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Judson Brown, City of Santa Ana October 27, 2022 <br />Habitat Washington Avenue – Preliminary Financial Gap Analysis Page 4 <br /> <br /> 2208010v2:SA:TRB <br /> 19090.018.026 <br /> <br />INDIRECT COSTS <br />KMA utilized the following assumptions in estimating the indirect costs: <br />1. The architecture, engineering and consulting costs are estimated at 12% of direct <br />costs, or $285,000. <br />2. Habitat estimates the public permits and fees costs at $40,000 per unit, or <br />$240,000. City staff should verify the accuracy of this estimate. <br />3. The taxes, legal and accounting costs are estimated at 3% of direct costs, or <br />$71,000. <br />4. The insurance costs are based on Habitat’s estimate of $7,200 per unit, or <br />$43,000. <br />5. The Developer Fee is set at $480,000, which equates to 13% of net development <br />costs (excluding the Developer Fee). This estimate is within the range of similar <br />projects. <br />6. An indirect cost contingency allowance equal to 10% of other indirect costs is <br />provided. <br />KMA estimates the total indirect costs at $1.23 million. <br />FINANCING COSTS <br />The financing costs for the Project are estimated as follows: <br />1. The interest costs to be incurred during the construction period are estimated at <br />$32,000. This cost estimate is based on the following assumptions: <br />a. KMA assumes that Habitat will obtain a construction loan from a 3rd party <br />lender for the Project. KMA estimates the construction loan amount at <br />$765,000, which is calculated based on the total development costs less <br />90% of the City’s financial assistance, Habitat fundraising assistance, <br />Developer Fee, closing costs, and warranty costs. <br />b. KMA assumes that the construction loan will carry the following terms: <br />EXHIBIT 3