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EXHIBIT 2 <br />Terri Eggers /Judson Brown, City of Santa Ana June 221 2023 <br />Bewley Street —Preliminary Financial Gap Analysis Page 9 <br />ESTIMATED EFFECTIVE GROSS RESIDENTIAL INCOME <br />KMA estimates the residential effective gross income (EGI) at approximately $239,000 <br />based on the following assumptions: <br />1. The gross rental income is estimated at $50,600. <br />2. The PBV subsidy overhang income is estimated at $215,000 based on the <br />following payment standards: <br />a. $2,219 for one -bedroom units; and <br />b. $2,665 for two -bedroom units. <br />3. A vacancy and collection allowance equal to 10% of gross rental income is <br />assumed, which equates to $26,600. <br />ESTIMATED RESIDENTIAL OPERATING EXPENSES <br />KMA estimates the Project's residential operating expenses at approximately $107,200 <br />based on the following assumptions: <br />1. The general operating expenses are estimated at $9,200 per unit per year. This is <br />within the range for similar small affordable housing projects. <br />2. KMA assumes the Developer will apply for the property tax abatement that is <br />accorded to non-profit housing organizations that own and operate apartment <br />units that are restricted to households earning less than 80% of the Area Median <br />Income. The Developer assumes that the Project will not be subject to any <br />property tax assessment override cost. <br />3. The Developer did not include supportive services costs in their pro forma. Per <br />discussions with the Developer, the Developer will provide / pay for supportive <br />services expenses outside of the Project's operating budget. The Developer <br />estimates these costs at $120,,000 per year; however, the City should <br />memorialize this concept in the City's grant agreement and/or regulatory <br />agreement. <br />2306002v3.SA.TRB <br />19090.018.028 <br />