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Natalie Verlinich, City of Santa AnaApril 15, 2016 <br />First Street Apartments: Financial Gap Analysis Page 4 <br />FINANCIAL GAP ANALYSIS <br />KMA prepared a pro forma analysis to assist in evaluating the Developer’s proposal. The <br />analysis is located at the end of this memorandum, and is organized as follows: <br />Table 1: Estimated Development Costs <br />Table 2: Stabilized Net Operating Income <br />Table 3: Financial Gap Calculation <br />Estimated Development Costs (Table 1) <br />KMA reviewed the Developer’s development cost estimates, and then independently <br />prepared a pro forma analysis for the Project. The resulting development costs are <br />estimated as follows: <br />Property Assemblage Costs <br />The total property assemblage costs are estimated at $5.47 million, and they are <br />comprised of the following components: <br />1.The proposed purchase price for the Site is $4.5 million, or $48 per square foot <br />of land area. The Developer submitted an appraisal prepared by Lidgard and <br />Associates, Inc. on January 20, 2015 to validate the purchase price. The appraisal <br />estimated the market value of the Site at $4.55 million, which is approximately <br />equal to the purchase price. <br />2.The Developer included a $942,000 allowance for relocation expenses. A <br />relocationplan prepared byOverland, Pacific & Cutler, Inc.on December 18, <br />2015 estimates the relocation costsat $865,000. The additional $77,000 in costs <br />are assumed to represent the estimated costs to implement the relocation plan. <br />3.The Developer included$25,000 in closing costs. <br />1604007:SA;TRB <br />19090.014.001 <br />