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Judson Brown, City of Santa Ana <br />March 1, 2017 <br />Santa Ana Arts Collective: Financial Gap Analysis Page 15 <br />2. Set the total Developer Fee at $1,588,000, and defer $188,000 of this amount. In this <br />case, it is projected that sufficient cash flow will be generated within 15 years to repay <br />the entire deferred amount. <br />CONCLUSIONS <br />The following summarizes the conclusions KMA has derived from the preceding analysis: <br />1. KMA recommends that the City require the Developer to pursue additional financing <br />from the outside funding sources prior to approving the Developer's additional financial <br />assistance request. The two options identified are: <br />a. Pursue TCAC's 9%/4% Hybrid Structure; and <br />b. Pursue utilizing the AHSC 4% Tax Credit Loan Limits instead of the lower AHSC <br />9% Tax Credit Loan Limits. <br />2. If the Developer is unable to obtain additional outside funding, KMA estimates the <br />Project's unfunded financial gap as follows: <br />a. KMA recommends that the City require the Developer to defer or forgo <br />$600,000 of the Developer Fee included in the Project's budget. This would <br />decrease the warranted additional financial assistance to $2.90 million. <br />b. If the City does not require the Developer to defer or forgo $600,000 of the total <br />Developer Fee, the Developer's request for $3.49 million in additional financial <br />assistance would be warranted by the Project economics. <br />3. The City should require the Developer to produce the following documents prior to the <br />disbursement of any City funds: <br />a. The Developer should be required to produce formal contractors' bids for the <br />currently proposed scope of development. <br />b. The Developer estimated that the Project could support a $2.09 million <br />permanent loan. This is based on a 1.17 debt service coverage ratio and lower <br />than typical projected increases in management fees and social services costs. <br />The Developer should be required to provide evidence that $2.09 million in <br />permanent loan funds have been committed to the Project. <br />1703001:SNA:TRB <br />19090.014.007 <br />65A-31 <br />