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Judson Brown, City of Santa Ana June 4, 2022 <br />WISEPlace PSH Preliminary Financial Gap Analysis Page 14 <br /> <br /> 2206004.SA.TRB <br /> 19090.018.025 <br /> <br />CONCLUSIONS / RECOMMENDATIONS <br />The following summarizes the conclusions of the KMA analysis: <br />1. Based on the currently available information, it is KMA’s conclusion that the <br />Developer’s request for $5.26 million in financial assistance from the City is <br />supported by the Project’s economics. <br />2. It is important to note that, with the use of a COSR, the Project is structured to <br />be operationally feasible for only 20 years. After Year 20, the Project’s NOI is <br />expected to be negative. As such, the Project will need to identify additional <br />operating subsidies or complete a financial restructuring by that time. <br />3. The Developer’s direct costs estimates are at the high end of the typical range. <br />As such, KMA recommends that the City require: <br />a. The Developer should obtain three general contractor bids; <br />b. All subcontractors should be competitively bid out; and <br />c. The City should review the final general contractor’s contract, and if the <br />costs differ from those used in this analysis, this analysis may need to be <br />updated. <br />4. The City will receive Regional Housing Needs Assessment (RHNA) credit for 47 <br />Extremely Low Income units. <br /> <br />EXHIBIT 3