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Judson Brown, City of Santa Ana <br />February 21, 2019 <br />Budget Inn: Preliminary Financial Gap Analysis Page 6 <br />7. An indirect cost contingency equal to 10% of other indirect costs is provided. <br />KMA estimates the total indirect costs at $3.77 million. <br />Financing Costs <br />The financing costs for the Project are estimated as follows: <br />1. The construction period and absorption period interest costs are estimated at <br />$1.64 million. These costs are based on the following assumptions: <br />a. The construction period interest costs are based on a 5.0% interest rate, <br />a 13 -month construction period, and a 65% average outstanding balance. <br />The absorption period interest costs are based on a seven-month <br />absorption period with a 100% average outstanding balance. <br />2. The construction loan and permanent loan financing fees are estimated as at 1.0 <br />point. <br />3. A $320,000 capitalized operating reserve is provided. This equates to three <br />months of operating expenses and debt service payments. <br />4. The Tax Credit fees are estimated at $104,000 based on the following <br />assumptions: <br />a. A $2,000 application fee; <br />b. A $410 per unit monitoring fee; and <br />C. Four percent (4%) of gross Tax Credit proceeds for one year. <br />KMA estimates the total financing costs at $2.38 million. <br />Total Development Costs <br />As shown in Table 1, KMA estimates the total development costs at $29.75 million, or <br />$326,900 per unit. This is approximately $16,000 less than the Developer's estimate, <br />which can be considered an insignificant difference. <br />1902016.SA.TRB <br />80B-24 19090.017.009 <br />