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Judson Brown, City of Santa Ana March 19, 2020 <br />Westview House: Financial Gap Analysis Page 7 <br />Indirect Costs <br />KMA utilized the following assumptions in estimating the indirect costs: <br />1. The architecture, engineering and consulting costs are estimated at 5.5% of <br />direct costs. <br />2. The Developer estimated the public permits and fees costs at $1.48 million, or <br />approximately $17,500 per unit. City staff should verify the accuracy of this <br />estimate. <br />3. The taxes, insurance, legal and accounting costs are estimated at 2% of direct <br />costs. <br />4. A $500 per unit allowance for marketing and leasing costs is provided. <br />5. The Developer set the Developer Fee at $3.93 million, which is the maximum <br />amount allowed by TCAC for this Project.3 <br />6. $400,000 of the City's financial assistance will be set -aside as a City -controlled <br />project contingency allowance. <br />KMA estimates the total indirect costs at $7.53 million. <br />Financing Costs <br />The Project is proposed to be developed with Tax -Exempt Multifamily Bonds allocated <br />by CDLAC. To comply with Internal Revenue Service (IRS) requirements, the Bonds must <br />be equal to at least 50% of the land acquisition costs plus the eligible Tax Credit basis. In <br />addition, the Bond funds must be sufficient to cover the development costs that do not <br />have funding from other sources. <br />In this case, the Project's estimated NOI can only support a $13.98 million Bond; this will <br />be called the Series A Bond. To fulfill the 50%Test, and to provide bridge funding for <br />costs that will be paid for by other sources upon the Project's completion, a Series B <br />3 $1.43 million, or 36% of the total Developer Fee will be contributed back to the Project by the Developer <br />as equity. <br />2003012:SA:TRB <br />60 B-21 19090.017.022 <br />