential, which is primarily due the difference in Affordable Sales Prices. The City proposes to provide up to $231,000 in Inclusionary Housing Funds to the Project. Since this amount is less than the financial gap identified by KMA and less than Habitat's assistance request. It is therefore KMA's conclusion that the proposed assistance package will not provide a windfall profit to Habitat. SILENT SECOND MORTGAGE REVENUE CALCULATION The next step in the process is to determine how much of the $231,000 in City assistance can be treated a junior lien obligation. As a basic premise it must be assumed 1901009:SA:TRB 80A-20 19090.017.011