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Judson Brown, City of Santa Ana October 6, 2021 <br />Francis Xavier Residence: Financial Gap Analysis Page 10 <br /> <br /> 2108022:SA:TRB <br /> 19090.017.010 <br /> <br />Estimated Stabilized Net Operating Income <br />The Project’s EGI is estimated at $196,200, and the operating expenses are estimated at <br />$180,800. This results in estimated stabilized net operating income of $15,400. <br />However, it is important to note, that once the COSR funds are fully disbursed, the <br />Project’s NOI will become negative. This will likely occur between Years 15 – 20. At that <br />time, the Project’s affordability requirements may need to be re-evaluated to ensure <br />operational feasibility. <br />Financial Gap Calculation <br />The financial gap is estimated by deducting the available outside funding sources from <br />the Project’s total construction costs. The outside funding sources anticipated to be <br />received by the Project are described in the following sections of this memorandum. <br />Available Outside Funding Sources <br />Permanent Loan <br />The Project’s NOI could potentially support a $138,000 permanent loan. However, the <br />NOI consists primarily of COSR subsidy, and it is unclear if permanent lenders would be <br />willing to underwrite a permanent loan using this revenue source. In addition, due to <br />the added restrictions imposed by permanent lenders, KMA generally does not <br />recommend taking out a permanent loan less than $500,000. As such, a permanent <br />loan is not included in the Project. <br />NPLH Loan <br />The Developer was awarded a $1.56 million NPLH Loan for capital costs. <br />SNHP Loan <br />The Developer was awarded a $2.05 million SNHP Loan for capital costs. <br />OCHTF Loan <br />The Developer was awarded an $832,000 OCHTF Loan. <br />EXHIBIT 3