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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 11 Federal Tax Credit Proceeds Tax Credit Basis KMA estimates the net Federal Tax Credit proceeds at $18.99 million. This estimate is based on the following assumptions: 1. The Project's eligible Tax Credit basis is equal to the lesser of the depreciable costs for the 86 Tax Credit units, or the threshold basis limits established by TCAC. In this case, the Project's depreciable costs are estimated at $30.42 million, and the threshold basis limits applied by TCAC equal $33.64 million. 2. To increase the competitiveness of the Project's Tax Credit application in the TCAC tiebreaker process, the Developer is proposing to voluntarily exclude a portion of the eligible Tax Credit basis. 3. The Project is not located in a designated "Difficult to Develop" census tract. 4. The current Tax Credit regulations set the annual Tax Credit rate at 9.0%. This rate is applied over the 10-year Tax Credit period. 100% of the Project's building area is located in units that qualify for Federal Tax Credits. 6. The net syndication value supported by the Tax Credit is ultimately determined based on competitive market conditions and on the timing of the disbursements. Based on currently available information, KMA and the Developer estimate the proceeds at $0.98 per gross Federal Tax Credit dollar. State Tax Credits Since the Project is not located in a "Difficult to Develop" census tract, the Project will apply for State Tax Credits awarded by TCAC. The net syndication value supported by the State Tax Credit is ultimately determined based on competitive market conditions and on the timing of the disbursements. Based on currently available information, KMA and the Developer estimate the State Tax Credit proceeds at $0.77 per gross State Tax Credit dollar, which equates to $5.0 million in State Tax Credit proceeds. 1905019:SA:TRB 19090.017.019