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." In performing the sensitivity analysis, Empire Economics will utilize a special model that it has designed for such pUlJloses, referred to as the Monthly Payment Model. Specifically, from the perspective of a prospective home purchaser, the household's income level, along with the bank's qualifYing criteria, determine what the household can afford. The monthly payment, in turn, is based upon the mortgage for the home (80% of the price) along with the mortgage rate as well as the ad Valorem and Special Assessments/Taxes. Thus, the Monthly Payment Model can be utilized to evaluate the potential impact of the higher mortgage rates. 5. Personnel Assi!med to the Studv The principal consultant for the Market Absorption Study is Dr. Joseph T. Janczyk. He will design the economic real estate model for CFD No. 2005-0 I and present the conclusions to the City of Santa Ana and the Financing Team. Additionally, he will be assisted by his staff which will be responsible for the compilation of the economic and real estate data required for the research and also conduct market field surveys. Furthermore, Dr. Janczyk will provide the key results in a convenient format to each of the other professionals, and will discuss these with them, including the Special Tax Analyst, Appraiser, Financial Advisor and the Underwriter: · Appraiser: Empire Economics will provide the Appraiser with absorption schedules for each of the product types, with respect to the number of units/acres absorbed each year, from market- entry to build-out. · Special Tax Analvst: Empire Economics will also provide the Special Tax Analyst with the estimated absorption schedules by various product types, so that the amount of Special Assessments that are expected to be paid by the developerlbuilder (as compared to the rmal- users/homeowners) can be calculated. · Finance Team: Empire Economics will provide copies of the Market Absorption Study to the members of the finance team in the Bond Issue and furnish a "Summary and Conclusions" of the Market Absorption Study for use in the Official Statement. Finally, the Market Absorption Study, Sununary and Delivery Letter will be distributed via E-Mail in PDF format to facilitate its distribution and also its use in the Official Statement. 6. No Contractual Relationships with the Developer/Builder Empire Economics conducts market absorption studies onlv for governmental entities, and this has provided numerous public entities with a high level of comfort. By comparison, other firms that provide services to developerslbuilders may encounter "conflicts of interest" in trying to represent both the private and public sectors. Empire Economics' approach of representing the public sector also enhances the credibility of the study in the municipal marketplace. Specifically, Empire Economics has not had any past contractual relationship with the owner/developerlbuilder in CFD No. 2005-01: >- Empire Economics has not performed any consulting services for the CFD's property owners nor the developerlbuilder during at least the past five+ years. >- Empire Economics will not perform any consulting services for the CFD's property owners nor the developerlbuilder during at least the next three years. 6