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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 5 <br />Estimated Development Costs (Table 1) <br />KMA reviewed the Developer's development cost estimates, and then independently <br />prepared a pro forma analysis for the Project. The resulting development costs are <br />estimated as follows: <br />PROPERTY ASSEMBLAGE COSTS <br />The Developer purchased the Site for $3.90 million. The Developer did not provide an <br />appraisal for review. The City may want to require the Developer to provide an appraisal <br />to ensure that the purchase price is consistent with the appraised value. <br />The Developer was required to pay the Seller's broker fees, which were set at $156,000, <br />or 4% of the purchase price. The total property assemblage costs are estimated at $4.06 <br />million. <br />DIRECT COSTS <br />The direct cost estimates assume that the Project will be subject to State of California <br />prevailing wage requirements. The direct costs applied in this analysis are based on <br />estimates provided by the Developer and can be summarized as follows: <br />1. The demolition costs are estimated at $71,000. <br />2. The site improvement costs are estimated at $71,000. <br />3. The rehabilitation and new construction costs for the ADU are estimated at <br />$2.09 million, or approximately $190,400 per unit. <br />4. The general conditions and contractor fee costs are estimated at $240,000, or <br />11% of construction costs. <br />5. The insurance costs are estimated at 1% of construction costs. <br />6. A direct cost contingency allowance equal to 15% of direct costs is provided, <br />which is reasonable given the proposed scope of development. <br />KMA estimates the total direct costs at $2.88 million, or $261,400 per unit. <br />230600203A.TRB <br />19090.018.028 <br />