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Natalie Verlinich, City of Santa Ana April 15, 2016 <br />First Street Apartments: Financial Gap Analysis Page 7 <br />a. The interest costs incurred during the construction period are estimated <br />based on a 2.5% interest rate, a 16 -month construction period, and a 60% <br />average outstanding loan balance. <br />b. The absorption period interest costs are based on a three-month <br />absorption period and a 100% average outstanding loan balance. <br />The financing fees are estimated at $547,000, and are based on 1.0 point for the <br />LIIF acquisition loan, and 2.0 points for the construction and permanent loans. <br />6. A $221,000 capitalized operating reserve account is provided. This equates to <br />approximately three months of operating expenses and debt service payments <br />on the permanent loans supported by the Project's base income and PBV <br />income. <br />7. The Tax Credit fees are estimated at $71,000 based on the following: <br />a. A $2,000 application fee; <br />b. A $410 per unit monitoring fee; and <br />C. Four percent (4%) of gross Tax Credit proceeds for one year. <br />Total Development Costs <br />As shown in Table 1, the total development costs at $28.51 million, which equates to <br />approximately $413,100 per unit. <br />Stabilized Net Operating Income (Table 2) <br />The Project's funding sources include City HOO in -lieu fees, Tax Credits, and PBVs. The <br />Project's income and affordability standards must comport with the most stringent of <br />the following standards: <br />1. Income Restrictions: The tenants' household incomes cannot exceed the <br />strictest of: <br />65A-47 <br />1604007:SA;TRB <br />19090.014.001 <br />