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Judson Brown, City of Santa Ana October 6, 2021 <br />Francis Xavier Residence: Financial Gap Analysis Page 6 <br /> <br /> 2108022:SA:TRB <br /> 19090.017.010 <br /> <br />4. An approximately $900 per unit allowance for marketing and leasing costs is <br />provided, which equates to $15,000. <br />5. The Developer set the Developer Fee at $442,000, which is equal to 7% of the <br />net construction costs.2 <br />6. An indirect cost contingency allowance equal to 10% of other indirect costs is <br />provided. <br />KMA estimates the total indirect costs at $1.63 million. <br />Financing Costs <br />The financing costs for the Project are estimated as follows: <br />1. The construction period and absorption period interest costs are estimated at <br />$235,000. These costs are based on the following assumptions: <br />a. The construction period interest costs are based on a 5.05% interest rate, <br />a 20-month construction period, and a 60% average outstanding balance. <br />b. The absorption period interest costs are based on a four-month <br />absorption period with a 100% average outstanding balance. <br />2. The financing fees for the construction loan are estimated at $35,000, which <br />equates to 1.0 point. <br />3. The following capitalized reserves will be provided: <br />a. A $60,000 capitalized operating reserve is provided, which equates to <br />four months of operating expenses; and <br />b. The Developer included a $57,000 transition reserve to satisfy the NPLH <br />Program. <br />KMA estimates the total financing costs at $387,000. <br /> <br />2 Net construction costs equate to the total construction costs less the developer fee amount. <br />EXHIBIT 3