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Natalie Verlinich, City of Santa Ana <br />April 15, 2016 <br />First Street Apartments: Financial Gap Analysis Page 6 <br />3. The taxes, insurance, legal and accounting costs are estimated at 3% of direct <br />costs. <br />4. A $1,700 per unit allowance for marketing and leasing costs is provided. <br />5. The Developer Fee is set at $2.0 million, which is the maximum amount allowed <br />for the Project by TCAC. <br />6. An indirect cost contingency allowance equal to 5% of other indirect costs is <br />provided. <br />Financing Costs <br />KMA estimated the Project's financing costs at $2.17 million. The financing cost <br />assumptions are as follows: <br />1. The Developer purchased the property in part with a $3.74 million loan from the <br />Low Income Investment Fund (LIIF). The estimated loan term is 30 months, and <br />the loan carries a 4.70% interest rate. The interest costs are estimated at <br />$440,000. <br />2. The Developer provided a $1.15 million loan to the Project to fund acquisition <br />and predevelopment expenses. The estimated loan term is 30 months at a <br />stated interest rate of 10%. However, KMA contends that the interest rate on a <br />loan provided by a party related to the Project should be in line with the interest <br />charged on similar loans. In this case, the Developer obtained a predevelopment <br />loan with an interest rate of 5.25%. KMA applied this same interest rate to the <br />Developer's $1.15 million acquisition and predevelopment loan. The interest <br />costs are estimated at $151,000. <br />3. The Developer obtained a $2.21 million predevelopment loan with a 30 -month <br />loan term and a 5.25910 interest rate. The interest costs are estimated at <br />$290,000. <br />4. The interest costs on the approximately $17 million construction loan are <br />estimated at $446,000. These costs are based on the following assumptions: <br />1604007:SA;TRB <br />19090.014.001 <br />