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Judson Brown, City of Santa Ana June 4, 2022 <br />WISEPlace PSH Preliminary Financial Gap Analysis Page 11 <br /> <br /> 2206004.SA.TRB <br /> 19090.018.025 <br /> <br />FINANCIAL GAP CALCULATION <br />The financial gap is estimated by deducting the available outside funding sources from <br />the Project’s total development costs. The outside funding sources anticipated to be <br />received by the Project are described in the following sections of this analysis. <br />Available Funding Sources <br />Permanent Loan <br />The Project’s NOI does not support a permanent loan. <br />Tax Credit Proceeds <br />Tax Credit Basis <br />KMA estimates the net Tax Credit proceeds at $20.05 million. This estimate is based on <br />the following assumptions: <br />1. The Project’s eligible Tax Credit basis is equal to the lesser of the depreciable <br />costs for the 48 Tax Credit units, or the threshold basis limits established by <br />TCAC. In this case, the Project’s depreciable costs are less than the threshold <br />basis limits allowed by TCAC. <br />2. To increase the competitiveness of the Project’s Tax Credit application in the <br />TCAC tiebreaker process, the Developer is proposing to voluntarily exclude a <br />portion of the eligible Tax Credit basis. <br />3. The Project is located in a designated “Difficult to Develop” census tract. <br />4. The current Tax Credit regulations set the annual Tax Credit rate at 9.0%. This <br />rate is applied over the 10-year Tax Credit period. <br />5. 100% of the Project’s building area is located in units that qualify for Tax Credits. <br />6. The net syndication value supported by the Tax Credit is ultimately determined <br />based on competitive market conditions and on the timing of the disbursements. <br />Based on currently available information, KMA and the Developer estimate the <br />proceeds at $0.94 per gross Federal Tax Credit dollar. <br />EXHIBIT 3