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Judson Brown, City of Santa Ana June 4, 2022 <br />WISEPlace PSH Preliminary Financial Gap Analysis Page 7 <br /> <br /> 2206004.SA.TRB <br /> 19090.018.025 <br /> <br />b. A 5.25% interest rate; <br />c. A 20-month construction period with a 50% average outstanding loan <br />balance; and <br />d. A 10-month absorption/conversion period with a 100% average <br />outstanding balance. <br />2. The financing fees for the construction loan are estimated at 1.25 points, or <br />$207,000. <br />3. The following capital reserves are included: <br />a. A $2.10 million Capitalized Operating Subsidy Reserve (COSR) is provided. <br />The COSR was sized based on the estimated operating deficits over a 20- <br />year period (See Table 4 for KMA estimate). <br />b. A $146,000 capitalized operating reserve, which is equal to three months <br />of operating expenses. <br />4. The Tax Credit fees are estimated at $107,000 based on the following: <br />a. A $2,000 application fee; <br />b. A $410 per unit monitoring fee; and <br />c. Four percent (4%) of gross Tax Credit proceeds for one year. <br />KMA estimates the total financing costs at $3.72 million. <br />Total Development Costs <br />As shown in Table 1, KMA estimates the total development costs at $28.73 million, <br />which equates to approximately $598,500 per unit. This is $59,000 less than the <br />Developer’s estimate, which equates to a less than 1% differential. <br />It is important to note that the total development costs include a $2.10 million COSR, <br />which will be used to fund operations over a 20-year period. When the $2.10 million is <br />removed from the total development costs, the total construction costs equate to <br />$26.63 million, or $554,700 per unit. <br />EXHIBIT 3