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Judson Brown, City of Santa Ana <br />1126-46 E. Washington Ave: Preliminary Financial Gap Analysis <br />Financing Costs <br />The financing costs for the Project are estimated as follows: <br />EXHIBIT 2 <br />May 22, 2019 <br />Page 7 <br />1. The construction period and absorption period interest costs are estimated at <br />$1.21 million. This estimate is based on the following assumptions: <br />a. A $24.08 million construction loan; <br />b. A 4.38% interest rate; <br />C. An 18-month construction period with a 60% average outstanding loan <br />balance; and <br />d. A 3-month absorption period with a 100% average outstanding loan <br />balance. <br />2. The financing fees for the construction and permanent loans are estimated at <br />1.50 points, or $505,000. <br />3. A $248,000 capitalized operating reserve account is provided. This equates to <br />approximately three months of operating expenses and debt service payments. <br />4. The Tax Credit fees are estimated at $115,000 based on the following: <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 $38.69 million. <br />Total Development Costs <br />As shown in Table 1, KMA estimates the total development costs at $36.69 million, <br />which equates to approximately $449,900 per unit. In comparison, the Developer <br />estimates the total development costs at $38.73 million. This equates to a less than 1% <br />differential, which can be considered an insignificant difference. <br />1905019:SA:TRB <br />19090.017.019 <br />FO <br />