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EXHIBIT 2 Judson Brown, City of Santa Ana May 22, 2019 1126-46 E. Washington Ave: Preliminary Financial Gap Analysis Page 5 Estimated Development Costs (Table 1) KMA reviewed the Developer's development cost estimates, and then independently prepared a pro forma analysis for the Project. The resulting development costs are estimated as follows: Property Assemblage Costs The Developer will enter into longterm ground leases with the Housing Authority and the County for both the Housing Authority Parcel and the County Parcel. As proposed, the ground lease payments will be structured as capitalized ground rent payments based on the appraised fair market value of the Site. The Developer estimates the current value of the Site at $5.58 million.' Thus, the capitalized ground rent payments are estimated as follows: 1. The capitalized ground rent payment for the County Parcel is estimated at $2.50 million; and 2. The capitalized ground rent payment for the Housing Authority Parcel is estimated at $3.08 million. Direct Costs The direct cost estimates assume that the Project will be subject to State of California and/or Federal Davis Bacon prevailing wage requirements. The direct costs applied in this analysis can be summarized as follows: 1. The Developer estimated the off -site improvement costs at $493,000. City staff should verify the scope and cost of the off -site improvements required to serve the Project. 2. The on -site improvement costs are estimated at $30 per square foot of land area, or $2.98 million. The surface parking costs are estimated at $3,000 per space, or $330,000. z An appraisal was not available for the fair market value of the combined Housing Authority and County Parcels. This analysis will need to be updated if the appraised value of the Site differs from the estimate used in the analysis. 1905019:SA:TRB 19090.017.019 FO