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EXHIBIT 2 <br />Terri Eggers / Judson Brown, City of Santa Ana June 22, 2023 <br />Bewley Street — Preliminary Financial Gap Analysis Page 2 <br />EXECUTIVE SUMMARY <br />Estimated Financial Gap <br />The results of the KMA preliminary financial gap analysis are compared to the <br />Developer's financial assistance request in the following table: <br />KMA Developer Difference <br />Total Development Costs $7,339,000 $7,290,900 ($48,200) <br />(Less) Outside Funding Sources (5,269,500) (5,269,500) -0- <br />Financial Gap $2,069,500 $2,021,300 $48,200 <br />As shown in the preceding table, KMA estimates the Project's financial gap at $2.07 <br />million, which is $48,200, or less than 3% higher than the Developer's financial gap <br />estimate. This differential can be considered inconsequential for a Project of this <br />magnitude. <br />Operating Feasibility <br />The Developer estimates the Project's stabilized net operating income (NOI) at <br />approximately $37,000 in the Project's first stabilized year of operation. In contrast, <br />KMA estimates the Project's stabilized NOI at negative $37,000 in Year 1 and not <br />becoming positive until Year 10. Per discussions with the Developer, the Developer will <br />cover any cash flow losses. This should be included as a provision in the City's grant <br />agreement and/or regulatory agreement. <br />Proposed Funding Sources <br />The following summarizes the proposed funding sources for the Project: <br />1. The Santa Ana Housing Authority (Housing Authority) proposes to provide eight <br />(8) Section 8 Project -Based Vouchers (PBVs) that are allocated to the Housing <br />Authority by the United States Department of Housing and Urban Development <br />(HUD). The PBVs will be overlayed on the 8 TAY units — and cannot be utilized for <br />the two shared housing units. <br />2306002v3.SA.TRB <br />19090.018.028 <br />