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Natalie Verlinich, City of Santa AnaApril 15, 2016 <br />First Street Apartments: Financial Gap Analysis Page 10 <br />Estimated Effective Gross Income <br />KMA estimates the Project’s effective gross income at approximately $962,100 based on <br />the following assumptions: <br />1.The base rental income is estimated at $898,300. <br />2.The PBV income is estimated at $106,900. <br />3.Laundry and miscellaneous income is estimated to average $9 per unit per <br />month for a total of $7,500 per year. <br />4.A vacancy and collection allowance equal to 5% of gross income is provided. This <br />equates to $50,600. <br />Estimated Operating Expenses <br />The residential operating expenses are estimated at $371,700 based on the following <br />assumptions: <br />1.The general operating expenses are estimated at $4,790 per unit per year. <br />2.KMA assumes the Developer will apply for the property tax abatement that is <br />accorded to non-profit housing organizations that own and operate apartment <br />units that are restricted to households earning less than 80% of the Median. The <br />Developer estimates that the Project will incur $2,500 per year in property tax <br />assessment override costs. <br />3.The Developer is proposing to provide social services at an estimated cost of <br />$18,000 per year. <br />4.Annual deposits to a capital replacement reserve account are estimated at $300 <br />per unit per year. This exceeds the minimum amount required by TCAC. <br />Stabilized Net Operating Income <br />The Project’s effective gross income is estimated at $962,100, and the operating <br />expenses are estimated at $371,700. This results in an estimated stabilized net <br />operating incomeof $590,400. <br />1604007:SA;TRB <br />19090.014.001 <br />