Laserfiche WebLink
Judson Brown, City of Santa Ana <br />Budget Inn: Preliminary Financial Gap Analysis <br />February 21, 2019 <br />Page 12 <br />financial gap on a dollar -for -dollar basis. In addition, these expenses decrease the <br />annual cash flow available to repay the City's loan. <br />KMA and the Developer had lengthy discussions regarding the proposed social services <br />budget, but were not able come to an agreement. During these discussions, KMA <br />proposed the following structure: <br />1. The permanent loan may be underwritten based on the Developer's proposed <br />social services budget of $3,500 per affordable unit, or $331,500. <br />2. However, the automatically approved social services budget will be limited to <br />$2,000 per affordable unit, or $178,000. <br />The remaining $133,500 of the budget ($311,500 - $178,000 = $133,500), will be <br />subject to review and approval by the City each year. <br />This structure would allow the City to evaluate the level of social services and <br />corresponding budget on an annual basis. This structure would also allow the City to <br />encourage the Developer to seek out additional social service funds from other entities. <br />If in any year the City determines that the additional $133,000 is not warranted, it <br />would result in additional cash flow to the Project that would work its way through the <br />Project's cash flow waterfall and ultimately repay the City's loan sooner than <br />anticipated. <br />As noted above, KMA discussed this concept with the Developer; however, the <br />Developer was not amenable to accepting any annual caps on the social services budget <br />that were less than the proposed $311,500 budget. <br />CONCLUSIONS/ RECOMMENDATIONS <br />The following summarizes the conclusions of the KMA analysis: <br />1. Based on the currently available information, and if it is assumed that the City <br />approves a $311,500 per year social services budget, it is KMA's conclusion that <br />the Developer's request for $1.69 million in City assistance and 89 HUD-VASH <br />PBVs is supported by the Project economics. <br />1902016.SA.TRB <br />80B-30 <br />19090.017.009 <br />