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Judson Brown, City of Santa Ana March 1, 2017 <br />Santa Ana Arts Collective: Financial Gap Analysis Page 5 <br />additional financing to fill the Project's unfunded financial gap. In that case, the Developer <br />would not need any additional financial assistance from the City. <br />If it is determined that this structure is viable, KMA recommends re -analyzing a more finalized <br />version of the Developer's pro forma to ensure that the City's previous financial assistance <br />package is still warranted by the Project economics. <br />Increase in AHSC Program Funds <br />As discussed above, the Developer was required to utilize 9% Tax Credit Loan Limits, and <br />subsequently reduce the amount of the original AHSC award. However, due to the decrease in <br />Tax Credit equity rates being experienced by all Tax Credit projects, the Developer is working <br />with HCD to allow the Project to use the higher 4%Tax Credit Loan Limits rather than the 9% Tax <br />Credit Loan Limits. If HCD approves this request, the Project will not require additional funds <br />from the City. <br />No Additional Outside Financial Assistance <br />Given the uncertainty of successfully obtaining additional funding through either of the two <br />options outlined above, the Developer is requesting $3.49 million in additional financial <br />assistance from the City. <br />Developer Proposal <br />KMA analyzed the information provided by the Developer, and prepared a financial gap analysis <br />for the Project. The following table compares the KMA and Developer financial gap estimates <br />based on the assumption that no additional outside funding sources are available: <br />Developer <br />KMA <br />Difference <br />Total Development Cost $34,178,000 <br />$34,145,000 <br />$33,000 <br />Available Funding Sources 30,687,000 <br />30,694,000 <br />($7,000) <br />Unfunded Financial Gap $3,491,000 <br />$3,451,000 <br />$40,000 <br />As shown in the preceding table, based on the Developer's proposal, KMA estimates the <br />Project's unfunded financial gap at $3.45 million. Comparatively, the Developer is requesting <br />$3.49 million in additional financial assistance from the City. This equates to a $40,000, or less <br />than 1% differential, which can be considered inconsequential. <br />1703001:SNA:TRB <br />65A-21 19090.014.007 <br />