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CITY OF SANTA ANA COMMUNITY DEVELOPMENT AGENCY — <br />AFFORDABLE HOUSING FINANCIAL, ANALYTICAL & ADVISORY SERVICES <br />B. PRO FORMA AND PROJECT ANALYSIS <br />For the purposes of KMA'S pro forma analysis services, KMA reviews the proposed scope of <br />development, conceptual development plans, the developer's pro forma analysis, and any additional <br />available Information that describes the proposed project. KMA will work with City/Housing Authority <br />staff to clarify any questions regarding the project and to Identify any major financial issues with the <br />proposed development plan, <br />At the completion of that process, ICMA prepares an initial pro forma analysis to estimate the financial <br />gap associated with the proposed project, The KMA analysis will include the following components: <br />1. Development Costs: The accuracy and reasonableness of the developer's cost estimates will be <br />reviewed and evaluated. The specific cost categories that will be considered are: <br />a. The estimated construction costs; <br />b. The amount of the developer fee being requested; and <br />C. Other financial elements of the development cost pro forma as necessary. <br />2. KMA will evaluate the sales price or.rent structure assumptions applied in the developer's pro <br />forma especially with regards to any income and affordability restrictions Imposed on the <br />project. <br />3. I<MA will review and evaluate the reasonableness of the operating expense estimates provided <br />by the developer. <br />4. KMA will review and evaluate the sources and uses of funds proposed to be used during the <br />construction period and on a permanent basis. <br />5. KMA will quantify the financial gap associated with the project, <br />G. KMA will prepare a cash flow projection that covers the period during which the income and <br />affordability covenants will be in place. <br />KMA will prepare a memorandum that describes the assumptions and methodology that were applied <br />in the financial analysis, Based on the findings of the analysis, ICMA will provide conclusions and <br />recommendations for the City Including the warranted financial assistance amount and best practices <br />for structuring the City's financial assistance. <br />Keyser Marston Assoclates, Inc. _ Page 18 <br />