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Judson Brown, City of Santa Ana <br />March 19, 2020 <br />Westview House: Financial Gap Analysis Page 12 <br />2. KMA assumes that the Developer will apply for the property tax abatement that <br />is accorded to non-profit housing organizations that own and operate units <br />restricted to households earning less than 80% of the area median income. The <br />Developer anticipates that the property will not be subject to any tax assessment <br />override. <br />3. The social service expenses are estimated at $29,800 per year, which equates to <br />$350 per unit per year. This budget is at the low end of the range seen for <br />projects which include PSH units. However, the Developer contends that the <br />budget is reasonable given that the NPLH program will provide case <br />management and other social services to the PSH tenants. <br />4. HCD requires a mandatory annual debt service payment equal to 0.42% of the <br />NPLH Loan. This equates to $29,900 per year. <br />5. The Developer provided an allowance for replacement reserve deposits at $300 <br />per unit per year. <br />Estimated Stabilized Net Operating Income <br />The effective gross income of the Project is estimated at $1.44 million and the operating <br />expenses are estimated at $528,400. This results in estimated NOI of $913,000. <br />Financial Gap Calculation <br />Available Outside Funding Sources <br />Tax -Exempt Multifamily Bonds <br />To estimate the maximum Bond amount that can be supported by the Project's NOI, <br />KMA assumed that the Bonds would be underwritten based on the following <br />requirements: <br />1. A 115% debt service coverage ratio; <br />2. A 4.50% interest rate; and <br />3. A 35-year amortization period. <br />2003012:SA:TRB <br />60 B-26 19090.017.022 <br />