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EXHIBIT 3 <br />Judson Brown, City of Santa Ana January 9, 2019 <br />Francis Xavier Residence: Preliminary Financial Gap Analysis Page 9 <br />4. The NPLH Loan has a mandatory debt service payment equal to 0.42% of the <br />NPLH Loan amount, which equals $9,900 per year. <br />5. The replacement reserve deposits are set at $500 per unit per year, which is <br />required by the NPLH Program. <br />Estimated Stabilized Net Operating Income <br />The Project's EGI is estimated at $142,600, and the operating expenses are estimated at <br />$88,300. This results in estimated stabilized net operating income of $54,300. <br />Financial Gap Calculation <br />The financial gap is estimated by deducting the available outside funding sources from <br />the Project's total construction costs. The outside funding sources anticipated to be <br />received by the Project are described in the following sections of this memorandum. <br />Available Outside Funding Sources <br />Permanent Loan <br />To estimate the maximum permanent loan that can be supported by the Project's NOI, <br />KMA assumed that the loan would be underwritten based on the following <br />requirements: <br />1. A 118% debt service coverage ratio; <br />2. A 6.15% interest rate; and <br />3. A 15 -year amortization period. <br />KMA estimates that the Project's stabilized NOI can support a $449,000 conventional <br />loan. <br />AIDI N I non <br />The Developer anticipates receiving a $2.35 million NPLH Loan. <br />1901007:SA:TRB <br />19090.017.010 <br />3-26 <br />