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B. Cost Reasonableness <br />The construction costs have been estimated in detail by a third -party consultant, Advent <br />Companies, as of May 25, 2018. In addition, the indirect and financing costs were reviewed by <br />KMA and found to be reasonable when compared to similar project in the region. However, if <br />there are any changes to the scope of development or costs increases experienced by the <br />Project during construction, a third party will be required to review the revised estimates. <br />C. Written Agreement <br />The City must execute a written agreement (HOME Agreement) before committing HOME <br />funds to the Project. The written agreement must capture the Project and financing terms that <br />result from the underwriting process. The following summarizes the financial deal points <br />memorialized in the written agreement: <br />1. The term of the HOME Loan is 55 years. <br />2. The term of the HOME Affordability Period is 20 years. <br />3. A total of three units in the Project should be restricted as fixed HOME units, occupied <br />by very -low households (two one -bedroom units and one two -bedroom unit). <br />4. The HOME Loan terms are as follows: <br />a. A total of $477,346 will be disbursed to the Developer for eligible costs related <br />to the construction of the three HOME assisted units. <br />b. A 3.0% simple interest rate. <br />C. The outstanding loan balance will be due and payable at the end of the 55-year <br />term if the Project is not in default. <br />d. The loan is secured by a of trust that will be subordinated to the <br />construction/permanent loans, OCCF Loan and SNHP Loan. <br />e. Annual payments will be made to the City based on 3% of residual receipts after <br />the OCCF and SNHP loan payment have been made. <br />The following verifies that the written agreement includes the provisions required in Section <br />92.504: <br />City of Santa Ana Underwriting & Subsidy Layering Review: Veteran's Village Page 118 <br />25B-52 <br />