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HomeMy WebLinkAbout60B - AFFORDABLE HOUSING FUND FOR MERCY HOUSEREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: APRIL 7, 2020 TITLE: APPROVE A PRE -COMMITMENT OF $3,904,341 OF AFFORDABLE HOUSING FUNDS TO COMMUNITY DEVELOPMENT PARTNERS AND MERCY HOUSE FOR THE DEVELOPMENT OF THE WESTVIEW HOUSE PROJECT LOCATED AT 2530 AND 2534 WESTMINSTER AVENUE CLERK OF COUNCIL USE ONLY: ❑ As Recommended ❑ As Amended ❑ Ordinance on 1" Reading ❑ Ordinance on 2i1 Reading ❑ Implementing Resolution ❑ Set Public Hearing For CONTINUED TO /s/ Kristine Ridge FILE NUMBER CITY MANAGER RECOMMENDED ACTION Authorize the City Manager to execute a pre -commitment letter with Community Development Partners ("CDP") and Mercy House Community Housing Development Organization ("Mercy House CHDO") for $3,904,341 in affordable housing funds consisting of $1,514,113 in Inclusionary Housing funds, $2,003,705 in HOME Investment Partnerships Program funds and $386,523 in Rental Rehabilitation Program funds for the development of the Westview House affordable housing project located at 2530 and 2534 Westminster Avenue, Santa Ana, CA 92701, (APNs 198-132-21 and 198-132-23), subject to non -substantive changes approved by the City Manager and City Attorney. DISCUSSION On July 2, 2019, the City Council authorized the Community Development Agency ("CDA") to release a FY 2019 — 2020 Request for Proposals (RFP # 19-063) to develop affordable rental and ownership project(s) in the City of Santa Ana with available funds from the HOME Investment Partnerships Program ("HOME"), Community Development Block Grant Program ("CDBG"), Rental Rehabilitation Program ("RRP") and Inclusionary Housing Fund. The RFP also included one land asset owned by the Housing Authority of the City of Santa Ana. The RFP was prepared in compliance with the City's Affordable Housing Funds Policies and Procedures adopted by City Council on March 20, 2018. Following this approval, on July 3, 2019, CDA issued RFP # 19-063 for Affordable Housing Development. The RFP was published on both the City and Housing Authority's websites and Planet Bids; a public notice was published in the OC Register on July 10, 2019; an e-mail was sent out by Orange County's largest affordable housing membership associations including the Kennedy Commission, 2-1-1 Orange County, and Southern California Association of Nonprofit L. 1 Pre -Commitment of Affordable Housing Funds to Community Development Partners April 7, 2020 Page 3 Housing; and an electronic letter was e-mailed to interested developers and nonprofit organizations who had previously requested to be informed of development opportunities on CDA's RFP Process Database. The first deadline for the City's RFP # 19-063 for Affordable Housing Development closed on Tuesday, October 15, 2019 at 5:00 p.m. The City received four (4) proposals prior to the deadline. The affordable housing developers that submitted a proposal are: Affordable Housing Developers American Family Housing Community Development Partners Innovative Housing Opportunities Premiant Development After the deadline, staff conducted a minimum threshold review of each proposal to ensure compliance with RFP requirements. Following the minimum threshold review, staff formed a Review Panel that consisted of the Executive Director of the City's Public Works Agency, the Executive Director of the Planning and Building Agency, the Executive Director of the Community Development Agency, the Housing Division Manager and the Housing Programs Analyst. Keyser Marston Associates served as an advisor to the Review Panel. In compliance with the City's Affordable Housing Funds Policies and Procedures, the Review Panel used the proposal Scoring and Selection Criteria from the RFP to conduct their review and analysis of each proposal. In addition to the Scoring and Selection Criteria from the RFP, the Review Panel also reviewed the proposed project design for appropriateness for the proposed target group, compatibility with surrounding uses, cost effectiveness of construction, and appropriateness of the design and construction for low maintenance and long term durability. On January 7, 2020, the Review Panel met and interviewed all proposals. On January 23, 2020, the Review Panel met a second time to discuss and deliberate upon the scoring and selection of the proposals. The Review Panel agreed upon the final scores below based on an average of the individual reviewer scores: Housing Final Score Developer Name Project Name Authority (Average of Land Asset Individual Requested Reviewer Scores Community Development Westview House N/A 104 Partners Innovative Housing 2021 E. 4th Street N/A 82 Opportunities Apartments American Family Housing 1921 Washington N/A 70 Premiant Development Twenty Two 302 E. Twenty 60 Residences Second Street �. 1 Pre -Commitment of Affordable Housing Funds to Community Development Partners April 7, 2020 Page 3 Based on the scores above and the deliberative selection and review process followed by the City, the Review Panel recommends the following award for this project: Developer: Community Development Partners and Mercy House CHDO Project Name: Westview House Award Recommendation: Inclusionary Housing funds $1,514,113 HOME Investment Partnerships Program $1,412,643 (HOME) funds HOME Community Housing Development $591,062 Organization (CHDO) funds Rental Rehabilitation Program funds $386,523 Total Financial Award $3,904,341 The pre -commitment letter for Community Development Partners and Mercy House CHDO as the service provider provides the enforceable funding commitment from the City (Exhibit 1) for $3,904,341 in affordable housing funds consisting of $1,514,113 in Inclusionary Housing funds, $2,003,705 in HOME Investment Partnerships Program funds and $386,523 in Rental Rehabilitation Program funds, for the development of the Westview House affordable housing project located at 2530 and 2534 Westminster Avenue, Santa Ana, CA 92706, (APNs 198-132- 21 and 198-132-23). Among various other conditions in the pre -commitment letter, one of the primary conditions is that the developer must provide verification that it has secured all of its remaining financing for the development of the Project in the form of the other enforceable funding commitments in the Project's capital stack, which may include 9% or 4% Federal Low Income Housing Tax Credits, State Housing Tax Credits, a commitment of affordable housing funds from the County of Orange or State of California, Section 8 project -based vouchers from the Orange County or Santa Ana Housing Authority, or any other funding source needed in the Project's capital stack to develop the Project and close on the financing, before staff will return to the City Council for consideration of the Loan Agreements for this Project. The pre -commitment letter is also conditional on the developer securing any and all permits and discretionary approvals that may be required for the Project by the City. The pre -commitment does not obligate the City or any department thereof to approve any application or request for or take any other action in connection with any planning approval, permit or other action necessary for the construction of the project. In compliance with the City's Affordable Housing Funds Policies and Procedures, KMA has conducted a preliminary financial gap analysis to confirm the Project's underwriting, the financial gap, and other programmatic requirements related to the funding sources (Exhibit 2). KMA reviewed the developer's estimates and projections of rents, expenses, reserves and Pre -Commitment of Affordable Housing Funds to Community Development Partners April 7, 2020 Page 3 development costs in accordance with industry -standard underwriting guidelines. Following this financial gap analysis and the procurement and deliberative process described above, staff recommends the full amount of the award to City Council for final approval. Project Description Following the Request for Proposal ("RFP") process, Community Development Partners ("CDP") in partnership with Mercy House Community Housing Development Organization ("Mercy House CHDO") is being recommended by the City of Santa Ana staff as the developers to co -develop an affordable housing community at 2530 and 2534 Westminster Avenue (the "Project"). The proposed name for the Project is the Westview House. Community Development Partners is an experienced multifamily and mixed -use developer focused exclusively on creating and preserving vibrant affordable housing communities with a focus on Southern California, where the company is headquartered. Since 2011, CDP has successfully built a portfolio of 22 unique projects comprising over 1,660 units and $400 million in total development costs. As of August 2019, CDP became a Certified B Corporation ("B-Corp"), a reflection of their dedication to mission and priority of impact over profits. The company's principals have over 30 years of combined experience working with cities and public agencies to bring new investment into existing neighborhoods. CDP has extensive affordable housing financing experience, including securing 4% and 9% low income housing tax credits, and is well versed in navigating regulatory complexities. CDP's long term and multiple deal relationships with various public and private financial partners provide access to external capital resources and expertise in leveraging public financing sources for affordable housing projects. CDP has experience developing and operating communities in Santa Ana including the recently opened permanent supportive housing project The Orchard, and two affordable housing developments currently under construction, Aqua Housing and Tiny Tim Plaza. CDP has formed a qualified team to design and partner with in supporting the ongoing mission of the property. This includes, as co -developer and Managing General Partner, the local non-profit Mercy House CHDO, their specialized supportive services provider affiliate Mercy House Living Centers, development partner Magis Realty, non-profit project architecture firm City Fabrick, The Orangewood Foundation, the Orange County Healthcare Agency, and experienced property management firm Solari Enterprises, Inc. Mercy House CHDO, Inc. was founded in 2007 by Mercy House Living Centers in order to assist and support its existing transitional housing activities. Mercy House CHDO, Inc. is dedicated to providing support and transitional assistance to low- and moderate -income people, with an emphasis on development, construction, and operations of decent, safe, and sanitary housing in the geographic area of Greater Southern California. The work of Mercy House CHDO, Inc. is guided by its mission, to become a community -based developer, owner, and manager of affordable housing. Mercy House has been providing supportive services and comprehensive case management to homeless individuals, veterans, and families in Southern California for over 29 years. As a co -developer and general partner, Mercy House CHDO will work with CDP, particularly within Mercy House's areas of expertise including the project's resident selection, �. 1 Pre -Commitment of Affordable Housing Funds to Community Development Partners April 7, 2020 Page 3 execution of the services plan, and oversight of other service providers and property management. CDP and Mercy House CHDO have been collaborating on affordable housing and permanent supportive housing developments over the last 5 years. Along with completing two projects with permanent supportive housing ("PSH") in Orange County, they have successfully funded and started construction on two additional projects in Santa Ana. CDP and Mercy House CHDO currently have new projects in development together in Riverside, Oxnard, Costa Mesa, and Los Angeles. Additionally, Mercy House CHDO provides the resident services and case management at three CDP projects in Arizona, totaling 191 units. Project Site CDP, in partnership with Mercy House CHDO, is proposing to develop 2.12 acres located on the vacant site at 2530 and 2534 Westminster Avenue. The site is located along Westminster Avenue and Fairview Street. Both routes have regular Orange County Transportation Authority bus service including Route 560 along Westminster Avenue and Route 47 on Fairview. The project is within one mile of two stops on the future OC Streetcar (Westminster/Harbor and Fairview/Civic Center). The Project site is on two (2) contiguous undeveloped parcels and is currently zoned for general commercial. The project will require a zone change and amendment to the current land -use. The City's Planning and Building Agency has completed an initial review of the project and has agreed to recommend this zone change and amendment to the Planning Commission for approval. The development team has worked together to secure necessary entitlements for multiple projects in Santa Ana, and are familiar with the process to receive approval for the zone change and land -use amendment. Most recently, the team began the redevelopment of Tiny Tim Plaza, in the adjacent Pilar Artesia neighborhood and the development of Aqua Housing on 17th Street, a couple miles to the east. Both of these projects required community engagement as part of securing their respective zone changes, land -use amendments and creation of unique specific zones. Proposed Project The proposed project includes 84 new affordable units and 1 manager's unit, with 58 three- and four -bedroom affordable units, and 26 one- and two -bedroom affordable units. A total of 75% of the units will be set aside for extremely low-income households at 30% Area Median Income. The three- and four -bedroom units will be designated for large families, while the one- and two - bedroom units will be designated as PSH for persons experiencing chronic homelessness. Community outreach was conducted to understand whether there were other homeless housing needs that were still being unmet. From this, a partnership developed with the Orangewood Foundation to set aside 10 of the 26 PSH units for Transitional Aged Youth ("TAY") (e.g. emancipated foster youth). The project consists of a single 3 to 4 story building, with multiple wings extending around a series of courtyards and public open space. The larger massing is located on Westminster and tiered lower to the South. The building architecture is modestly contemporary responding to the Pre -Commitment of Affordable Housing Funds to Community Development Partners April 7, 2020 Page 3 commercial conditions of the boulevard while providing a comfortable environment for residents. Much of the street facing ground floor is occupied by resident amenities, as well as spaces for service providers and community partners. The indoor amenities and most apartment homes are oriented around a series of courtyards with a mix of balconies, patios, and decks engaging the common outdoor spaces. Expanded breezeways and upper level deck distribute common outdoor spaces throughout the building. The amenities in the project include a community room, community kitchen, laundry room, computer room, pocket park, picnic/BBQ area, and a tot lot. Resident Services Mercy House will coordinate the delivery of all services including those anticipated to be committed through the Orange County Health Care Agency and Orangewood Foundation. A comprehensive range of services will be offered to assist residents achieve and maintain self- sufficient, healthy and purposeful lives. Working under a Housing First and "Whatever it Takes" philosophy, Mercy House staff utilizes strategies from an array of evidence -based models and practices to ensure residents have access to all required services. The project will provide a full suite of on -site client -centered services for the PSH residents that support wellness, recovery and resiliency to adults diagnosed with a serious and persistent mental illness who are homeless. A Residential Clinical Services Coordinator will ensure that a Supportive Services Plan is enacted for all PSH units and residents have access to needed services to maintain housing, a sense of community and quality of life. Additional supportive services and case management will be provided on site by the Orangewood Foundation to assist TAY resident's transition to permanent housing. Services will be focused on four critical areas: health and wellness, housing, life skills and employment, and education. Highly trained Youth Support Specialists will be available to assist TAY residents in acclimating to their environment and building life skills necessary to maintain housing (financial planning, advocacy, interpersonal skills and communication skills). Lastly, Mercy House will provide wrap -around services and coordination to activate the community amenity spaces on site to meet the needs of all residents. Community Inclusion As part of the development process, the development team has engaged local partners to determine suitable housing types and services, and to identify ideal partners for implementing the project. This engagement has included extensive communications with the United Way of Orange County, Orangewood Foundation and Samueli Academy, the latter of which has led to engaging in a partnership specific to this project. The project will include, a public pocket park, oriented toward the neighborhood, providing a much -needed community asset. The nearest publicly accessible open space, Edna Park, is over a third of a mile away from the project site, and requires traversing multiple major thoroughfares. This pocket park will provide neighbors essential public open spaces, along with play equipment and a picnic area. Pre -Commitment of Affordable Housing Funds to Community Development Partners April 7, 2020 Page 3 Along with the new public park, the development and design team will engage local residents to collaboratively develop community -enhancing projects. Additional opportunities for neighborhood initiatives include tree planting, painting a community mural, or holding a neighborhood event. City Fabrick, the nonprofit design studio, has extensive experience working with residents to select, design, and implement community projects. Further, CDP is committed to providing $100,000 of the developer fee to the Samueli Academy to enhance their programs. An additional contribution of up to $100,000 to Samueli Academy may become available through a $400,000 City -controlled contingency allowance if there are any funds remaining after construction. The development team will work with local businesses to enhance access and connections between the project, its residents, the surrounding neighborhood, and the nearby commercial centers. Recognizing that the nearby commercial centers collectively provide essential daily needs including groceries, self -care, and professional services, within walking distance for residents of the project, and the surrounding residential neighborhood, improving pedestrian access would benefit local residents and businesses alike. This will include identifying means to enhance safety at the corner of Fairview Street and Westminster Avenue, as well as determine ways to establish pedestrian connections between the project site and commercial center to the east. Parking The proposed site plan includes 144 surface parking spaces, of which a portion of the spaces would be tandem spaces assigned to the three -bedroom and four -bedroom apartments. The City allows tandem parking. In terms of the parking ratio, 1.0 parking space per PSH unit and 2.0 parking spaces per family unit is planned for a total parking ratio of 1.7 overall. Typically, PSH units are developed with a ratio of .50 parking space per dwelling unit. The ratio of 1.0 parking space per PSH unit is higher than the industry standard of .50 parking space per PSH unit and will provide additional parking capacity in the event many of the formerly homeless residents secure employment and vehicles. Residents will not be charged for parking. The City's Planning and Building Agency has reviewed this proposed number of 144 surface parking spaces and is willing to consider the 1.7 overall ratio when the project is submitted for site plan review. Unit Mix The target population for Westview House includes large families and special needs homeless individuals with a local preference for residents of the Santa Ana community. Within the project's census block, 61 % are renter -households with a per capita income far below that which would be required to adequately house a family within market rate rentals in the area. To support these families, the project was designed with 58 three- and four -bedroom units. A total of 61 of the project units (75%) are reserved for extremely low-income individuals and families at or below 30% of the Area Median Income (AMI), with the remainder of the units at 60% AMI. There are 26 of the project units (30%) also specifically designated for permanent supportive housing for persons who are experiencing chronic homelessness. The proposed unit mix and rent restrictions are as follows: �. 1 Pre -Commitment of Affordable Housing Funds to Community Development Partners April 7, 2020 Page 3 Bedroom Size 30% AMI PSH 30% AMI 60% AMI Manager's Unit Total Units One -Bedroom 23 23 Two -Bedroom 3 1 4 Three -Bedroom 21 13 34 Four -Bedroom 16 8 24 TOTAL 26 37 21 1 85 STRATEGIC PLAN ALIGNMENT Approval of this item supports the City's efforts to meet Goal # 5 - Community Health, Livability, Engagement & Sustainability, Objective # 3 (Facilitate diverse housing opportunities and support efforts to preserve and improve the livability of Santa Ana neighborhoods), and Strategy C (Provide that Santa Ana residents, employees, artists and veterans receive priority for affordable housing created under the City's Housing Opportunity Ordinance or with City funding to the extent allowed under state law). FISCAL IMPACT The various agreements, including the loan agreements, are estimated to be finalized for City Council approval in FY 2020-21. Upon future approval of the loan agreements, funds will be budgeted and available as shown below: Fiscal Accounting Unit — Accounting Unit, Year Account # Fund Description Account Amount Description FY 20-21 13018780-69152 HOME Program Loans & Grants $2,003,705 FY 20-21 41718820-69152 Inclusionary Housing Loans & Grants $1,514,113 Fund FY 20-21 14518760-69152 Rental Rehabilitation Loans & Grants $ 386,523 Program Total Loans $3,904,341 Exhibits: 1. Pre -Commitment Letter with CDP and Mercy House CHDO 2. Preliminary Financial Gap Analysis by Keyser Marston Associates 3. Proposed Project Renderings / Preliminary Site Plan EXHIBIT 1 MAYOR Miguel A. Pulido MAYOR PRO TEM Juan Villages COUNCILMEMBERS Phil Bacerra Cecilia Iglesias David Penaloza Vicente Sarmiento Jose Solorio CITY OF SANTA ANA COMMUNITY DEVELOPMENT AGENCY 20 Civic Center Plaza - M25 • P.O. Box 1988 Santa Ana, California 92702 www.santa-ana.org (714) 657-5360 April 7, 2020 Kyle Paine Community Development Partners 3416 Via Oporto, Suite 301 Newport Beach, CA 92663 Larry Haynes Executive Director Mercy House Living Centers CITY MANAGER Kristine Ridge CITY ATTORNEY Sonia R. Carvalho CLERK OF THE COUNCIL Daisy Gomez Re: Westview House 2530 and 2534 Westminster Avenue, Santa Ana, CA 92701 Pre -Commitment Letter for Inclusionary Housing Funds Loan, HOME Loan, HOME CHDO Loan, and Rental Rehabilitation Program Loan Dear Messrs. Paine and Haynes: Community Development Partners ("CDP"), in partnership with Mercy House Community Housing Development Organization ("Mercy House CHDO") (collectively referred to as the "Developer"), requested financial assistance in connection with the proposed development of an eighty-five (85) unit affordable housing complex, with eighty-four (84) units restricted to extremely -low income and very -low income households, to be located at 2530 and 2534 Westminster Avenue, Santa Ana, CA 92701 (APNs 198-132-21 and 198-132-23) ("Project"). The Project site is located along Westminster Avenue, near North Fairview Street. The Project site is on two (2) contiguous undeveloped parcels and is currently zoned for general commercial. The Project will require a zone change and amendment to the current land -use, among other potential discretionary actions to be determined by the City's Planning and Building Agency. The City of Santa Ana ("City") has reviewed the Developer's request for assistance, and at the City Council meeting on April 7, 2020, the City Council authorized and approved Page 12 issuance of this pre -commitment letter evidencing the preliminary award of $3,904,341 in affordable housing funds consisting of (collectively, the "City Assistance"): - A loan in the maximum amount of $1,514,113 from the Inclusionary Housing Fund held by the City for the Project ("Inclusionary Loan"); - A loan in the maximum amount of $1,412,643 from the HOME Investment Partnerships Program ("HOME") funds held by the City for the Project ("HOME Loan"); - A loan in the maximum amount of $591,062 from the HOME Community Housing Development Organization ("CHDO") funds held by the City for the Project ("HOME CHDO Loan"); and, - A loan in the maximum amount of $386,523 from the Rental Rehabilitation Program held by the City for the Project ("RRP Loan"). This letter shall evidence the City's pre -commitment of the City Assistance to the Developer for the Project subject to the conditions described below. City Assistance: The amount of the proposed City Assistance has been determined based upon the City's review of the Developer's request for the receipt of the City Assistance and the development proforma and projected cash flows for the Project submitted by the Developer to the City ("Proforma"). The City Manager has authority to approve revised development proformas and projected cash flows for the Project; provided, however, that the City Assistance is not increased or extended. The City Assistance shall include the following loan terms: The Inclusionary Loan shall be for a maximum principal amount of $1,514,113, or as much thereof as is disbursed for hard and soft costs in constructing the Project, provided from the Inclusionary Housing Fund. The HOME Loan and HOME CHDO Loan shall be for a maximum principal amount of $2,003,705, or as much thereof as is disbursed for hard and soft costs in constructing the Project, provided from HOME funds. The RRP Loan shall be for a maximum principal amount of $386,523, or as much thereof as is disbursed for hard and soft costs in constructing the Project, provided from RRP funds. 3% simple interest per annum. Page 13 Repayment from 50% of Residual Receipts (pro-rata with payments due in connection with other financing provided by other public agencies) (after payment of operating expenses, including social services expenses and monitoring fees, debt service, any deferred developer fee, and partnership fees to be described in the Agreement), with the remaining 50% to be disbursed to the Developer. o Any repayments to the soft loans must be based on the pro rata share of all the soft loan balances (the same as the residual receipts splits). The Developer will request a different term for their Rising Tide Loan to match the other terms of their soft debt. Remaining principal and accrued interest due upon the 55th anniversary of the issuance of Certificate of Occupancy or earlier upon sale, refinancing or default. On that date, the City agrees to review the performance of the Property and consider in good faith any reasonable request by Developer to modify the terms or extend the term of the City Promissory Notes. Additionally, the City will receive 50% of the net proceeds received from any sale or refinancing of the Project in order to repay any outstanding principal or interest due on the City Promissory Notes, after payment of outstanding conventional debt and payment in full of any deferred developer fee and establishment of any reserves and transaction costs. Cost savings from the Project, if any, will be applied first to pay down the City Assistance, subject to compliance with the Tax Credit Allocation Committee ("TCAC") Regulations and California Health and Safety Code, as applicable. After all other funding sources have been secured through enforceable funding commitments, a HOME Subsidy Layering Review is required in order to confirm the amount of HOME funds committed to the Project. An environmental review in compliance with the National Environmental Policy Act is required prior to entering into a Loan Agreement for the HOME funds committed to the Project. The HOME Loan shall also require specific HOME designated units in the Project. Based on a preliminary HOME Cost Allocation Analysis, the City must designate at least nine (9) units in the Project as HOME assisted -units per the following preliminary unit mix: • Three (3) one -bedroom units; • One (1) two -bedroom unit; • Three (3) three -bedroom units; and, • Two (2) four -bedroom units. As least 20% of the HOME designated units must be designated as Low HOME units. This equates to two (2) Low HOME units based on a nine (9) unit HOME requirement. One (1) of the one -bedroom units and one (1) of the four -bedroom units will be designated as the Low HOME units. The remainder of the HOME designated units can be restricted 60B-11 Page 14 as High HOME units. This is subject to change based upon a final HOME Cost Allocation Analysis to be completed after the HOME Subsidy Layering Review has been performed. General Provisions: The City's obligation to provide the City Assistance to the Project is subject to each of the following conditions: Developer must provide proof that it has secured all of its remaining financing for the development of the Project in the form of enforceable funding commitments, which may include 9% or 4% Federal Low Income Housing Tax Credits, State Housing Tax Credits, a commitment of affordable housing funds from the County of Orange or State of California, Section 8 project -based vouchers from the Orange County or Santa Ana Housing Authority, or any other funding source needed in the Project's capital stack to develop the Project and close on the financing, before staff will return to the City Council for consideration of the Loan Agreements for the City Assistance. At least 75% of the affordable units (less one (1) manager's unit) in the Project will be restricted to extremely low-income households at 30% of the Area Median Income. The Project consists of twenty-six (26) permanent supportive housing units for chronically homeless individuals and families. All individuals and families shall be referred from the Orange County Coordinated Entry System, and preference should be given to residents of the City of Santa Ana based upon: o Proof of strong ties to the community, to include current residency of an immediate family member — mother, father, sibling, or grandparent in the City of Santa Ana; o Proof that the individual attended a K-12 school in Santa Ana; o Proof that the individual resided on property zoned for residential use in Santa Ana and the individual was on the lease and/or paid utilities necessary for legal use of the property for residential purposes; or o Knowledge — either first-hand or recorded — by the Santa Ana Police Department that the individual has been a member of the Santa Ana homeless community. The rent standards for the Project must comply with the strictest of the standards imposed by TCAC and the HOME Program regulations, or other funding sources contributed to the Project, as applicable. All provided funding and Project requirements shall conform to the City's most recently adopted Affordable Housing Funds Policies and Procedures, unless alternative requirements are expressly provided in the executed Loan Agreements for the City Assistance or any other documents related to the development of the Project. 60B-12 Page 15 Approval of all required entitlements and discretionary actions, to allow the construction of an 85-unit affordable housing complex to be located at 2530 and 2534 Westminster Avenue, Santa Ana, CA 92706, (APNs 198-132-21 and 198- 132-23). The City's obligation to provide the City Assistance is and shall remain subject to all covenants, conditions, and restrictions set forth in the Loan Agreements, and in particular the City's analysis of the available funding sources and development and operating costs of the Project and the overall economic feasibility of the Project. Review and approval of the Loan documents evidencing the City Assistance by the City Council including the Loan Agreement(s), Promissory Note(s), Affordability Restrictions and Deed(s) of Trust. $400,000 of the City's financial assistance will be set -aside as a City -controlled contingency allowance. The City must approve any disbursements from this contingency allowance. Any funds remaining in the contingency allowance at the end of construction must be utilized for a surrounding community benefit at the City's sole discretion, within the guidelines for allowable uses pursuant to the funding source. $100,000 of the $2.5 million Developer Fee will be contributed to a surrounding community benefit, within the guidelines for allowable uses pursuant to the funding source. Any additional contribution will be allocated from the remainder of the City - controlled contingency allowance. The City is requiring that any amount of the Developer Fee above $2.5 million to be contributed as Developer Equity. This amount is currently estimated at $1.43 million, or 36% of the total Developer Fee. The Developer Equity should have the following terms: o The Developer Equity will not be secured by a promissory note; o The Developer Equity may only be repaid from the Developer's share of the Project's residual receipts; and o Any portion of the Developer Equity that is not repaid from the Developer's share of the Project's residual receipts may only be repaid upon sale or transfer of the property after the City Loans are repaid in full. Given that HUD severely limits the restructuring that can occur during the HOME affordability period (e.g. refinancing), the Developer's senior permanent loan term should be at least 20 years. The Developer will request a longer term permanent loan from their senior lender. Compliance with California Health and Safety Code and applicable regulations set forth in Section 34176. 60B-13 Page 16 Developer, at its sole cost and expense, will be responsible for securing any and all permits and discretionary approvals that may be required for the Project by the City or any other federal, state, or local governmental entity having or claiming jurisdiction over the Property or Project. Notably, this pre -commitment letter shall not obligate the City or any department thereof to approve any application or request for or take any other action in connection with any planning approval, permit or other action necessary for the construction, rehabilitation, installation or operation of the Project. This pre -commitment letter for the Project will expire on April 7, 2022. If you have any questions or require any additional information regarding this pre - commitment letter, please contact Judson Brown, Housing Division Manager, by telephone at (714) 667-2241 or by e-mail at Ibrown(a1santa-ana.org. Sincerely, On behalf of the City of Santa Ana: Kristine Ridge City Manager Attest: Daisy Gomez Clerk of the Council �. 1 EXHIBIT 2 KEYSER MARSTON ASSOCIATES,. ADVISORS IN PUBLIC/PRIVATE REAL ESTATE DEVELOPMENT MEMORANDUM ADVISORS IN: Real Estate To: Judson Brown, Housing Division Manager Affordable Housing Economic Development City of Santa Ana BERKELEY A. Jerry Keyser From: Tim Bretz Timothy C. Kelly Debbie M. Kern David Doezema Date: March 19, 2020 Kevin Feeney Los ANGELES Kathleen H. Head Subject: Westview House: Financial Gap Analysis James A. Rabe Gregory D. Soo-Hoo Kevin E. Engstrom Julie L. Burney Tim R. Bretz At your request, Keyser Marston Associates, Inc. (KMA) prepared a financial gap analysis SAN DIEGO for the project proposed to be developed at 2530 and 2534 Westminster Avenue (Site) Paul C. Marra by Community Development Partners (CDP) and Mercy House Development Organization (Mercy House CHDO) — collectively referred to in this analysis as "Developer." As proposed, the project will include 84 apartment units that will be restricted to extremely low and low income households and one (1) unrestricted manager's unit (Project). The Developer is requesting financial assistance from the City of Santa Ana (City) for the purposes of developing the Project. The purpose of this KMA analysis is to evaluate the Developer's request for financial assistance. EXECUTIVE SUMMARY Estimated Financial Gap The results of the KMA financial gap analysis are compared to the Developer's financial proposal in the following table: 500 SOUTH GRAND AVENUE, SUITE 1480 ➢ LOS ANGELES, CALIFORNIA 90071 ➢ PHONE 213.622.8095 W W W.KEYSERMARSTON.COM 6 U B -15 2003012:SA:TRB 19090.017.022 Judson Brown, City of Santa Ana Westview House: Financial Gap Analysis March 19, 2020 Page 2 KMA Developer Difference Total Development Costs $39,020,000 $39,017,000 $3,000 (Less) Outside Funding Sources (35,125,000) (35,113,000) (12,000) Financial Gap $3,895,000 $3,904,000 ($9,000) As shown in the preceding table, KMA estimates the Project's financial gap at $3,895,000. Comparatively, the Developer is requesting $3,904,000 in financial assistance from the City. This equates to less than 1% differential, which can be considered inconsequential. However, the KMA and Developer analyses differ on a line item by line item basis. Proposed Funding Sources The following summarizes the proposed funding sources for the Project: 1. The Project's stabilized net operating income (NOI) supports $13.98 million in Tax -Exempt Multifamily Bonds (Bonds), which are allocated by the California Debt Limit Allocation Committee (CDLAC). 2. The Developer is proposing to utilize 4% Federal Low Income Housing Tax Credits (Tax Credits) that are automatically awarded to projects that receive a Bond allocation from CDLAC. The net Tax Credit proceeds are estimated at $11.61 million. 3. The Developer intends to apply for 26 Section 8 Project -Based Vouchers (PBVs) from the County of Orange. The PBVs are allocated to the Orange County Housing Authority (OCHA) by the United States Department of Housing and Urban Development (HUD). 4. The Developer propose to apply for a $7.11 million loan of No Place Like Home Program (NPLH) funds that is awarded by the California Department of Housing and Community Development (HCD). 2003012:SA:TRB 60 B-16 19090.017.022 Judson Brown, City of Santa Ana Westview House: Financial Gap Analysis March 19, 2020 Page 3 5. The Developer received a commitment letter from Rising Tide, a non-profit affordable housing investment group, to provide a $1.0 million loan (Rising Tide Loan). 6. The City is requiring that any amount of the Developer Fee above $2.5 million to be contributed as Developer Equity. This amount is currently estimated at $1.43 million, or 36% of the total Developer Fee. The Developer Equity should have the following terms: a. The Developer Equity will not be secured by a promissory note; b. The Developer Equity may only be repaid from the Developer's share of the Project's residual receipts; and C. Any portion of the Developer Equity that is not repaid from the Developer's share of the Project's residual receipts may only be repaid upon sale or transfer of the property after the City Loans are repaid in full. 7. The City's financial assistance will consist of the following: a. A $1.51 million loan of Inclusionary Housing Funds (Inclusionary Loan). b. A $2.0 million loan of HOME Investment Partnership Program (HOME) funds allocated to the City by HUD (HOME Loan). The HOME Loan will consist of the following components: i. $1.14 million in general HOME funds; and ii. $591,000 in HOME Community Housing Development Organization (CHDO) funds. C. A $387,000loan of Rental Rehabilitation Program funds (RRP Loan). PROJECT DESCRIPTION The proposed scope of development can be described as follows: 2003012:SA:TRB 60 B-17 19090.017.022 Judson Brown, City of Santa Ana March 19, 2020 Westview House: Financial Gap Analysis Page 4 1. The Site area totals 2.12 acres, or approximately 92,400 square feet of land area.1 2. The 85-unit project represents a density of 40 units per acre. 3. The Project's units mix is as follows: Number of Unit Size Units (SF) One -Bedroom Units 23 520 Two -Bedroom Units 4 750 Three -Bedroom Units 34 970 Four -Bedroom Units 24 1,080 Total / Weighted Average 85 869 4. The Project's gross building area (GBA) is estimated at 95,370 square feet, and is comprised of the following: a. The residential GBA is estimated at 73,860 square feet; b. The community room/amenity GBA is estimated at 5,400 square feet; and C. The common area and circulation GBA is estimated at 16,110 square feet. 5. The Project will include 144 surface parking spaces, which equates to 1.7 parking spaces per unit. 6. The Project's affordability mix is as follows: 'Per the appraisal prepared by James G. Palmer Appraisals, Inc. on January 3, 2020. 2003012:SA:TRB 60 B-18 19090.017.022 Judson Brown, City of Santa Ana Westview House: Financial Gap Analysis March 19, 2020 Page 5 Tax Credit @ 30%AMI/NPLH/ HOME (PSH) 2 26 Tax Credit @ 30%AMI / HOME 37 Tax Credit @ 60%AMI / HOME 21 Unrestricted Manager's Unit 1 Total Units 85 FINANCIAL GAP ANALYSIS KMA prepared a pro forma analysis to estimate the Project's financial gap. The analysis is located at the end of this memorandum, and is organized as follows: Table 1: Estimated Development Costs Table 2: Stabilized Net Operating Income Table 3: Financial Gap Calculation Table 4: Cash Flow Analysis Table 5: HOME Cost Allocation Estimated Development Costs (Table 1) KMA reviewed the Developer's March 19, 2020 pro forma and then independently prepared a pro forma analysis of the Project. The resulting development costs are estimated as follows: Property Acquisition Costs The Developer entered into a purchase and sale agreement on October 11, 2019 to acquire the vacant Site for $6,675,000, or $72 per square foot of land area. The Developer provided an appraisal prepared by James G. Palmer Appraisals, Inc. on January 3, 2020 that estimates the As -Is market value of the property at $6,286,000, or $68 per square foot of land area. As such, the purchase price is $389,000, or approximately 6% higher than the appraised value. 2 PSH refers to permanent supportive housing units. 2003012:SA:TRB 60 B-19 19090.017.022 Judson Brown, City of Santa Ana Westview House: Financial Gap Analysis March 19, 2020 Page 6 The Seller is allowing the Developer to enter into a longer than typical escrow period to provide the Developer time for due diligence and to secure public funding sources. As such, KMA contends that the 6% premium above the appraised value is warranted by the terms of the sale. However, the City should confer with legal counsel to ensure this differential complies with City funding requirements. Direct Costs The direct costs assume that the Project will be subject to State of California and/or Federal Davis Bacon prevailing wage requirements. The direct costs applied in this analysis can be summarized as follows: 1. The Developer estimates the off -site improvement costs at $250,000. City staff should verify the scope and cost of the off -site improvements required to serve the Project. 2. The on -site improvement costs are estimated at $1.39 million, which equates to $15 per square foot of land area. 3. The residential building costs are estimated at $150 per square foot of GBA, or $14.31 million. 4. The Developer included a prevailing wage premium equal to 17%of the construction costs. 5. The Developer included a $213,000 allowance for furnishings, fixtures and equipment. 6. A 12% allowance for contractors' fees and general requirements is provided. 7. An allowance for construction bonds / general liability insurance at 1% of construction costs is provided. 8. The Developer included a total direct cost contingency allowance equal to 5% of other direct costs. The total direct costs are estimated at $22.36 million. This equates to $234 per square foot of GBA. 2003012:SA:TRB 60 B 0 19090.017.022 Judson Brown, City of Santa Ana March 19, 2020 Westview House: Financial Gap Analysis Page 7 Indirect Costs KMA utilized the following assumptions in estimating the indirect costs: 1. The architecture, engineering and consulting costs are estimated at 5.5% of direct costs. 2. The Developer estimated the public permits and fees costs at $1.48 million, or approximately $17,500 per unit. City staff should verify the accuracy of this estimate. 3. The taxes, insurance, legal and accounting costs are estimated at 2% of direct costs. 4. A $500 per unit allowance for marketing and leasing costs is provided. 5. The Developer set the Developer Fee at $3.93 million, which is the maximum amount allowed by TCAC for this Project.3 6. $400,000 of the City's financial assistance will be set -aside as a City -controlled project contingency allowance. KMA estimates the total indirect costs at $7.53 million. Financing Costs The Project is proposed to be developed with Tax -Exempt Multifamily Bonds allocated by CDLAC. To comply with Internal Revenue Service (IRS) requirements, the Bonds must be equal to at least 50% of the land acquisition costs plus the eligible Tax Credit basis. In addition, the Bond funds must be sufficient to cover the development costs that do not have funding from other sources. In this case, the Project's estimated NOI can only support a $13.98 million Bond; this will be called the Series A Bond. To fulfill the 50%Test, and to provide bridge funding for costs that will be paid for by other sources upon the Project's completion, a Series B 3 $1.43 million, or 36% of the total Developer Fee will be contributed back to the Project by the Developer as equity. 2003012:SA:TRB 60 B-21 19090.017.022 Judson Brown, City of Santa Ana Westview House: Financial Gap Analysis March 19, 2020 Page 8 Bond totaling $13.16 million must be obtained. The sum of the Series A and Series B Bonds totals $27.14 million The financing costs for the Project are estimated as follows: 1. The Developer will obtain a short-term acquisition loan to acquire the property at the close of escrow. The acquisition loan interest is estimated at $254,000 based on the following: a. A 95% loan -to -value ratio; b. A 4% interest rate; and C. A 12-month term. 2. The construction period interest costs incurred on the Bonds are estimated at $1.10 million based on the following: a. A 3.25% interest rate; b. An 18-month construction period with a 50%average outstanding balance; and C. A 6-month absorption period with a 100% average outstanding balance. 3. The bond costs/financing fees are estimated at 1.75 points, or $475,000. 4. A $331,000 capitalized operating reserve is provided. This equates to three months of operating expenses and debt service payments. 5. A $250,000 capitalized transition reserve is provided, which is required by the NPLH Program. 6. The Tax Credit fees are estimated at $49,000 based on the following assumptions: a. A $2,000 application fee; b. A $410 per unit monitoring fee; and 2003012:SA:TRB 60 B 19090.017.022 Judson Brown, City of Santa Ana Westview House: Financial Gap Analysis March 19, 2020 Page 9 C. One percent (1%) of the gross Tax Credit proceeds for one year. KMA estimates the total financing costs at $2.59 million. Total Development Costs As shown in Table 1, KMA estimates the total development costs at $39.02 million, which equates to approximately $459,000 per unit. This is approximately equal to the Developer's development cost estimate Stabilized Net Operating Income The Project's outside funding sources include Bonds, Tax Credits, NPLH funds, and HOME funds. These programs all publish income limits for the households that are qualified to reside in the development. TCAC publishes rents standards for projects that receive Tax Credits. In addition, HUD publishes rent standards for projects that utilize HOME funds and HCD utilizes Tax Credit rent standards for projects that utilize NPLH funds. The Developer will be required to adhere to the strictest of the standards imposed by the funding sources contributed to the Project. Tenant -Paid Rents The rents used in this analysis are based on 2019 income and rent information published by TCAC, HCD and HUD. The maximum allowable rents, net of the appropriate utility allowance, is estimated as follows:° The Developer stated that the Project will pay the utility costs for the 26 NPLH units. The utility allowances for the remaining units are estimated by the Developer as follows: $61 for a three -bedroom unit and $75 for a four -bedroom unit. 2003012:SA:TRB 60 B-23 19090.017.022 Judson Brown, City of Santa Ana Westview House: Financial Gap Analysis March 19, 2020 Page 10 Rent Restriction 1-Bdrm 2-Bdrm 3-Bdrm 4-Bdrm TC @ 30%AMI / NPLH5 $667 $802 NA NA TC (n@ 30%AMI / NPLH/ Low HOME TCAC / NPLH $667 NA NA NA HOME $1,113 NA NA NA Applicable Rents $667 NA NA NA TC @ 30%AMI / NPLH/ High HOME TCAC / NPLH $667 $802 NA NA HOME 1428 1714 NA NA Applicable Rents $667 $802 NA NA TC @ 30%AMI NA NA $865 $957 TC @ 30%AMI / Low HOME TCAC NA NA $865 NA HOME NA NA $1,483 NA Applicable Rents NA NA $865 NA TC @ 60%AMI NA NA $1,791 $1,990 TC @ 60%AMI / High HOME TCAC NA NA $1,791 $1,990 HOME NA NA $1,912 $2,105 Applicable Rents NA NA $1,791 $1,990 s The No Place Like Home Program utilizes Tax Credit income and rent standards. Thus, the rents are the same. 2003012:SA:TRB 60 B-24 19090.017.022 Judson Brown, City of Santa Ana March 19, 2020 Westview House: Financial Gap Analysis Page 11 Operating Subsidy The Developer anticipates that the Project will be awarded an operating subsidy for 26 PBVs from the County of Orange. The PBV subsidy income is equal to the difference between the rent paid by the tenant and the OCHA payment standard rent. In addition, the Developer will request that the OCHA payment standard rent be increased to 110% of the fair market rent. As such, the Developer is applying the following payment standards to the Project: Unit Type Payment Standard One -Bedroom Units $1,964 Two -Bedroom Units $2,438 Effective Gross Income KMA estimates the Project's effective gross income at $1.44 million based on the following: 1. The gross tenant -paid rent income is estimated at $1.09 million. 2. The gross operating subsidy income is estimated at $416,900. 3. The laundry and miscellaneous income is estimated at $15 per unit per month, or $15,300 per year. 4. A 5%vacancy and collection allowance is applied to both the tenant -paid rent income and the operating subsidy income. The vacancy and collection allowance is estimated at $75,900. Estimated Operating Expenses The operating expenses are estimated at $6,200 per unit per year based on the following: 1. The general operating expenses are estimated at $5,200 per unit per year, which is above the minimum amount required byTCAC. 2003012:SA:TRB 60 B-25 19090.017.022 Judson Brown, City of Santa Ana March 19, 2020 Westview House: Financial Gap Analysis Page 12 2. KMA assumes that the Developer will apply for the property tax abatement that is accorded to non-profit housing organizations that own and operate units restricted to households earning less than 80% of the area median income. The Developer anticipates that the property will not be subject to any tax assessment override. 3. The social service expenses are estimated at $29,800 per year, which equates to $350 per unit per year. This budget is at the low end of the range seen for projects which include PSH units. However, the Developer contends that the budget is reasonable given that the NPLH program will provide case management and other social services to the PSH tenants. 4. HCD requires a mandatory annual debt service payment equal to 0.42% of the NPLH Loan. This equates to $29,900 per year. 5. The Developer provided an allowance for replacement reserve deposits at $300 per unit per year. Estimated Stabilized Net Operating Income The effective gross income of the Project is estimated at $1.44 million and the operating expenses are estimated at $528,400. This results in estimated NOI of $913,000. Financial Gap Calculation Available Outside Funding Sources Tax -Exempt Multifamily Bonds To estimate the maximum Bond amount that can be supported by the Project's NOI, KMA assumed that the Bonds would be underwritten based on the following requirements: 1. A 115% debt service coverage ratio; 2. A 4.50% interest rate; and 3. A 35-year amortization period. 2003012:SA:TRB 60 B-26 19090.017.022 Judson Brown, City of Santa Ana Westview House: Financial Gap Analysis March 19, 2020 Page 13 KMA estimates that the Project's stabilized NOI can support $13.98 million in Bonds. Tax Credit Proceeds KMA estimates the net Tax Credit proceeds at $11.61 million. This estimate is calculated based on the following assumptions: 1. The Project's eligible Tax Credit basis is equal to the lesser of the depreciable costs for the 85 Tax Credit units, or the threshold basis limits established by TCAC. In this case, the depreciable costs of $30.10 million are less than the threshold basis limits. 2. The Project is located in a designated "Difficult to Develop" census tract. This allows the requested eligible basis to be increased by 30%. 3. The Developer set the annual Tax Credit rate at 3.19%. This rate is applied over the 10-year Tax Credit period. 4. 100% of the Project's residential building area is included in the eligible basis is located in units that qualify for Tax Credits. 5. The net syndication value supported by the Tax Credit is ultimately determined based on competitive market conditions, and on the timing of disbursements. Based on currently available information, the Developer estimates the proceeds at $0.93 per gross Tax Credit dollar. NPLH Loan The Developer proposes to apply fora $7.11 million NPLH Loan from HCD in the next NPLH funding round anticipated to be in the Fall 2020. The $7.11 million amount is based on the maximum per unit loan limits in place at the time of this analysis. Rising Tide Loan The Developer received a commitment letter from Rising Tide, a non-profit affordable housing investment group, to provide a $1.0 million loan (Rising Tide Loan). 2003012:SA:TRB 60 B 7 19090.017.022 Judson Brown, City of Santa Ana March 19, 2020 Westview House: Financial Gap Analysis Page 14 Developer Equity TCAC regulations allow the Project to receive a $3.93 million Developer Fee, and the Developer Fee can be included in the Project's eligible Tax Credit basis. Thus, a portion of the Developer Fee is funded by Tax Credit equity. The City is requiring that any amount of the Developer Fee above $2.5 million to be contributed as Developer Equity. This amount is currently estimated at $1.43 million, or 36% of the total Developer Fee. The Developer Equity will be repaid through the Developer's share of residual receipts or upon the sale/transfer of the Project after the City Loans are repaid in full. The Developer Equity will not be secured by a promissory note. Total Available Outside Funding Sources As shown in Table 3, the outside funding sources available to the Project are estimated at $35.13 million, which is approximately equal to the Developer's estimate. Financial Gap Calculation Based on the preceding analysis, KMA estimates the Project's financial gap as follows: Total Development Costs $39,020,000 (Less) Total Available Funding Sources (35,125,000) Financial Gap $3,895,000 Per Unit $45,800 As shown in the preceding table, KMA estimates that the Project exhibits a $3,895,000 financial gap based on the information currently available. In contrast, the Developer is requesting $3,904,000 in financial assistance from the City This represents a $9,000 differential, which is a less than 1% difference. It is the KMA opinion that a difference of this magnitude can be considered insignificant. 2003012:SA:TRB 60 B Q 19090.017.022 Judson Brown, City of Santa Ana March 19, 2020 Westview House: Financial Gap Analysis Page 15 PRELIMINARY HOME COST ALLOCATION HOME regulations require projects that include HOME funds to conduct a subsidy layering analysis demonstrating that the HOME assistance is required to provide affordable housing. The subsidy layering review must be completed prior to formally committing HOME funds, which cannot occur until all of the other funding sources have been committed to the Project. Given that the remaining funding sources will not be committed in the near term, the City will conduct the subsidy layering review at a future date. However, the City requested that KMA conduct a preliminary assessment to quantify the number of HOME units that will likely be required by the HOME Program. Cost Allocation (§92.205(d)) and HOME Unit Designation (Table 5) HOME funds may only be used to pay eligible costs for HOME -assisted units. When fewer than 100% of the units are designated as HOME assisted, the participating jurisdiction must calculate the eligible costs that are allocable to the assisted units and may only pay the actual costs related to those HOME assisted units, capped by the maximum subsidy limits previously described. The financial gap analysis concludes that the Project needs $3.90 million in total financial assistance and the City will utilize $2.0 million in HOME funds as part of the assistance package. HOME Assistance Cost Allocation KMA used the Standard Method to determine the cost allocation. As detailed in Table 5, KMA estimated that eligible project costs equate to $497 per square foot of net residential area. As such, a total of nine (9) units are proposed to be designated as HOME -assisted units by the City. This consists of: three (3) one -bedroom units, one (1) two -bedroom unit, three (3) three -bedroom units, and two (2) four -bedroom units. Therefore, per the cost allocation test, these nine HOME -assisted units justify providing $3.67 million in HOME assistance. There is also a maximum HOME subsidy requirement that must be met. In order to commit $2.0 million to this Project, based on the 2019 maximum subsidy limits, three (3) one -bedroom units, one (1) two -bedroom unit, three (3) three -bedroom units, and two (2) four -bedroom units need to be restricted as HOME units. 2003012:SA:TRB 60 B-29 19090.017.022 Judson Brown, City of Santa Ana Westview House: Financial Gap Analysis March 19, 2020 Page 16 The following summarizes the maximum HOME subsidy that can made to the Project based on nine total HOME units: Maximum HOME Minimum HOME Assistance Designated Units Proposed HOME Assistance $2,003,705 N/A Cost Allocation Test $3,665,241 9 Units Maximum Subsidy Test $2,128,449 9 Units Maximum Allowable HOME Subsidy $2,003,705 9 Units CONCLUSIONS / RECOMMENDATIONS The following summarizes the conclusions and recommendations of the KMA analysis: 1. Based on the currently available information, it is KMA's conclusion that the Developer's request for $3.90 million in City assistance is supported by the Project economics. 2. $400,000 of the City's financial assistance will be set -aside as a City -controlled contingency allowance. The City must approve any disbursements from this contingency allowance. Any funds remaining in the contingency allowance at the end of construction may be utilized for project amenities and/or community benefits at the City's sole discretion. 3. The City is requiring that any amount of the Developer Fee above $2.5 million to be contributed as Developer Equity. This amount is currently estimated at $1.43 million, or 36%of the total Developer Fee. The Developer Equity should have the following terms: a. The Developer Equity will not be secured by a promissory note; b. The Developer Equity may only be repaid from the Developer's share of the Project's residual receipts; and C. Any portion of the Developer Equity that is not repaid from the Developer's share of the Project's residual receipts may only be repaid 2003012:SA:TRB 60 B-30 19090.017.022 Judson Brown, City of Santa Ana March 19, 2020 Westview House: Financial Gap Analysis Page 17 upon sale or transfer of the property after the City Loans are repaid in full. 4. Based on a preliminary HOME Cost Allocation Analysis (Table 5), the City must designate at least nine (9) units in the Project as HOME units based on the following unit mix: a. Three (3) one -bedroom units; b. One (1) two -bedroom unit; C. Three (3) three -bedroom units; and d. Two (2) two -bedroom units. 5. At least 20%of the HOME -designated units must be restricted as Low HOME units, which equates to two (2) units. 6. It is important to note that the City cannot commit HOME funds to the Project until after all of the other funding sources have received formal commitments. At that time, the City must prepare a HOME Subsidy Layering Review in order to formally commit HOME funds to the Project. 2003012:SA:TRB 60 B-31 19090.017.022 TABLE 1 ESTIMATED DEVELOPMENT COSTS WESTVIEW HOUSE SANTA ANA, CALIFORNIA I. Property Acquisition Costs II. Direct Costs Off -site Improvements On -site Improvements Building Shell Costs Prevailing Wage Furnishings, Fixtures & Equipment Contractor Fees / General Requirements General Liability Insurance / Contt Bonds Contingency Allowance Total Direct Costs III. Indirect Costs Architecture, Engineering & Consulting Public Permits & Fees Taxes, Insurance, Legal & Accounting Marketing & Leasing Developer Fee City -Controlled Project Contingency Total Indirect Costs IV. Financing Costs Acquisition Loan Interest Reserve Interest During Construction Series A Bond Series B Bond Financing Fees Series A Bond Series B Bond Capitalized Reserves Operating Reserve Transition Reserve TCAC Fees Total Financing Costs It 92,434 Sf Land $72 /Sf Land $6,675,000 3 $250,000 92,434 Sf Land $15 /Sf Land 1,387,000 95,370 Sf GBA $150 /Sf GBA 14,306,000 17% Construction Costs 2,710,000 213,000 12% Construction Costs 2,238,000 1% Construction Costs 187,000 5% Other Direct Costs 1,065,000 95,370 Sf GBA $234 /Sf GBA $22,356,000 5.5% Direct Costs $1,230,000 4 85 Units $17,426 /Unit 1,481,000 2.0% Direct Costs 447,000 85 Units $500 /Unit 43,000 5 15% Eligible Costs 3,926,000 1% Total Project Costs 400,000 $7,527,000 6 $6,341,000 Loan Amount 4.00% Interest $254,000 7 $13,980,000 Loan Amount 3.25% Interest 568,000 8 $13,160,000 Loan Amount 3.25% Interest 535,000 $13,980,000 Loan Amount 1.75 Points 245,000 $13,160,000 Loan Amount 1.75 Points 230,000 3 Months Op Expand Debt Svc Pmts 331,000 250,000 49,000 $2,462,000 Total Construction Costs 85 Units $380,500 /Unit $32,3450000 Total Development Costs 85 Units $459,100 /Unit $39,020,000 1 The purchase price is based on a Purchase and Sale Agreement provided by Developer. The Developer provided an appraisal prepared by James G. Palmer Appraisals, Inc. on January 3, 2020 that estimates the "As Is" market value of the property at $6,286,000. As such, the appraised value is $389,000, or 6% higher than the appraised value. z Estimates assume prevailing wage requirements will be imposed on the Project. 3 Based on Developer estimate. City staff should verify the scope and cost of the required off -site improvements. 4 Based on Developer estimate. The estimate should be verified by City staff. 5 The Developer Fee is the maximum amount allowed by TCAC. 6 The Developer intends to obtain a short-term acquisition loan at the close of escrow. The proposed terms are: a 95% Loan -to -Value, a 4% interest rate, and a 12-month term. 7 Includes debt on the 70% of the Tax Credit Equity that will not be funded during construction. Assumes an 18-month construction period with a 50% average outstanding balance and a 6-month absorption period with a 100%average outstanding balance. 8 Equal to the unfunded construction costs minus the Series A Bond amount; an 18-month construction period with a 50% average outstanding balance; and a 6-month absorption period with a 100%average outstanding balance. a Includes a $2,000 application fee;$410/unit monitoring fee; and 1% of the gross Tax Credit proceeds for one year. 60B_�2 Prepared by: Keyser Marston Associates, Inc. J File name: Westview House 3 19 20.xlsm; Pro Forma; trb TABLE 2 STABILIZED NET OPERATING INCOME WESTVIEW HOUSE SANTA ANA, CALIFORNIA Income Manager's Unit 1 Unit $0 /Unit/Month $0 Base Income Tax Credit Cn1 30% Median / NPLH 1-Bedroom Units @ (520-Sf) 20 Units $667 /Unit/Month 160,100 2-Bedroom Units @ (750-Sf) 2 Units $802 /Unit/Month 19,200 Tax Credit Cn1 30% Median / NPLH / Low HOME 1-Bedroom Units @ (520-Sf) 1 Unit $667 /Unit/Month 8,000 Tax Credit to 30% Median / NPLH / High HOME 1-Bedroom Units @ (520-Sf) 2 Units $667 /Unit/Month 16,000 2-Bedroom Units @ (750-Sf) 1 Unit $802 /Unit/Month 9,600 Tax Credit 0 30% Median 3-Bedroom Units @ (970-Sf) 20 Units $865 /Unit/Month 207,600 4-Bedroom Units @ (1,080-Sf) 16 Units $957 /Unit/Month 183,700 Tax Credit Cn1 30% Median / Low HOME 3-Bedroom Units @ (970-Sf) 1 Unit $865 /Unit/Month 10,400 Tax Credit C& 60% Median 3-Bedroom Units @ (970-Sf) 11 Units $1,791 /Unit/Month 236,400 4-Bedroom Units @ (1,080-Sf) 6 Units $1,990 /Unit/Month 143,300 Tax Credit P 60% Median / High HOME 3-Bedroom Units @ (970-Sf) 2 Units $1,791 /Unit/Month 43,000 4-Bedroom Units @ (1,080-Sf) 2 Units $1,990 /Unit/Month 47,800 Section 8 Subsidy Tax Credit (@ 30% Median / NPLH z 1-Bedroom Units @ (520-Sf) 23 Units $1,297 /Unit/Month 358,000 2-Bedroom Units @ (750-Sf) 3 Units $1,636 /Unit/Month 58,900 Laundry/Miscellaneous Income 85 Units $15 /Unit/Month 15,300 Gross Rent Income 85 Units $1,517,300 (Less) Vacancy & Collection Allowance 5.0% Gross Rent Income (75,900) Effective Gross Rent Income $1,441,40p II. Operating Expenses General Operating Expenses 85 Units $5,214 /Unit $443,200 Property Taxes z 85 Units $0 /Unit - Social Services 3 85 Units $350 /Unit 29,800 NPLH Annual Fee $7,111,000 NPLH Loan 0.42% NPLH Loan 29,900 Replacement Reserve 85 Units $300 /Unit 25,500 Total Operating Expenses 85 Units $6,216 /Unit $528,400 III. IStabilized Net Operating Income $913,000 Based on Orange County 2019 Incomes distributed by HUD. As pertinent, the rents are based on rents published in 2019 by TCAC/HOME. The NPLH tenants will not pay for utilities. The utility allowances for the remaning units are per the Developer: $60 for 3-bdrm units; and $75 for 4-bdrm units. The Developer will apply to Orange County for the PBVs. The Developer assumes the County will approve fair market rents based on 110% of the published FMRs. Based on Developer estimate. Assumes the Developer will apply for the property tax welfare exemption accorded to non-profit housing organizations that own and operate apartment units restricted to households earning no more than 80%AMI, and that the property will not be subject to any Per the Developer, the NPLH Program will coverall social service and case management services for the NPLH units. 60B—� �i Prepared by: Keyser Marston Associates, Inc. JJ File name: Westview, House 3 19 20.xlsm; Pro Forma; trb TABLE 3 FINANCIAL GAP CALCULATION WESTVIEW HOUSE SANTA ANA, CALIFORNIA I. Available Funding Sources Tax -Exempt Multifamily Bonds Stabilized Net Operating Income Income Available for Mortgage Interest Rate Tax -Exempt Multifamily Bonds Tax Credit Equity Gross Tax Credit Value Syndication Rate Net Tax Credit Equity NPLH Rising Tide Funds Developer Equity Total Available Funding Sources II. Financial Gap Calculation Total Development Costs (Less) Total Available Funding Sources $913,000 (See TABLE 2) 1.15 DSCR 4.50% Interest Rate $12,483,000 $0.93 /Tax Credit Dollar $793,917 Debt Service 5.68% Mortgage Constant $13,980,000 $11,608,000 3 $7,111,000 4 $1,000,000 4 36% Total Developer Fee $1,426,000 $39,020,000 (35,125,000) $35,125,000 III. I Financial Gap 85 Units $45,800 /Unit $3,895,000 1 Assumes a 35-year amortization term and a 20-year repayment term. z Assumes a $30.1 million eligible basis, plus a 130%difficult-to-develop premium, a 3.2%Tax Credit rate and an applicable fraction of 100%. 3 The Developer proposes to apply for the maximum amount of NPLH funds. 4 Based on Developer estimate. 60 B-� Prepared by: Keyser Marston Associates, Inc. Jam} File name: Westview House 3 19 20.xlsm; Pro Forma; trb N OI O O O "I CO N N a CO O N �O N O O M CA h V1 M 01 O y N b ' a N O 01 Oil N vl N OI M O� 01 10 O 10 O M �O M kO 10 O 10 O M q M M O N d y O O1 N CO M N N I� N O1 CO N N N O y.yyy M M O O O CO N O O O1 O1 O N CO N I� "I a1 O1 V1 "I N O1 N N N m CO V1 O M M h O1 V1 I� 10 M N N b N M OI N O "I d O O1 O1 M �O M N N N N O1 10 10 y M I� "I N 7 N N N N N N N N N N N h �O O M �O N O O CO N V1 OI OI O � O OI N O I� OI N N h CO a 01 N 10 O CO ' m IO O 01 O M CO m Cl 01 a 01 M OI N N I� OI N N 10 V �O m h 'I y �p 01 vl 10 V m O O vl N 10 N OI 'I a h CO CO I� y m N N M M Ol y y N M 10 N "I N N N N a "I m m O O 10 O �O o CO m ko m N m CO m Ol m O m Oil N �n .i n m lg m ie a n a n m n m �n N m n m n m N Q n - i a y a N h CO a M 10 N Vl m N N w 10 O N N N �O ..yyy O N N �O O O CO ..yyy Ip M M CO O CO M OI I� OI m CO a I� CO m O m Oil N vl 'I m m CO m �a m �a m N b vi ll N n O m N n CO n N m O a O m "I W a O1 V1 CO N m CO CO V1 N 01 M I� "I a �O CO OI O m N N OI OI O1 OI OI CO N N V� 01 7 N N N N N N N N N �n m ie m a o o N a m o o �o N .i y n a �n y o m �O N m O m V1 CO y m V1 Lr a m "I y m y m y N y o y m is � iti � .i mm 'O 'O 'O 'O 'O a? N a? N a? M a? M o n q n m m �n o m m m m m Io q o `-! �O m O1 y a rl O1 V1 N N m W W V1 O N M N N "I z z z z z z z z z z of m N m m n n a n a m o m a oil �n m Cl m Ln m �n �n m .i o 0 o a o .i o o N h h h I� m O O1 V1 y N m m m V1 O M O O y 10 01 N N "I N g N N h I� Vl m N N y M Ol M M N "I N N M O N y 10 O N N N N N O O N O O O O O O O O O O O y d N O O O �O M O O O Oil O M m O O O O O 'I O M N a m m q N m m Q o m .i .i o o ,y m m m o o �o �n .i m of of �n m m m ai ai vi o iti o a ni O ti �O m N N 10 N 01 e'I m m n N ai N N N C a a 6 3 O my V c a m E a E m v v = m o. v a aE s w m a a °a v a Kn o. m E m yf z c_ v v c `a 10 2- O 0 N 0 m m c o p 0 V 0 m v u m c O p N Q a 0 N D p v a x v v q- C v v v m S v CdJ - m F m E Lp Y N Q v 0 p, d O O d d 0 O O S O ~ O O O m x- O z O z z z a z 0 0 o J W a c v a t m o a y w 0 u J u N a w w J N a J a > a O Gamzzr _ _ �0-B 3 X T v � � 1 x � � C � ¢ � v E a' v i o w c - I - i v { u? v m o N N 0 py O ti o c a a w v o v v a o m w C o w O o x u a Em 3 _ o E i v v v o v iwE a 3 m12 muw - a a U' m m Q m n m e aa = m y a` �-i Vl h N O m rl O O M I� V1 N N V1 O� I� 01 N CO CO h h CO N ul O1 O Oil a O m n n m M o m n Ce O N Ol a N �O rl M O N N O1 h O1 V1 Il V1 Ip O1 01 m Ip N Ip N V1 h CO N 10 "I O q Vl �O N � V1 V1 N N � M O1 y y N CO N N N N N CO N n Ol m O O N y � a N N N m N m y M m N V1 O m Ol Oil m VI Oi N m M Ol "I r% N' e'I r% N N O � N O 01 �o o co co m vi of �n m a m o o ti m .i c6 0 .i q Vl y N ul N N M "I Ol N N O CO y N N N N N Ol yyy m y O rl O O N N CO O CO N V N y CO �O m "I O CO O O1 Oil m V1 N m m O1 O m m O m O N e N .i .i m y y V1 M V1 m O1 V1 y 01 m N N b CO I� "I 01 01 q h m OI O1 V1 N N O CO O1 01 01 I� n V N M V N N N O O Ell CO m m O O N M Vl N N h Ol O w "I O V1 O1 N M O h O IO Ol O L' V1 N y m O O O 10 O N M "I m CO N 01 M ti 01 vl N C m O O �O V M V CO I� N N N h y �O CO h O O O CO N N O O M CO M N 10 10 O h O1 h h N V1 N O cl O1 Ol Oil � VI CO m m I� O1 N CO N CO CO V1 I� N O O N M O 01 M M � m m m O1 I� N N O1 O1 V1 n q O1 O O CO a O N N M O1 y y M 10 N "I e'I N N N �O O1 V1 O h O O M I� ul N N m b O M y b N O ' m O Oil g O O1 h Nul 10 O r N O1 CO O1 V1 V1 ei m N m N ei N ei v l h ei h 01 CO V O CO b 10 N 01 q V1 CO O M O N N N "I O1 N N 01 10 N N 01 y Vl Vl O h CO N h V V M V� M V� M N N N mo m m a o 0 w m 0 �n m �i m w li n �n a a o m �o of �n .i �n vi m m .i m is is a vi ti 'i vi ri `m ti n a ,ti •n 'i .n .n .n .n .n a o o ti m M m 'o o n �n o n m o o m o �n - m m Q m m Q m Q N rl Ni ti M Q e of o N m of vi of is a �e a .i •n .n ,y .n .n .n .n .n O Ol m le le ti N of m w �n m n � N CO O a O V1 CO N N Vl O ' O O Vn 1 O1 Oil b V1 01 N m O1 M m CO M CO M N O1 a CO N 10 "I 1� M CO N n "I M q a a O1 OI a a N N y y O1 N N M V1 01 "I Ip a ,ti •n .n 'i .n .n .n .n o D o m of e a e e o m �n �e m �n m n a a .i N m ry CO m h N V1 N O1 V1 N N m CO CO �O m CO O "I N y q O m Ol y N a N N N N Ol N N O N 01 e'I N a ,ti •n .n 'i .n .n .n .n m .y N w a O o� O m m a C of n Ln n m IO O1 V1 O g "I O1 e'I e'I V1 O N N W cr 01 N q h N Ol O O O N N O O Ol O O CO y � "I y a .i •n .n ,y .n .n .n .n N N N C v v 6 c v 3 v E o my V m E m v u° Eo =m v2vi n m e rv„ a aE s = w m a v v v a z v uo = w en v W $ o O 7.3 Kn v v�i `m @l `m `m c v c = y O o M v LL z c v 0 `� 0 c m 0 '^ 0 w N w po ti .Z E @1 z O u G m O = E v m E 3¢ Y v 3= = m= m= `v = a z m vi >= E Y¢ a o o o o 0 G v p n LL a 0 u 0 S 0 3 z N N« m n m O z z z E z a z O as o 0 o a c J- y N v N J w > J v o o a w m a J a m - u z z m in W z -3 y� X `hJ \M/ T N � � a x � � y O C ¢ v E a v T - c v \ E - i m y m o N N N 0 O ti oc. c R a n m v o v m v a o m w m o w O o i _- 3 cu o i w v w o N o? "v Y w v i E E a 3 m w - m m m n m e o = m y a` �-i m �o N ti N O o� M a m m m of a N O1 IO O1 V1 O y O1 N N � N ll N 10 M N It M CO a O1 M m m O1 V1 M O m 10 10 O N M M y "I q O h Vl N a CO N N CO y Ol y y N N M y M "I y m CO O N M 10 h CO CO CO "I N V� y N N N N N h h M a a O O CO N LO O V CO I� N O CO N I� 01 CO 01 'I vl b 01 N 1 1 N vl 'I O CA Cl O O of q V1 V1 V1 O CO N N M "I O1 "I e'I N N M M 01 y N N N N N m ..yyy CO O rl O O M ..yyy Ip M M O1 O N w w N 'I m a m m m �o m a .i CO �o N c: O o m oil V V1 I� C m o m V V n io m y W m N N rl CO O1 V1 y M m 01 01 N 10 y 10 "I M q m m V1 I� b h N N OI CO O1 CO CO N Ip N N M CO CO CO N N h I� N N "I N N M N N N N N O1 O I� rl O O 10 V1 O O m O N N y CO y CO V1 m m h m O h N 10 m O1 O O O Ol O M V1 CO ll I� m CO CO N O N 1 M N m N h N .4 h 01 vl N V m O O N W O W O Oi q � a O N h N N N N O1 10 10 N M N "I M 10 N N N N N N N CO Ol O O O CO O N N �O O CA O n o N .i o M m m m m m m O N N rl N a OI a N O1 V1 N 1L1 m N N ti "I N O 01 N g m m a M CO h N N "I N O1 M M N M M M N N y O h I� O N N h N N N "I N N M N N N N N O y O O V1 O O N N O O CO O N CO V -a 10 CO O O a a1 �O y M Ol m N O O O1 Oil � V1 N N m M m O1 m M m M m ' O1 N N n M n V n V N M N O N O N h O O1 V1 M 01 m N N O y "I N CO N g a h a I� O h N N N OI O1 O O N CO M O N y O h 10 O "I y h N N 10 "I N N M N N N N N N CO O1 rl m O O y I� V1 "I e'I CO O M y N O N N Vl rl Ip a O O M y m M M N CO N N �a V N m O O N O h "I I� O1 m ei O O1 CO O1 V1 y V1 N Il m M m CO N CO N m O y N CO 1L1 N M N n CO O1 y m I ie o N N N N N CO 'O N O N O O N yy rO O CO M N V h h �O h 'O CO I� N V1 h a O h O1 Oil m VI CO n m lg 10 O1 a 1� a 1 N m ' h O O N N N n N r% N N N rl V1 m M h V1 Ol V1 CO y m O O � "I N 10 �a N g a m m y h �O N N 01 y Ol N N M O CO N "I y O1 h N O1 O V h 10 10 10 M M V� M i N N ei ei N N N N N N N N N N r yy m M �O m O O N CO M M ti O N O N CA b M N O M CO O V1 O1 Oil O 10 V1 N m 01 m O1 01 01 01 01 b M CO I� N N 01 10 M "I V a r O "I y m O1 V1 M I� m M M m y CO CO N N q O1 m CO O �O N N Ip M O1 N N O 01 I� N O i N N ei ei N N N N N N N N N N N rry N a o O a h n O m Ol o .i V1 N m m y Ol ie N Lo N O IO 0Cl 1 Co O N M m O n q N CO O h ei N ei O1 V1 01 ei m I� N CO CO d ei V 01 a O N N �D N N N 01 O1 01 01 I� 01 N N y CO h q Ol O M h N N N V� "I V� N N i N N M M N N N N N N N N N y y Ol OI y b O O O yy 01 M M O N N N 01 N m m m m N a� h CO O1 O N O1 Oil N VI N CG m M O1 N q N q �O O ' 01 M e'I ai N I� N O 01 10 lg m m a M rl O1 O1 V1 Ip N m M M CO M 01 M M 10 q O CO N 10 CO ul N N 01 10 O1 I� N N CO 10 N N N N N C a a 6 c a 3 a E o my V m E m v u° Eo =m v2vi n m e v m a aE s = w m Kn 0 'P. K .i a v aa v w `m `m `m `m m�u= N � O 0 N D c 10 0 '^ 0 wpo ti .Z E @1 z O u G m m O = E a m E 3¢ Y v 3= a z m A>= E Y s o o o o 0 G ¢ v p a LL a 0 u 0 S 0 3 z N N« m a m O z z z z a z O as o 0 o a c J- y N v v N J a w > J v o O 0 a o a m Z v o z r a J z a z a a m n W z .� p�B -3 y/m _ `hi > > > X T v � � 1 x � � C � ¢ � w E a' v i E - i v { u? v m o N N � 0 py O ti o R a a w v o v v a oo m w C o w O -o 2 i a m _- 3 o m i w v v o N o ? "v v i E 12 m a 3 m v Q m a n m e a= m y a` �-i o M N a o � o o N m of m m m of m m n a N N vl CO O1 m h O It b ' O rl 01 O I� vl b N V N V N V O1 N N It N O N n "I ai � CO h CO I� b N O1 V1 M M M M m OI N y O 01 q N a O 10 N N N 01 I� N N m M "I N CO 10 y O N ai CO OI OI OI OI OI M N V� 01 a m N a O O O V O CO O cp O1 O1 Oil M M M M N 01 10 I� 10 y 01 ll I� a m m O O ti O1 vl CO N N N N OI O N 01 y q y i cp O1 N N CO M h .i 01 ei ei ei ei cr ei M V� N V� N 01 V� O rl Ip V1 cO O O M Ip O �a 1a O O N CO N CO O N O O1 O1 V1 CO M M M �p V ll M N N CO N V1 m O1 V1 V M M M ei 01 N 10 CO 01 q CO O1 O1 I� O1 N N Ip M M M m N O N N M CO 01 01 01 CO M N N 01 i N M ei ei ei ei ei V� V� V� M h N �O CO a CO N CO h O ' a O Ol O M M M M O CO 01 CO 10 N �n m ni co o of �n m o 0 0 0 of o I: �o a `m w m m m ry N o m m m m a o a n N h 0 CO r O O N N O N N N O M CO 10 M 10 CO h Vl O h O O Ol Oil m VI q O N O N O N Vl ' CO N 10 y 10 N V N I� N CO M m O1 O1 N �O O1 V1 V 01 01 01 O1 01 N CO N 01 �y O h m CO O N CO V1 O N N V I� W N y i N M ei ei ei ei ei V� V� V� N a N CO 0 O O Ip Ip O �a 1a m O M I� b CO m �O n N O N V m cl O co m Oil n N M cr m cr m cr m co m cr m N m n �o CO a m m �o a s � �e m ri m N m m m m ai o ai a N h CO O N O N N CO w M M M N CO m N N i IO N O N M V1 10 ei CO ei CO ei CO ei I� ei N V� N V� N CO V� N m n n O o� m m of M m m of a Co O .I n a m o m a m m o m N .�I m io m �o m �o � ti m a o m N N M CO CO N h m N N M CO CO CO N 10 CO N I� CO q O 10 I� N N N N N N CO N N N N N N N N O CO 10 Vl N O O I� m d d m O M N N m M M o m m oil �a VI CO 'I m N m CO N CO N' m N N M O O M 10 M h V1 V1 I� h V1 m V1 CO W m h N N N m CO y Vl m M a N O O m CO N N m O m 10 O M O m �O m CO m N m O r h m Oil a V1 M M m 10 m O I� O N N V1 I� "I N N y N m N m O N N m N m N CO m y y b CO N CO N y N CO O h N h m N N N N N m M M N O y 10 M N a m N m N i N M N N N N N a �O CO N m O O O M O N y y rl O M 10 m N I� M O a CO h I� N h N O O �O m O N N N O m O m O O N h M M Ip CO m "I m N N 10 M N CO h 10 N m m N I� m m N N N m N O 10 01 N b I� m CO N N N m m O O N N y 10 M M y a m M m q N N N N N h CO N O O O O O N O O rl O m y N O m N M m O N a N m Oil N q Ip m Ip Ip ' O Ip N I� V M q lO m �O m CO CO N N N 10 m N N N M N M N y m c0 O N y 10 h w CO CO CO N N N N N C a a 6 3 c a a E o my V m E m v we v m rv„ o. v a a s = w m a a w E o a O a v z v u= en w W $ a Kn w v�i `m `m (aj `m `v E N z c v c = y m °- p u= N O J 0 '� o M a LL z a 0 0 `j 0 c a 0 '^ 0 w =e w N w ;; 9 o= O W a g m .Z A a a a A m @1 m m m @� m z O u v G m O = E a m E E 3¢ Y v 3= a z m vi >= E Y ¢ v p n a 0 o o S o 0 0 E G m LL a u 0 O 3 z as N o 0 N« o a c n m J- y O N N z z J z z a z w ���_ J� v o OUdNZKf o a w o a J z_ a =�aB-30 a v o w a o. a m_wz N, N z > x T v � � 1 x y O j O ` C a ¢ v E a v i o w c - I - m i v o v m o N N 0 py O ti o R a n w v o v v a o m w C o w O o i m ° s o i w v v om N c 0 ? E v i E m E m 3 m m v - a a U' m N Q m a n m e n = m y a` �-i N �O �O h V1 O O1 CO M m V1 ' CO O N O1 O N V1 N 10 01 10 01 10 01 O ' V1 N V I� M V I� O 10 N n m V1 m N rl CO O1 V1 N 01 01 01 �O M 01 N 10 g h O h O Vl r N N CO "I e'I e'I y I� 10 N M y O1 V1 N N Ol a m rO O O 01 O m m O O N 01 O M N N O r V1 h r N N N N h CO ' V1 O N O1 Oil N V5 N m 10 lg m 10 m 10 � a .i m e n � �O CO h W ei N O1 V1 01 W W W V1 M q h �O �O I� b r N N CO CO CO CO O V $ 10 01 N y CO a N O V1 I� N N N N M 10 N "I a •. m o .y O o� O w of m m m of m .i m n o N N O1 h N O M y N V1 a O1 �O O1 V1 O V1 I� N N N N N N CO m y M 10 01 01 y e'I N I� 10 q CO m �O N h b N N OI N N N O "I N N 01 O h a N 01 y 10 N N N N M 10 V� "I O O at CO O1 at m M N m vl O O CO O\ O M vl I� 01 N 01 N 01 N �O vl M N N N V O N W "I b a M rl O O1 V1 I� N N N N M y 10 O "I q CO O1 V1 M O1 b N N O N N N a CO N d 01 01 N CO m Ip N N N "I M 10 V� O h a 0 m O O CO N O N N m O O O d m O Oil N M M M N CO 01 10 V O1 CO m CO Ip N b O m Ol V1 O1 N VI q V1 M N d N N m CO N O N y a a m Vl m N I� m ei N N OM1 M M O N M V M M 10 CO N I� O y m y y rl O OI N 01 OI O O OI O CO M y N a m N N ti O Oil M CO CO CO N � N O N O N O1 O O1 V1 O V1 CO N N N N N N O N y O CO M CO N "I q m a O m h N N M 10 10 10 O N y N CO 10 V1 m N 10 N y "I e'I e'I e'I M 10 V� O a N y CO Vl O O M O O O O O O O I� N 10 O N CO b m M N m O a1 O Ip V11 y N m N m N m m a O O 01 CO V O N O O O �O CO �O CO h vl 01 vl I� O O O CO N O Oi N b N Ol m CO h a N N N M M M m O C M b N O O1 N O V1 O O O 10 N O N N b O O M y N y b O O h y CO m O Oil "I N N N O y N CO N � O1 N V1 �O O CO O O1 O Ol V1 OI OI OI OI h ei y O N O m y m N N M O N O O O C O O N IN O1 N O O M Ip O b b O N O N O "I h m a 'O M O O1 O m cIt Oil O V M ll M N M N h N O 01 O O O N N V1 O N m V1 O1 V1 V I� N N b M 01 M N q rO m N N N O m M N O N N N N r% N O N O O O O O O1 V1 V1 CO b m O O 01 01 O O O ul O a N O "I N � N W h a m m 01 M V1 ' O CO O1 O N V1 I� O N O N O N a ' b b N � m N N V1 m I� V1 O O1 V1 ei Ip Ip Ip V1 O N "I M O q CO O 10 a m N N M M M M m O N 01 CO O y N N M Ol I M O O O O m m "I �p O1 O O N 10 O b b h M N N h O O CO N N h CO O m a Oil `� VI N b I� b n b n O b N e'I O e'I 01 a CO O CO O � O �O O 10 O1 �O O1 N N V1 e'I 0. 0. 0 O m O O N N N q y O r N 10 O h CO N 10 O O O O N m N M CO N CO N CO m C a a 6 c a 3 a E o my V m E m v o E o =m N u° m n m e v2ai rv„ v a a s = w m Kn p K 9 .i a a « w E o a O v o z v uo = en v W u a Kn °- v `m `m `m @1 `m `m c v c = y m p u N c O o M m a LL z c ti 0 `� 0 m 0 '^ 0 m m opo .Z E z O u m G m m O = E a m E 3¢ Y a z m vi >= E Y¢ a o o o o o G v p o. LL a 0 u o S o 3 z m m m N u m n m m O z z z z a z O as o 0 o a c o J y v a a N m m N J a w > l'J t� J t� .� v O t� a` o a m z o z r J z .� z m p�B m /y o. 2 m w F W zhi r g ji _ _ _ SM > > > X T v � � 1 x m O oO ` C a � ¢ � v E a v i w o o w - c m I E m Z v - m i m o y m o N N m 0 py O ti omx c a n w v o v v a o m w m o w O -o ui n o i m v v o v i u < a 3 - m m m n m e o = m y a` �-i la m m m n m m m m y O O O M "I N y . O O O I� Oil 10 O a 10 a 10 a a O O N a M O 10 N M "I a n a O � M rl CO M M M V1 O1 VI N II O O O O1 q h a CO M a 0 N N N N N a O I� CO OI N y O Vl N M h OI M M M M M 10 V� "I C a a 6 3 O V c a m E a E m v v v = m rv„ o. v a a E s a w m a a `a v a Kn o. v v�i m m @l m m m E m yf z c_ v u v c c A�- O '� u N p ai N Q c 0 o D V p w m v x v z C O G N m v x ti m S N CdJ - v a F m q- m m m m m m C' Cl N i_ E Lp Y N Q v 0 a d O O d d pa 2 O O S O ~ O O O m m-m O Z O z z z a z 0 0 o J W a c a n O m J o a v a u J u N m w w J N m J a > a O �amZzr _ _ GB-4 X T v � � 1 x y O jO ` C a � � ¢ v E a v i o w — c v \ E — i m { u? y m o N N � 0 py O ti o R a o w v o v v a o m w m o w O o i n m E 3 v v v o N o ? E v i u E m 3 m m m v - m m U' m m Q m m n m e a� m y aLL TABLE 5 PRELIMINARY HOME COST ALLOCATION WESTVIEW HOUSE SANTA ANA, CALIFORNIA Step 1: Determine Comparability, Select Method of Cost Allocation Step 2: Proposed HOME Investment Step 3: Calculate Actual Cost of HOME Units Total Development Costs Ineligible Development Costs ' Unit -Specific Upgrades Relocation Costs Assign Relocation Exclusively to HOME Units? Net Residential SF 73,860 $2,003,705 $39,017,797 (2,335,584) 0 0 NA Base Project Cost $497 /Sf Gross Residential SF $36,682,213 Assign Units p of Bdrms Unit Size Cost Unit 1 1 520 $258,255 2 1 520 $258,255 3 1 520 $258,255 4 2 750 $372,494 5 3 970 $481,746 6 3 970 $481,746 7 3 970 $481,746 8 4 1,080 $536,377 9 4 1,080 $536,377 Subtotal HOME Unit Costs $3,665,241 Add: Relocation Costs Allocated Exclusively to HOME Units (if applicable) $0 Actual Cost of HOME Units $3,665,241 Step 4: Calculate Maximum Project Subsidy Unit Size ft of Units Max Subsidy/Unit Maximum Subsidy 1 Bedroom 3 $171,802 $515,406 2 Bedroom 1 $208,913 $208,913 3 Bedroom 3 $270,266 $810,798 4 Bedroom 2 $296,666 $593,332 Maximum Project Subsidy 9 $2,128,449 Step 5: Maximum HOME Investment, Lesser of Proposed Investment (Step 2) $2,003,705 Actual Cost of HOME Units (Step 3) $3,665,241 Maximum Project Subsidy (Step 4) $2,128,449 Maximum HOME Investment 9 HOME Units $2,003,705 ' The ineligibe costs include: off -site improvements, on -site improvements, capitalized reserves and furnishings. 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