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Judson Brown, City of Santa Ana June 4, 2022 <br />WISEPlace PSH Preliminary Financial Gap Analysis Page 5 <br /> <br /> 2206004.SA.TRB <br /> 19090.018.025 <br /> <br />2. The on-site improvement costs are estimated at $54 per square foot of land <br />area, or $1.41 million. This includes the demolition costs of one existing building. <br />3. The residential building costs are estimated at $425 per square foot of GBA, or <br />$13.36 million. This includes the podium parking costs for 20 podium parking <br />spaces. In addition, this line item includes the adaptive reuse costs for the <br />existing one-story building which will remain on the Site. <br />4. A $192,000 allowance for furnishing, fixtures and equipment is provided. <br />5. A 14% allowance for contractor fees and general requirements is provided, <br />which is the maximum allowed by TCAC. <br />6. An allowance for construction bonds / general liability insurance at 2% of <br />construction costs is provided. <br />7. A direct cost contingency allowance equal to 5% of other direct costs is provided. <br />KMA estimates the total direct costs at $18.85 million. This equates to $597 per square <br />foot of GBA <br />It is important to note that the Project’s direct cost estimates are at the high end of the <br />typical range for similar affordable housing projects. Per the Developer, they worked <br />with their in-house general contractor to estimate the direct costs used in this analysis. <br />The Developer stated that their cost estimates are based on similar developments that <br />were recently bought out and also based on feedback from major subcontractors with <br />regards to current pricing. However, the construction industry is currently experiencing <br />exponential increases in costs due to supply chain issues and labor shortages. <br />In addition, the Developer noted that the Project consists of a hybrid of adaptive <br />reuse/rehabilitation and new construction. Based on the Developer’s experience, <br />unforeseen conditions are often discovered when opening up existing walls, <br />foundations, roofs, etc. that lead to increased costs. Furthermore, the historic nature of <br />the building adds additional complexity, as the Developer will need to work around and <br />refurbish existing features. The direct cost budget includes additional costs such as <br />support for the existing roof while removing load-bearing walls and replacing items that <br />are in disrepair with items that match the building’s historic character. <br />EXHIBIT 3