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3. The taxes, insurance, legal and accounting costs are estimated at 2% of direct costs, or <br />$298,000. <br />4. The marketing and leasing budget equates to $110,000, or $1,447 per unit. <br />5. The Developer will receive a $2,200,000 developer fee, which is the maximum allowed <br />by TCAC. <br />6. A 4% indirect cost contingency allowance is provided. <br />The total indirect costs are estimated at $5,372,000, which KMA concludes are reasonable and <br />necessary for the development of the Project. <br />Flnandng Casts <br />The financing costs for the Project are estimated as follows: <br />1. Century Housing Corporation, provided a $4,400,000 acquisition loan to the Project, <br />which closed escrow in January 2017. The loan has a 6.59% interest rate. Assuming a <br />13-month loan term, the interest owed during the development period is estimated at <br />$314,000. <br />2. The construction period and absorption period debt service payments are estimated at <br />$1.32 million. This estimate is based on the following assumptions: <br />a. $21,750,000 conventional construction loan; <br />5.58% interest rate; <br />C. A 24-month development period; and <br />d. An average outstanding balance of 55%. <br />3. The construction lender and other financing costs are estimated at $825,000, <br />4. The Tax Credit fees are estimated at $135,000. <br />5. A three-month capitalized operating reserve will be provided. However, no transitional <br />reserve is required by Union Bank, the lender. <br />The total financing costs are estimated at $2,907,000, which KMA finds to be reasonable and <br />necessary to complete the Project. As the Project moves through the construction process, the <br />City is required to keep up to date with any changes to the costs. <br />City of Santa Ana Underwriting & Subsidy Layering Review: Veteran's Village Page 16 <br />25B-40 <br />