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Total Development Costs $29,477,000 <br />(Less) Available Funding Sources (29,954,000) <br />Financial Gap $477,000 <br />Per Affordable Unit $6,400 <br />The City proposes to fund the financial gap with $477,346 of HOME Program funds. Based on <br />the KMA analysis, it is concluded that the $477,346 in HOME assistance to the Project is <br />warranted. <br />D. Cash Flow Over Affordability Term (Table 4) <br />KMA also conducted a cash flow analysis to estimate the present value of the debt service <br />payments to the City. The following describes the basic cash flow assumptions: <br />1. Year 1 is based on the pro forma rent and expense assumptions presented in the <br />stabilized analysis (Table 2). <br />2. Additional revenue and expense assumptions are as follows: <br />a. The projected residential income and miscellaneous income are estimated to <br />increase at 2.5% per year. <br />b. A 7.0% vacancy and collection allowance. <br />C. The general operating expenses and social services are increased at 3.5% per <br />year. <br />d. The property taxes are increased at 2.0% per year. <br />e. Replacement reserves and the HCD mandatory payment will remain flat for 55 <br />years. <br />The priority distributions are categorized as follows: <br />An annual debt service payment of $642,546; <br />ii. Repayment of the deferred Developer fee; and <br />iii. The Owner Partnership Management and Asset Management Fees are <br />set at $35,000 in Year 1 and are not to exceed 5% of gross rents. <br />g. The annual residual receipts payments to the soft lenders will be se as follows: <br />OCCF Loan: $1,500,000 will be repaid with 72% of the residual receipts. <br />This loan will have a 3% simple interest rate and a 15-year term. The loan <br />City of Santa Ana Underwriting & Subsidy Layering Review: Veteran's Village Page 111 <br />25B-45 <br />