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Judson Brown, City of Santa Ana February 21, 2019 <br />Budget Inn: Preliminary Financial Gap Analysis Page 8 <br />Estimated Effective Gross Income <br />KMA estimates the Project's effective gross income at $1.34 million based on the <br />following: <br />1. The gross tenant -paid rents are estimated to total $291,600. <br />2. The gross HUD-VASH PBV subsidy is estimated to total $1.19 million. <br />3. Laundry and miscellaneous income is estimated to average $9 per unit per <br />month, or $9,800 per year. <br />4. A 10% vacancy and collection allowance is provided. <br />Estimated Operating Expenses <br />The operating expenses are estimated at $853,400 based on the following: <br />The general operating expenses are estimated at $5,200 per unit per year. <br />KMA assumes that the Developer will apply for the property tax abatement that <br />is accorded to non-profit housing organizations that own and operate apartment <br />units restricted to households earning less than .80% of the area median income. <br />The property tax assessment overrides are estimated at $7,000 per year. <br />3. The social service expenses are estimated at $311,500, which equates to $3,500 <br />per unit. KMA has concerns with the proposed social services budget, which is <br />discussed in further detail at the end of this memorandum. <br />4. The VHHP Loan has a required debt service payment equal to 0.42% of the VHHP <br />Loan amount, which equals $15,000 per year. <br />5. The replacement reserve deposits are set at $500 per unit per year, which is <br />required by the VHHP Program. <br />Estimated Stabilized Net Operating Income <br />The Project's EGI is estimated at $1.34 million, and the operating expense are estimated <br />at $853,400. This results in estimated stabilized net operating income of $488,700. <br />80B-26 190 <br />1016SA. <br />19090.017.009009 <br />