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CITY OF SANTA ANA COMMUNITY DEVELOPMENT AGENCY - <br />AFFORDABLE HOUSING FINANCIAL, ANALYTICAL & ADVISORY SERVICES <br />B.PROFORMA AND PROJECT ANALYSIS <br />For the purposes of KMA's pro forma analysis services, KMA reviews the proposed scope of <br />development, conceptual development plans, the developer's pro forma analysis, and any additional <br />·available information that describes the proposed project. KMA will work with City/Housing Authority <br />staff to clarify any questions regarding the project and to identify any major financia·I issues with the <br />proposed development plari. <br />At the completion of that process, l<MA prepares an initial pro forma analysis to estimate the financial <br />gap associated with the proposed project. The KMA analysis will include the following components: <br />1.Development Costs: The accuracy and reasonableness of the developer's cost estimates will be <br />reviewed and evaluated. The specific cost categories that will be considered are: <br />a.The estimated construction costs; <br />b.The amount of the developer fee being requested; and <br />c.Other financial elements of the development cost proforma as _necessary. <br />2.KMA will evaluate the sales price or rent structure assumptions applied in the developer's pro <br />forma especially with regards to any income and affordability restrictions Imposed on the <br />project. <br />3.l<MA will review and evaluate the reasonableness of the operating expense estimates provided <br />by the developer. <br />4.KMA will review and evaluate the sources and uses of funds proposed to be used during the <br />construction period and on a permanent basis. <br />5.KMA will quantify the financial gap associated with the project. <br />6.KMA Will prepare a cash flow projection that covers the period during which the income and <br />affordability covenants will be in place. <br />KMA will prepare a memorandum that describes the assumptions and methodol ogy that were applied <br />in the financial analysis. Based on the findings of the analysis, KMA will provide conclusions and <br />recommendations for the City including the warranted financial assistance amount and best practices <br />for structuring the City's financial assistance. <br />Keyser Marston Associates, Inc. Page I 8 <br />EXHIBIT 1