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Loans <br />The cash flow projects potential cash deficits, as discussed above. The deficits are <br />primarily the result of assumed on -going ERAF payments to the State as a result of State <br />budget deficits. The cash flow assumes that short -term loans can be advanced to the <br />Agency, as necessary, to meet any future year deficits. The projection assumes that the <br />Agency may borrow from the Housing Fund in order to meet the ERAF payments. Non - <br />ERAF deficits are assumed to be funded from other Agency financing sources. Loan <br />principal and interest (assumed at 6 %) to be paid, on a pay -as- you -go basis, within the <br />subsequent fiscal years. The short -term loans may be funded from any allowable source <br />outlined above. <br />C. PROPOSED FINANCING METHOD, ECONOMIC FEASIBILITY, AND <br />REASONS FOR INCLUDING TAX INCREMENT FINANCING <br />The anticipated costs to implement a program of revitalization in the Merged Project Area <br />will require significant participation from the Agency as it implements activities that promote <br />and achieve the stated goals and objectives of the Amended Plan. Economic feasibility of <br />the Merged Project Area has been determined based upon a comparative cash flow <br />analysis of the anticipated costs for implementation of the proposed redevelopment <br />program to the resulting projected resources expected to be generated over the life of the <br />Merged Project Area. <br />The financial feasibility cash flow summarized on Table 4 was created to represent one <br />scenario of economic feasibility. At the discretion of the Agency, other funding sources <br />discussed above may also represent viable funding alternatives for economic feasibility of <br />the Amended Plan. Although the Agency may consider other funding sources permitted in <br />the Amended Plan, not all of the funding sources may be available or be feasible for the <br />Agency to use in financing the anticipated costs and revenue shortfalls. In the event that <br />neither the City nor the private market acting alone could fully bear the costs associated <br />with revitalization of the Merged Project Area, the implementation of a redevelopment <br />program utilizing tax increment revenues must be considered as a viable financing tool. <br />Preliminary Report for the Merger of the Keyser Marston Associates, Inc. <br />Santa Ana Redevelopment Projects Page 21 <br />PA0402006.SNTA:CK:gbd <br />19090 00.0002/27104 <br />