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Judson Brown, City of Santa Ana <br />Westview House: Financial Gap Analysis <br />March 19, 2020 <br />Page 6 <br />The Seller is allowing the Developer to enter into a longer than typical escrow period to <br />provide the Developer time for due diligence and to secure public funding sources. As <br />such, KMA contends that the 6% premium above the appraised value is warranted by <br />the terms of the sale. However, the City should confer with legal counsel to ensure this <br />differential complies with City funding requirements. <br />Direct Costs <br />The direct costs assume that the Project will be subject to State of California and/or <br />Federal Davis Bacon prevailing wage requirements. The direct costs applied in this <br />analysis can be summarized as follows: <br />1. The Developer estimates the off -site improvement costs at $250,000. City staff <br />should verify the scope and cost of the off -site improvements required to serve <br />the Project. <br />2. The on -site improvement costs are estimated at $1.39 million, which equates to <br />$15 per square foot of land area. <br />3. The residential building costs are estimated at $150 per square foot of GBA, or <br />$14.31 million. <br />4. The Developer included a prevailing wage premium equal to 17%of the <br />construction costs. <br />5. The Developer included a $213,000 allowance for furnishings, fixtures and <br />equipment. <br />6. A 12% allowance for contractors' fees and general requirements is provided. <br />7. An allowance for construction bonds / general liability insurance at 1% of <br />construction costs is provided. <br />8. The Developer included a total direct cost contingency allowance equal to 5% of <br />other direct costs. <br />The total direct costs are estimated at $22.36 million. This equates to $234 per square <br />foot of GBA. <br />2003012:SA:TRB <br />60 B 0 19090.017.022 <br />