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HomeMy WebLinkAboutItem 09 - Approve a Pre-Commitment of up to $920,000 in Inclusionary Housing Funds for Eligible Homebuyers to Purchase Nine (9) Existing Rental Units that will be coverted into Affordable Ownership Condominium Units Located at 425 E. Wellington Avenue Community Development Agency www.santa-ana.org/cd Item # 9 City of Santa Ana 20 Civic Center Plaza, Santa Ana, CA 92701 Staff Report July 1, 2025 TOPIC: Pre-Commitment of $920,000 in Affordable Housing Funds for Habitat for Humanity of Orange County AGENDA TITLE Approve a Pre-Commitment of up to $920,000 in Inclusionary Housing Funds for Eligible Homebuyers to Purchase Nine (9) Existing Rental Units that will be Converted into Affordable Ownership Condominium Units Located at 425 E. Wellington Avenue RECOMMENDED ACTION Approve a pre-commitment letter with Habitat for Humanity of Orange County for up to $920,000 in Inclusionary Housing Funds for eligible homebuyers to purchase nine (9) existing rental units that will be converted into affordable ownership condominium units located at 425 E. Wellington Avenue, Santa Ana, CA (APN 398-028-12) (Agreement No. A-2025-XXX). GOVERNMENT CODE 484308 APPLIES: No COMMUNITY DEVELOPMENT COMMISSION RECOMMENDATION At a special meeting on December 13, 2024, the Community Development Commission recommended the City Council to approve the recommended action by a vote of 5:0. However, the recommended action was amended by staff following the Commission meeting to add $20,000 and adjust the language of the award to comply with California Government Code §§ 7260 or 66300.6 relocation assistance obligations regarding the conversion of market rate rental units. DISCUSSION On October 17, 2023, the City Council authorized the Community Development Agency ("CDA") to release a Fiscal Year 2023-24 Request for Proposals ("RFP # 23-156") to develop affordable ownership projects in the City of Santa Ana ("City") (Exhibit 1). The RFP was prepared in compliance with the City's Affordable Housing Funds Policies and Procedures. The RFP was published on the City's website and Planet Bids; a public notice was published in the OC Register on October 25, 2023; and an e-mail was sent out to Orange County's largest affordable housing membership associations, interested developers, and nonprofit organizations from CDA's RFP Process Database. Pre-Commitment of $920,000 in Affordable Housing Funds for Habitat for Humanity of Orange County July 1, 2025 Page 2 A Review Panel, composed of City staff from the Community Development Agency and Planning and Building Agency together with an affordable housing consultant, used the Scoring and Selection Criteria from the RFP to review all of the proposals. Habitat for Humanity of Orange County, Jamboree Housing, THRIVE Santa Ana, Mary Erikson, and Orange County Community Housing Corporation ("OCCHC") each submitted a proposal during the period that the RFP was open. Jamboree Housing and THRIVE Santa Ana ended up withdrawing their proposals. The proposal from OCCHC that was scored and reviewed did not meet the minimum threshold requirements and the proposal from Mary Erikson was determined to be infeasible because it was cost prohibitive. Following this review and scoring process, and substantial due diligence, the Review Panel is recommending the following award for a project with Habitat for Humanity to create nine (9) new affordable ownership opportunities: Developer: Habitat for Humanity of Orange County • 425 E. Wellington Avenue: Up to $920,000 in Inclusionary Housing Funds for eligible homebuyers to purchase nine (9) existing rental units that will be converted into affordable ownership condominium units including: (1) an allocation of $720,000 to the City's Down Payment Assistance Program, and (2) a conditional award up to $200,000 for eligible relocation costs. Background on Habitat for Humanity of Orange County Habitat for Humanity of Orange County ("Habitat for Humanity") is a nonprofit organization dedicated to providing affordable housing for qualifying families. Since 1988, the organization has completed and sold 239 homes in Orange County, including 32 affordable homes in the City of Santa Ana. Habitat for Humanity is currently building an additional six (6) new homes in the City at 1921 W. Washington Ave for low-income families at 80% of the AMI that was made possible with $2.2 million from the City's Inclusionary Housing Fund. Habitat for Humanity also currently administers the City's Residential Rehabilitation Grant Program with $500,000 per year in Community Development Block Grant funds. The organization is the largest provider of affordable ownership opportunities in Orange County and also advocates for fair housing policies, addresses substandard housing conditions, and offers families training and resources to achieve homeownership. Project Description - 425 E. Wellington Avenue The pre-commitment letter for 425 E. Wellington Avenue, Santa Ana, CA (APN 398- 028-12) between the City and Habitat for Humanity provides an enforceable funding commitment of up to $920,000 in Inclusionary Housing Funds for eligible homebuyers to purchase nine (9) existing rental units that will be converted into affordable ownership condominium units including: (1) an allocation of$720,000 to the City's Down Payment Assistance Program, and (2) a conditional award up to $200,000 for eligible relocation costs (Exhibit 2). The letter is referred to as a pre-commitment because the City has Pre-Commitment of $920,000 in Affordable Housing Funds for Habitat for Humanity of Orange County July 1, 2025 Page 3 conditions and requirements that must be met before a full commitment can be issued in the form of a Memorandum of Understanding (MOU). The purpose of the pre- commitment letter is to award these program funds to the developer in compliance with the City's adopted Affordable Housing Funds Policies and Procedures last amended by City Council on August 18, 2020. The letter states the maximum amount of program funds reserved for the project and lists all of the additional conditions, documents, and steps that must be taken before staff will return to City Council with the MOU. Specifically, this project involves the conversion of an existing nine-unit apartment building into condominiums, which will be made available for homeownership to Low and Moderate-Income households earning less than 120% of the AMI. Habitat for Humanity currently owns the apartment building and purchased it after the building was rehabilitated in May 2024. The building includes one two-bedroom unit and eight one- bedroom units, each with a single bathroom. Unit sizes range from 420 to 846 square feet and are move-in ready. The building recently underwent over $1 million in renovations, which included new flooring, electrical upgrades (new outlets and fixtures), updated kitchen cabinets, and complete bathroom remodels. Doors, windows, shutters, garage doors, stairways, and railings were restored or replaced as needed to meet code compliance. Current residents of the property with household incomes of less than 120% AMI and that qualify to purchase a unit within the Property will be given the right of first refusal to purchase a unit at an affordable purchase price (eight of the nine units are currently occupied). KMA estimates the moderate income affordable sales prices at $310,400 for the eight (8) one-bedroom units and $350,500 for the one (1) two-bedroom unit. The allocation of$720,000 to the City's Down Payment Assistance Program will be available for down payment assistance to individual households to purchase a unit, structured as a silent mortgage based on homebuyer eligibility. Homebuyers must meet the eligibility requirements for Habitat for Humanity's Affordable Homeownership Program with a residency preference for local workers and residents of Santa Ana in accordance with Santa Ana Municipal Code Section 8-3500. The conditional award of up to $200,000 for eligible relocation costs will be available upon a determination by the City that the Project is subject to relocation benefits under California Government Code §§7260 or 66300.6. The specific amounts utilized for relocation benefits will be based on actual amounts determined immediately prior to the relocation of existing tenants. The City and Habitat for Humanity will enter into a Memorandum of Understanding ("MOU") that sets forth the terms under which the City will provide the homebuyer Down Payment Assistance and conditional relocation award. The MOU will specify that the project is not undertaken by the City and is not in furtherance of a City program. Rather, the MOU is a response to Habitat for Humanity's request for financial assistance to enhance affordability for qualified homebuyers by providing homebuyer Down Payment Assistance through an existing City program. The MOU will require that Habitat for Humanity execute an affordable housing covenant to offer the nine (9) affordable units Pre-Commitment of $920,000 in Affordable Housing Funds for Habitat for Humanity of Orange County July 1, 2025 Page 4 to households with income that does not exceed the limits for Low and Moderate- Income Households for an affordable sales price that complies with the limits for an "affordable housing cost," as defined in California Health and Safety Code §50052.5. The affordable housing covenant will run with the land for a period of forty-five (45) years. 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. The pre-commitment letter will also be conditional on Habitat for Humanity obtaining approval of all required entitlements and discretionary actions to allow the construction, improvement, conversion, and/or development of nine (9) affordable ownership units at 425 E. Wellington Avenue. In compliance with the City's Affordable Housing Funds Policies and Procedures, KMA completed a preliminary financial gap analysis for this project (Exhibit 3). Following this analysis and completion of the procurement process, KMA confirmed the preliminary financial gap and need for the Review Panel's recommendation to award up to $920,000 in Inclusionary Housing Funds. This second project's economics are described in detail in KMA's analysis attached as Exhibit 3 to this report. ENVIRONMENTAL IMPACT There is no environmental impact associated with this action because the recommended action consists of a pre-commitment of funds. FISCAL IMPACT For 425 E. Wellington Avenue, the MOU is estimated to be finalized for City Council approval in FY 25-26. Upon future approval of the MOU, funds will be budgeted and available as shown below: Fiscal Accounting Unit Fund Accounting Unit, Year —Account # Description Account Amount Description FY 25-26 41718820-69152 Inclusionary Loans and Grants $920,000 Housing Fund Total $920,000 EXHIBITS 1. Staff Report from October 17, 2023 2. Pre-Commitment Letter for 425 E. Wellington Avenue 3. Preliminary Financial Gap Analysis for 425 E. Wellington Avenue Pre-Commitment of $920,000 in Affordable Housing Funds for Habitat for Humanity of Orange County July 1, 2025 Page 5 Submitted By: Michael L. Garcia, Executive Director, Community Development Agency Approved By: Alvaro Nunez, City Manager EXHIBIT 2 MAYOR CITY MANAGER Valerie Amezcua Alvaro 1\10ez MAYOR PRO TEM b4i: T1L° CITY ATTORNEY Benjamin Vazquez --- - Sonia R.Carvalho COUNCILMEMBERS CITY CLERK Phil Bacerra — Jennifer L. Hall Johnathan Ryan Hernandez 9' - Jessie Lopez , David Penaloza Thai Viet Phan CITY OF SANTA ANA COMMUNITY DEVELOPMENT AGENCY 20 Civic Center Plaza—M25 Santa Ana,California 92702 www.santa-ana.orq July 1, 2025 Michael Valentine President & CEO Habitat for Humanity of Orange County, Inc. 2200 Ritchey Street Santa Ana, CA 92705 Re: Pre-Commitment Letter 425 E. Wellington Ave. Santa Ana, CA 92701 Dear Mr. Valentine, Habitat for Humanity of Orange County, Inc. (referred to as the "Developer"), requested financial assistance for eligible homebuyers to purchase nine (9) existing rental units that will be converted into affordable ownership condominium units ("Project"). The Project would be located at 425 East Wellington Avenue, Santa Ana, CA, 92701 (APN 398-028-12) ("Property"). The Project involves the conversion of an existing nine-unit apartment building into condominiums, which will be made available for homeownership to Low and Moderate- Income households earning less than 120% of the Area Median Income ("AMI") ("Low and Moderate-Income Households"). The existing building on the Property was rehabilitated in May 2024 and includes one two-bedroom unit and eight one-bedroom units, each with a single bathroom. All units are equipped with essential appliances: stoves, refrigerators and stacked washer/dryer units in the laundry space. Unit sizes range from 420 to 846 square feet. The building recently underwent over $1 million in renovations, which included new flooring, electrical upgrades (new outlets and fixtures), updated kitchen cabinets, and complete bathroom remodels. Doors, windows, shutters, garage doors, stairways, and railings were restored or replaced as needed to meet code compliance. SANTA ANA CITY COUNCIL Valerie Amezcua Benjamin Vazquez Thai Viet Phan Jessie Lopez Phil Bacerra Johnathan Ryan Hernandez David Penaloza Mayor Mayor Pro Tem-Ward 2 Ward 1 Ward 3 Ward 4 Ward 5 Ward 6 yamezcua(o7santa-ana.orq MzqueZ(o7sa nta-an 11 tphan(a7Santa-ana.orq essielopeZsanta-ana.om pbacerra(o�santa-ana.om ryanhernan=az Santa-ana.orq dpenalozXsanta-ana.om EXHIBIT 2 The City of Santa Ana ("City") has reviewed the Developer's request for financial assistance, and at the City Council meeting on July 1, 2025, the City Council authorized and approved the issuance of this pre-commitment letter evidencing a commitment to reserve $920,000.00 (the "City Assistance") in Inclusionary Housing Funds as follows: (1) an allocation of$720,000 to the City's Down Payment Assistance Program (the "Down Payment Assistance Program Allocation"), and (2) a conditional award up to $200,000 for eligible relocation costs (the "Conditional Relocation Allocation"). The City Assistance will be available to Low and Moderate-Income households. Current residents of the Property with household incomes of less than 120% AMI and that qualify to purchase a unit within the Property will be given the right of first refusal to purchase a unit. The Down Payment Assistance Allocation shall be available for down payment assistance to individual households, structured as a silent mortgage based on homebuyer eligibility (the "Homebuyer Down Payment Assistance"). Homebuyers must meet the eligibility requirements for the Developer's Affordable Homeownership Program with a residency preference for local workers and residents of Santa Ana in accordance with Santa Ana Municipal Code Section 8-3500. Conversion and construction will comply with all City of Santa Ana, County, and State building codes. The Conditional Relocation Allocation will be available upon a determination by the City that the Project is subject to relocation benefits under California Government Code §§ 7260 or 66300.6. 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 targeting Low and Moderate Income Households. The City Assistance shall be conditioned on and include the following terms: • City and Developer shall enter into a Memorandum of Understanding ("MOU") that sets forth terms under which the City shall provide the Homebuyer Down Payment Assistance and Conditional Relocation Allocation. • The Homebuyer Down Payment Assistance shall be available for Low and Moderate Income Households with income that does not exceed 120% of the Orange County AMI as set by the Department of Housing and Urban Development ("HUD"). • The MOU may, but is not required to, include provisions that govern if and how the City Assistance may be used in the event the total authorized Homebuyer Down Payment Assistance loans are less than the amount of the award in this pre-commitment ($720,000.00). The MOU may make these provisions subject to approval from the City Manager of an amended MOU. EXHIBIT 2 • The MOU shall specify that the Project is not undertaken by the City and is not in furtherance of a City program. Rather, the MOU is a response to Developer's request for financial assistance to enhance affordability for qualified homebuyers by providing Homebuyer Down Payment Assistance through an existing City program. • The MOU shall require that Developer execute an affordable housing covenant ("Affordable Housing Covenant") to offer the nine (9) affordable units to households with income that does not exceed the limits for Low and Moderate- Income Households for an affordable sales price that complies with the limits for an "affordable housing cost," as defined in California Health and Safety Code § 50052.5. In addition to the available Homebuyer Down Payment Assistance, the existing residents shall have a right of first refusal, which shall provide those households with the right to purchase an affordable unit. The Affordable Housing Covenant shall run with the land for a period of forty-five (45) years. • Developer shall assume any and all responsibility and be solely responsible for determining whether the project must comply with the relocation requirements under California Government Code § 7260 et seq. and implementing regulations and any other applicable federal, state, or local laws governing relocation of residential tenants, including but not limited to Division 2 of Article IX of Chapter 34 of the Santa Ana Municipal Code (§ 34-331 et seq.) (collectively, "Relocation Laws"). To the extent applicable, Developer shall comply with and be responsible for all costs of compliance with relevant Relocation Laws. • Developer shall assume any and all responsibility and be solely responsible for compliance with all tenant and eviction protections, including but not limited to protections under the California Tenant Protection Act (Civil Code § 1946.2), the Ellis Act (Government Code § 7060 et seq.), Santa Ana's Rent Stabilization and Just Cause Eviction Ordinance (Article XIX of Chapter 8 of the Santa Ana Municipal Code) (collectively, "Eviction Protections"). To the extent applicable, Developer shall comply with and be responsible for all costs of compliance with all relevant Eviction Protections. • Because the MOU will provide City Assistance as part of Homebuyer Down Payment Assistance for qualified homebuyers, the repayment obligation is based on the City's existing Down Payment Assistance Program. City shall not be obligated to make any payments to qualified homebuyers under the MOU unless and until Developer meets all conditions provided for in the MOU and qualified Low and Moderate-Income Households comply with all requirements to receive the Homebuyer Down Payment Assistance. • The nine (9) affordable ownership units at the Project shall be restricted by an Affordable Housing Covenant to an affordable home purchase price, which will require that the nine (9) homes be sold to qualified Low and Moderate-Income Households. Future sales of such single-family homes will be restricted to qualified Low and Moderate-Income Households for a period of at least forty-five (45) years. EXHIBIT 2 • Developer will have a local preference for families who live or work in the City of Santa Ana in the selection of qualified Low and Moderate-Income Households in compliance with Santa Ana Municipal Code Section 8-3500. The local preference will be applied after all existing residents have the opportunity to exercise the right of first refusal. • Developer will ensure that each "Program Participant" (used interchangeably with "Homebuyer") means the selected eligible person or family who will be purchasing a house. Each Program Participant will provide voluntary work as sweat equity or any other administrative work as may be designated by the Developer. Each Program Participant is to be selected by the Developer as more fully set forth in its Affordable Homeownership Program. The City shall have the right to review and approve the sweat equity requirements and related criteria (including a residency preference for Santa Ana residents or workers) applied through the Affordable Homeownership Program. • Developer will comply with the City's Community Workforce Agreement and union labor will be used for all necessary upgrades when volunteer labor is not used. • Developer will provide existing tenants with the right of first refusal to purchase a unit, provided they meet the eligibility requirements for Habitat for Humanity's Affordable Homeownership Program and the City of Santa Ana's Down Payment Assistance Program; provided, however, Developer shall at all times comply with the Relocation Laws. If an eligible and qualified household exercises the right of first refusal, Developer shall sell the Affordable Unit to that household. • Developer shall comply with all requirements of the California Building Code. If the Project requires a building permit that is subject to Chapter 11 B of the California Building Code, including but not limited to any requirements for "public housing" under Section 11 B-233.3, then Developer shall comply with applicable requirements of the California Building Code. • At the close of escrow for the purchase of each affordable unit, the City will require each household purchasing such unit to execute all documents and instruments required by the City's Down Payment Assistance Program. • The MOU shall set forth the terms and conditions for disbursement of the Conditional Relocation Allocation. All disbursements of the Conditional Relocation Allocation shall be subject to compliance with the Relocation Laws, and disbursed only on a reimbursement basis after the City has been provided reasonable documentation of compliance with the Relocation Laws. General Provisions: The City's obligation to provide the City Assistance to the Project is subject to each of the following conditions: EXHIBIT 2 • Developer must provide proof that it has secured all of its remaining financing for the conversion of the Project in the form of enforceable funding commitments and agrees that Developer shall be solely and exclusively responsible for any and all Project costs in the event all or some of the City Assistance is not approved or authorized. • Developer and City shall enter into the MOU setting forth the terms and conditions for the Homebuyer Down Payment Assistance loans for individual homeowners and any other uses of the City Assistance, and the disbursements of the Conditional Relocation Allocation, if any. • Execution of an Affordable Housing Covenant and recording the same against the Property. • Developer shall assume any and all responsibility and be solely responsible for determining whether laborers employed relative to the construction or installation of the Project must be paid the prevailing per diem wage rate for their labor classification, as determined by the state, pursuant to labor code sections 1720, et seq. If applicable, Developer shall comply with the City's Community Workforce Agreement. • All provided funding and Project requirements shall conform to the City's most recently adopted Affordable Housing Funds Policies and Procedures and the City's Down Payment Assistance Program, unless alternative requirements (e.g., reduction of 3% down payment requirement to 1%) are expressly provided in the executed MOU or any other documents related to the conversion of the Project. • Approval of all required entitlements and discretionary actions to allow the construction, improvement, conversion, and/or development of nine (9) affordable ownership units to be located at 425 East Wellington Avenue, Santa Ana, CA, 92701 (APN 398-028-12). • The City's obligation to provide the City Assistance is and shall remain subject to all covenants, conditions, and restrictions set forth in this pre-commitment letter and the MOU, 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. • Developer's compliance with any applicable Relocation Laws. • For any disbursement of the Homebuyer Down Payment Assistance, each Homebuyer shall comply with the City's Down Payment Assistance Program. • Developer must comply with all other conditions specified in the MOU for disbursement of funds, including execution and recordation of the Affordable Housing Covenant. EXHIBIT 2 • City shall have the right to review and approve any conditions of title, as reflected on a preliminary title report, and a condition of title guarantee, at Developer's expense, regarding the priority of the Affordable Housing Covenant, subject to City's review and approval. • Developer must indemnify, defend, and hold harmless, City against loss or damage suffered by City as a result of any claim by any person or entity arising out of or relating to this pre-commitment or the transactions contemplated by this pre-commitment, excluding claims resulting from the City's gross negligence and/or willful misconduct. • Any other terms and conditions the City determines are reasonably necessary for the MOU to protect the City's interest and comply with applicable law. 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 July 1, 2027. 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 jbrown(aD_santa-ana.orq. Sincerely, On behalf of the City of Santa Ana: Alvaro Nunez City Manager Attest: Jennifer L. Hall City Clerk RECOMMENDED FOR APPROVAL: Michael L. Garcia Executive Director Community Development Agency EXHIBIT 2 AGREED TO BY: HABITAT FOR HUMANIT OF ORANGE COUNTY, INC. Michael Valentine,r esident & CEO may_g R A Tt� EXHIBIT 3 V G� KEYSER MARSTON ASSOCIATES MEMORANDUM ADVISORS IN: Real Estate To: Judson Brown, Housing Division Manager Affordable Housing Economic Development City of Santa Ana BERKELEY Debbie M.Kern From: Tim Bretz David Doezema Los ANGELES Date: February 10, 2025 Kathleen H.Head Kevin E.Engstrom Julie L.Romey Subject: Habitat Wellington Avenue— Preliminary Financial Gap Analysis Tim R.Bretz SANDIEGO At your request, Keyser Marston Associates, Inc. (KMA) prepared a preliminary financial Paul C.Marra Linnie A.Gavino gap analysis for the project proposed to be developed at 425 East Wellington Avenue EMERITUS (Site) by Habitat for Humanity of Orange County (Habitat). Habitat purchased the Site in A.Jerry Keyser November 2024. Timothy C.Kelly The Site includes an existing 9-unit apartment building. Habitat proposes to convert the existing rental units into for-sale condominium units which will be sold to Low or Moderate Income households (Project). Habitat is requesting up to $920,000 in financial assistance from the City of Santa Ana (City). The City's financial assistance package is proposed to be structured as follows: 1. The City proposes to utilize up to $720,000 in Inclusionary Housing (Inclusionary) Funds to provide down payment assistance to eligible homebuyers (Down Payment Assistance Program Allocation). 2. The City may provide up to $200,000 in Inclusionary Funds to provide relocation assistance to existing apartment tenants that do not purchase an affordable unit at the property (Conditional Relocation Allocation). 777 SOUTH FIGUEROA STREET,SUITE 2555 LOS ANGELES,CALIFORNIA 90017),-PHONE 213.622.8095 2412002v3.SA.TRB WWW.KEYSERMARSTON.COM 19090.018.035 EXHIBIT 3 Judson Brown, City of Santa Ana February 10, 2025 Habitat Wellington — Preliminary Financial Gap Analysis Page 2 The purpose of the KMA analysis is to evaluate Habitat's financial assistance request. EXECUTIVE SUMMARY As noted previously, the City's financial assistance package is proposed to be structured in two components: nnwn Payment Assistance Program Alincation KMA completed a financial gap analysis to evaluate Habitat's request for$720,000 in Down Payment Assistance Program funds. The results of the KMA financial gap analysis are compared to Habitat's financial proposal in the following table: KMA Habitat Difference Total Development Costs $4,402,000 $4,374,200 $27,800 (Less) Total Available Revenue (3,654,200) (3,654,200) (-0-) Estimated Financial Gap $747,800 $720,000 $27,800 As shown in the preceding table, KMA estimates the Project's financial gap at $747,800. Comparatively, Habitat is requesting $720,000 in Down Payment Assistance Program funds from the City. This represents a $27,800, or approximately 4% differential. Habitat will be responsible for any unfunded financial gap above the $7200,000 in financial assistance proposed to be provided by the City. As such, it can be concluded that the City's proposed Down Payment Assistance Program funding is warranted by the Project's economics. The City proposes to utilize $720,000 in Inclusionary Funds to provide Down Payment Assistance Program funds to eligible homebuyers. The City Down Payment Assistance Program Allocation is based on providing up to $80,000 per unit in down payment assistance to each eligible Moderate or Low Income homebuyer. Conditional Relocation Allocation The City may utilize up to $200,000 in Inclusionary Funds to provide relocation assistance to existing apartment tenants that do not purchase an affordable unit at the property (City Relocation Assistance). The specific amounts utilized for the Conditional Relocation Allocation 2412002v3.SA.TRB 19090.018.035 EXHIBIT 3 Judson Brown, City of Santa Ana February 10, 2025 Habitat Wellington — Preliminary Financial Gap Analysis Page 3 will based on actual amounts determined immediately prior to the relocation of existing tenants. PROJECT DESCRIPTION The proposed scope of development can be described as follows: 1. The Site area totals approximately 9,150 square feet, or approximately 0.21 acres of land area. 2. The Site consists of one existing apartment building. The apartment units will be converted to condominium units. 3. The Project's unit mix can be summarized as follows: a. The Project will include 9 for-sale units, which equates to a density of 43 units per acre. b. The unit mix consists of the following: i. Eight (8) one-bedroom units consisting of approximately 550 square feet of living area; and ii. One (1) two bedroom unit consisting of approximately 850 square feet of living area. C. The Project's total gross building area (GBA) is estimated at 5,266 square feet. 4. Each unit has an existing one-car garage for a total of 9 parking spaces for the Project. 5. The Project's affordability mix will consist of the following: a. All nine units will be sold to Low or Moderate Income households. For the purposes of this financial gap analysis, I<MA assumed that all units will be sold to Moderate Income households. b. To limit displacement, existing apartment tenants with household incomes of less than 120% of the Area Median Income (AMI) and that qualify to purchase a unit will be given the first right to purchase a unit at an affordable sales price. 2412002v3.SA.TRB 19090.018.035 EXHIBIT 3 Judson Brown, City of Santa Ana February 10, 2025 Habitat Wellington — Preliminary Financial Gap Analysis Page 4 FINQNCI 11 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: Estimated Available Revenue Table 3: Estimated Financial Gap Table 4: Silent Second Mortgage Revenue Calculations Table 5: Affordable Sales Price Calculation Fr-TIMATED DEVELOPMENT COSTS (TAR1 F 11 KMA reviewed Habitat's December 2024 pro forma, and then independently prepared a pro forma analysis for the Project. The resulting development costs are estimated as follows: Property Assemblage Costs: The property assemblage costs are estimated at $3.23 million as follows: Based on information provided by Habitat, Habitat purchased the Site for$3.11 million, or $345,000 per unit. Habitat provided an appraisal prepared by AEI Consultants on July 26, 2024 that estimated the as-is market value of the property at $2.78 million, or$309,000 per unit. As such, Habitat purchased the property for$325,000, or approximately 12% more than the appraised value of the Property. RELOCATION COSTS The property is currently utilized as an apartment building that contains existing apartment tenants. The funding source proposed to be provided by the City does not trigger the Federal Uniform Relocation Act. To that end, Habitat estimates the relocation costs at $60,000, which is based on three months of current rent payments. 2412002v3.SA.TRB 19090.018.035 EXHIBIT 3 Judson Brown, City of Santa Ana February 10, 2025 Habitat Wellington — Preliminary Financial Gap Analysis Page 5 However, Habitat will provide current tenants that earn 120% AMI or less and qualify to purchase an affordable unit with a Right of First Refusal to purchase a unit at an affordable sales price. CLOSING COSTS Habitat estimates the closing costs at $69,000 or approximately 2% of the purchase price. Direct Cost The direct costs assume that the Project will be subject to the City's Community Workforce Agreement. The direct costs can be summarized as follows: 1. Habitat estimates the site improvement costs at $30,000, or $3 per square foot of land area. The site improvement costs include asphalt repaving and trash enclosure improvements. 2. The building renovation costs are estimated at $76,000, or approximately$8,500 per unit. The scope of rehabilitation includes new water meters, garage doors, windows, and additional repairs required by the insurance company. 3. The prevailing wage premium is estimated at 30% of construction costs, or$32,000. 4. The general conditions are estimated at 20% of construction costs, or$28,000. 5. Habitat will not charge for the costs to supervise the construction of the Project. 6. A direct cost contingency allowance equal to 15% of other direct costs is provided. KMA estimates the total direct costs at $191,000, which equates to approximately$21,200 per unit. Indirect Costs KMA utilized the following assumptions in estimating the indirect costs: 1. The architecture, engineering and consulting costs are estimated at 3% of the property assemblage and direct costs, or$103,000. 2412002v3.SA.TRB 19090.018.035 EXHIBIT 3 Judson Brown, City of Santa Ana February 10, 2025 Habitat Wellington — Preliminary Financial Gap Analysis Page 6 2. Habitat estimates the public permits and fees costs at $3,800 per unit, or$34,000. City staff should verify the accuracy of this estimate. 3. The taxes, legal and accounting costs are estimated at 3% of direct costs, or $103,000. 4. Habitat estimates the insurance costs at $27,000 or $3,000 per unit. 5. The Developer Fee is set at $207,000 which is based on the following: a. Management and Overhead costs are set at $4,000 per month for an 18-month development period. b. Habitat will charge the Project to provide homeownership services to potential affordable homebuyers. Habitat set this fee at $15,000 per unit. 6. An indirect cost contingency allowance equal to 7% of other indirect costs is provided. KMA estimates the total indirect costs at $507,000. Financing Costs 1. The interest costs to be incurred during the development period are estimated at $340,000. This cost estimate is based on the following: a. Habitat states that a $3.0 million predevelopment/construction loan will be obtained from a third party lender for the Project. b. KMA assumes the p redevelop ment/construction loan will carry the following terms: i. A 7.56% interest rate; ii. An 18-month development period; and iii. A 100% average outstanding balance. 2. The financing fees for the p redevelop ment/construction loan are estimated at 1.0 point, or $30,000. 2412002v3.SA.TRB 19090.018.035 EXHIBIT 3 Judson Brown, City of Santa Ana February 10, 2025 Habitat Wellington — Preliminary Financial Gap Analysis Page 7 3. The closing costs related to the sale of each affordable unit are estimated at $3,000 per unit, or$27,000. 4. Habitat proposes to fund an $8,000 reserve for the Homeowners Association. 5. The warranty costs are estimated at $65,000, which equates to approximately$7,200 per unit. KMA estimates the total financing costs at $470,000. TOTAL DEVELOPMFNT COSTS As shown in Table 1, KMA estimates the total development costs at $4.40 million. In comparison, Habitat estimates the total development costs at $4.37 million. This represents an approximately$28,000 differential, which equates to less than 1% of the total development costs. r-btimated Available Revenue KMA estimates the revenue available to the Project as follows: I UL&KAfE INCOML SALLS PRICt-S- INLLUSIONAKY HOUSINt FUNDS The City will provide Inclusionary Funds to the Project. As such, KMA estimated the affordable sales as follows: 1. The household income used in the calculations is based on the area median income published by the California Department of Housing and Community Development (HCD) and adjusted for the number of persons per household (Area Median Income (AMI)). KMA assumes the household size is estimated at one plus the number of bedrooms (four persons for a three-bedroom unit). 2. KMA assumes that the qualifying Moderate Income limits are set at 120% of AMI. 3. Since the Project consists of more than four units, the Project is required to have an HOA. Habitat estimates the annual HOA dues at $400 per unit per month. 4. Habitat estimates the homeowner's insurance cost at 0.75% of the affordable sales price. 2412002v3.SA.TRB 19090.018.035 EXHIBIT 3 Judson Brown, City of Santa Ana February 10, 2025 Habitat Wellington — Preliminary Financial Gap Analysis Page 8 5. The annual utilities are based on the utility allowances published by the Santa Ana Housing Authority (SAHA) as of October 1, 2024. KMA assumes the homeowners will pay for: electric cooking, electric heating, electric water heating, basic electricity, air conditioning, water, sewer and trash. 6. Habitat estimates the property tax cost based on 1.25% of the estimated affordable sales price. 7. The mortgage interest rate is set at 7.0%. The mortgage is assumed to be fully amortizing over 30 years and provided by a conventional lender. 8. The homebuyer down payment is set at 5% of the affordable sales price. Based on the assumptions outlined above, KMA estimates the Moderate Income affordable sales prices at $310,400 for the eight (8) one-bedroom units and $350,500 for the one (1) two- bedroom unit. AFFORDABLE SALES PRICE REVENUE KMA estimates that nine Moderate Income units will generate $2.83 million in affordable sales revenue. However, it is important to note that the affordable sales prices will ultimately be determined immediately prior to the sale of each unit. This analysis may need to be revised if the affordable sales prices differ from the sales prices utilized in this analysis. ADDITIONAL REVENUF ���rinl(�rna�ca The property is currently operating as an apartment building and is collecting rents from existing tenants. Habitat estimates that the Project will generate $229,700 in rental income during the condominium conversion process. Habitat will utilize this rental income as a funding source for the Project. 2412002v3.SA.TRB 19090.018.035 EXHIBIT 3 Judson Brown, City of Santa Ana February 10, 2025 Habitat Wellington — Preliminary Financial Gap Analysis Page 9 Habitat proposes to utilize fundraising contributions to off-set a portion of the development costs. As such, Habitat estimates the financial assistance that they will provide to the Project at $590,800, or$65,600 per unit. ESTIMATED AVAILABLE REVENUE The Project's estimated total available revenue is equal to the sum of the Affordable Sales Price revenue and the Project's additional revenue. KMA estimates the total available revenue as follows: Affordable Sales Price Revenue $2,833,700 Rental Income 229,700 Habitat Financial Assistance 590,800 Estimated Available Revenue $3,654,200 Financial Gap Calculation The financial gap is estimated by deducting the Project's available revenue from the Project's total development costs. Based on the preceding analysis, KMA estimates the Project's financial gap as follows: KMA Total Development Costs $4,402,000 (Less) Total Available Revenue (3,654,200) Estimated Financial Gap $747,800 Per Unit $83,100 As shown in the preceding table, KMA estimates the Project's financial gap at $747,800. Comparatively, Habitat is requesting $720,000 in Down Payment Assistance Program funding from the City. Since this amount is less than the financial gap identified by KMA, it can be 2412002v3.SA.TRB 19090.018.035 EXHIBIT 3 Judson Brown, City of Santa Ana February 10, 2025 Habitat Wellington — Preliminary Financial Gap Analysis Page 10 concluded that the proposed Down Payment Assistance Program Allocation is warranted by the project economics. However, KMA estimates that the Project exhibits an unfunded financial gap of$27,800. Habitat will need to secure funding sources for any unfunded financial gap in order for the Project to be financially feasible. The City should confirm that Habitat has secured all necessary funding sources before formally disbursing any City funds. SILENT SECOND MORTGAGE REVENUE CALCULATION (TABLE 4) As a basic premise, it must be assumed that the total of the liens accepted by a homebuyer cannot exceed the unrestricted market value of the home. Furthermore, based on previous City homeownership projects, the City will record a second trust deed equal to the difference between the Affordable Sales Price and the estimated market value of the home. KMA assumes that the City's second trust deed will be structured as deferred payment loans which are commonly known as silent second mortgages. These loans typically become due and payable when the home is resold to a non-affordable home buyer. KMA assumes that the City's silent second trust deed will fall second in the lien hierarchy behind the conventional first trust deed mortgage. The calculations used to estimate the supportable silent mortgages are presented in the following sections of this analysis. Md(Kel KaLe :�oaies rriLes KMA researched sales comparables for similar units in the market area for the purpose of estimating the current silent second mortgage amount. The appraisal provided by Habitat included additional sales comparable data. Based on this information, KMA estimates the market rate sales price for the units as follows: 1. One-Bedroom Units: $345,600 2. Two-Bedroom Unit: $389,700 2412002v3.SA.TRB 19090.018.035 EXHIBIT 3 Judson Brown, City of Santa Ana February 10, 2025 Habitat Wellington — Preliminary Financial Gap Analysis Page 11 Available Silent Second Mortgage Revenue Based on the estimated market rate sales prices, the available silent second mortgage revenue is estimated at as follows: Moderate Income Units One-Bedroom Two-Bedroom Units Unit Market Rate Sales Price $345,600 $389,700 (Less) Affordable Sales Price (310,400) (350,500) Silent Second Mortgage Amounts (Per Unit) $35,200 $39,200 Number of Units 8 1 Available Silent Second Mortgage Capacity $281,600 $39,200 Total Amount of City Down Payment Assistance Secured as Silent Mortgages $320,800 Thus, it is important to note that based on the estimated market rate prices, the City will not be able to secure the full $80,000 in City Down Payment Assistance Program funding per unit. The City will only be able to secure the amount of mortgage capacity between the appraised market value and the first mortgage amount. Based on current estimates, the City will be able to secure $320,800 of the $720,000 in City Down Payment Assistance Program funding as silent mortgages. Proposed City Down Payment Assistance $720,000 (Less) Amount Secured by Silent Mortgages (320,800) Estimated Amount Unable to be Secured Against $399,200 Affordable Units 2412002v3.SA.TRB 19090.018.035 EXHIBIT 3 Judson Brown, City of Santa Ana February 10, 2025 Habitat Wellington — Preliminary Financial Gap Analysis Page 12 However, this calculation is provided for illustrative purposes only at this time. The calculation will need to be conducted at the time of sale of each unit and must be based on the actual appraised value and affordable sales prices at the time of sale. Affordable Sales Price Differential Furthermore, it is important to note that there typically needs to be a sales price differential between the market rate sales price and the affordable sales price in order to entice homebuyers to accept an affordability covenant. The following illustrates the price differential based on the currently estimated market rate sales affordable sales prices: Moderate Income Units One-Bedroom Two-Bedroom Units Unit Market Rate Sales Price $345,600 $389,700 (Less) Affordable Sales Price (310,400) (350,500) Price Differential $35,200 $39,200 of Market Rate Sales Price 10% 10% Ultimately, the silent second mortgage and sales price differential calculations will occur once sales of the units commence. At that point, the appraised market values of the homes and the defined Affordable Sales Prices will be utilized to determine the silent second mortgage amounts and any possible affordable sales price reductions that are necessary to entice affordable homebuyers. CONCLUSIONS / RECOMMENDATIONS The following summarizes the conclusions of the KMA analysis: 1. City Financial Assistance: a. Down Payment Assistance Program Allocation: 2412002v3.SA.TRB 19090.018.035 EXHIBIT 3 Judson Brown, City of Santa Ana February 10, 2025 Habitat Wellington — Preliminary Financial Gap Analysis Page 13 i. Based on currently available information, KMA estimates the Project's financial gap at $747,800. In comparison, Habitat is requesting $720,000 in Down Payment Assistance Program funding from the City. As such, Habitat's request is supported by the Project economics. ii. KMA estimates that the Project exhibits a $27,800 unfunded financial gap. Habitat will need to secure funding sources for any unfunded financial gap in order for the Project to be financially feasible. The City should confirm that Habitat has secured all necessary funding sources before disbursing any funds. b. Conditional Relocation Allocation: The City may utilize up to $200,000 in Inclusionary Funds to provide relocation assistance to existing apartment tenants that do not purchase an affordable unit at the property. The specific amounts utilized for the Conditional Relocation Allocation will based on actual amounts determined immediately prior to the relocation of existing tenants. 2. Habitat purchased the property for $325,000, or approximately 12%, more than the appraised value. However, the City established the maximum amount of City Down Payment Assistance Program Allocation based on the funding limits established by the City's Down Payment Assistance Program (DPAP). Habitat is required to fund any remaining financial gap amount after the affordable sales price revenue and City's financial assistance amount is taken into consideration. Therefore, Habitat is responsible for the purchase price that exceeds the appraised value of the property. 3. Given the preliminary nature of the proposal, if the scope of development or financing assumptions change, the KMA analysis may need to be updated accordingly. 4. The affordable sales prices cannot be finalized until the Project commences sales activities. It is likely that the actual affordable sales prices will differ from the amounts estimated in this analysis. 5. The silent second mortgage and sales price differential calculations will occur once sales of the units commence. At that point, the appraised market values of the homes and the defined affordable sales prices will be utilized to determine the silent second mortgage amounts and any possible affordable sales price reductions that are necessary to entice affordable homebuyers. 2412002v3.SA.TRB 19090.018.035 EXHIBIT 3 Judson Brown, City of Santa Ana February 10, 2025 Habitat Wellington — Preliminary Financial Gap Analysis Page 14 a. Based on current estimates of market rate sales prices, the City will not be able to secure the full $80,000 per unit in City Down Payment Assistance with silent second mortgages. KMA estimates that approximately $399,200 of the City's $720,000 in City Down Payment Assistance Program funds will not be able to be secured by the affordable units. b. The affordable sales prices may need to be reduced further in order to entice homebuyers to accept an affordable covenant. 6. KMA typically recommends that the City retain 10% of the City's financial assistance amount (or$92,000) until after the completion of the construction. However, in this instance, the City will provide the Down Payment Assistance Program funds directly to eligible homebuyers and any relocation assistance will be based on actual relocation costs at the time of the relocation of tenants. As such, there is no need to impose a 10% retention requirement on the Project. 2412002v3.SA.TRB 19090.018.035 EXHIBIT 3 TABLE 1 ESTIMATED DEVELOPMENT COSTS 9 FOR-SALE MODERATE INCOME UNITS HABITAT FOR HUMANITY-WELLINGTON SANTA ANA,CALIFORNIA I. Property Assemblage Costs Property Acquisition Costs 1 9 Units $345,000 /Unit $3,105,000 Relocation Costs z 60,000 Closing Costs 2% Property Acquisition Costs 69,000 Total Property Assemblage Costs $3,234,000 II. Direct Costs 3 On-Site Improvements 9,148 Sf Land $3 /Sf Land $30,000 Rehabilitation Costs 9 Units $8,461 /Unit 76,000 Prevailing Wage Premium 30% Construction Costs 32,000 General Conditions 4 20% Construction Costs 28,000 Habitat Supervision 0% Construction Costs 0 Contingency Allowance 15% Other Direct Costs 25,000 Total Direct Costs 9 Units $21,200 /Unit $191,000 III. Indirect Costs Architecture, Engineering&Consulting 3% Assemblage+Direct Costs $103,000 Public Permits&Fees 5 9 Units $3,773 /Unit 34,000 Taxes,Legal&Accounting 3% Assemblage+Direct Costs 103,000 Insurance 9 Units $3,000 /Unit 27,000 Developer Fee 4 5% Net Development Cost(Excl. Dev Fee) 207,000 Contingency Allowance 7% Other Indirect Costs 33,000 Total Indirect Costs $507,000 IV. Financing Costs Interest During Construction 6 $3,000,000 Loan 7.6% Interest $340,000 Loan Origination Fee $3,000,000 Loan 1.0 Point 30,000 Closing Costs 9 Units $3,000 /Unit 27,000 HOA Reserves 9 Units $889 /Unit 8,000 Warranties 9 Units $7,183 /Unit 65,000 Total Financing Costs $470,000 V. JTotal Development Costs 9 Units $489,100 /Unit $4,402,000 1 Based on Habitat estimate. An appraisal prepared by AEI Consultants estimated the market value of the property at$2.78 million on 7/26/2024. Habitat's purchase price is$325,000 or approximately 12%higher than the appraised value of the property. z Assumes existing tenants that do not purchase a unit are provided relocation assistance equal to up to 3 months of rent payments. 3 Based on Habitat estimates. Assumes that the City's Community Workforce Agreement wage requirements will be imposed on the Project. 4 Based on estimate provided by Habitat. 5 Based on Habitat estimates. City staff should verify the accuracy of this estimate. 6 Per Habitat,the Project will obtain a$3.0 million predevelopment/construction loan.The loan interest is based on an 18-month loan term and a 100%average outstanding balance. Prepared by:Keyser Marston Associates,Inc. File name:Habitat Wellington_2 10 25;Pf EXHIBIT 3 TABLE 2 ESTIMATED AVAILABLE REVENUE 9 FOR-SALE MODERATE INCOME UNITS HABITAT FOR HUMANITY-WELLINGTON SANTA ANA,CALIFORNIA I. Affordable Sales Revenue 1 Moderate Income:One-Bedroom Units 8 Units $310,400 /Unit $2,483,200 Moderate Income:Two-Bedroom Unit 1 Unit $350,500 /Unit 350,500 Total Affordable Sales Revenue $2,833,700 II. Rental Income 2 $229,700 III. Habitat Financial Assistance 9 Units $65,600 $590,800 IV. Estimated Available Revenue 9 Units $406,020 /Unit $3,654,200 1 See TABLE 5 for the KMA affordable sales price calculations. z Per Habitat. Prepared by:Keyser Marston Associates,Inc. File name:Habitat Wellington_2 10 25;Pf EXHIBIT 3 TABLE 3 ESTIMATED HABITAT FINANCIAL GAP 9 FOR-SALE MODERATE INCOME UNITS HABITAT FOR HUMANITY-WELLINGTON SANTA ANA,CALIFORNIA I. Total Development Costs See TABLE 1 $4,402,000 II. (Less)Estimated Available Revenue See TABLE 2 ($3,654,200) III. I Estimated Financial Gap 9 Units $83,100 /Unit $747,800 IV. Distribution of Proposed City Financial Assistance Proposed City Development Assistance 9 Low Inc. Units $80,000 /Mod Inc. Unit (720,000) Proposed City Relocation Assistance (200,000) Total Proposed City Financial Assistance 9 Units ($102,200) /Unit ($920,000) V. Estimated Additional Habitat Financial Gap Estimated Financial Gap $747,800 Proposed City Development Assistance 9 Low Inc. Units $80,000 /Mod Inc. Unit (720,000) Estimated Additional Habitat Financial Gap $27,800 Prepared by:Keyser Marston Associates,Inc. File name:Habitat Wellington_2 10 25;Pf EXHIBIT 3 TABLE 4 SILENT MORTGAGE REVENUE SAMPLE CALCULATIONS 9 FOR-SALE MODERATE INCOME UNITS HABITAT FOR HUMANITY-WELLINGTON SANTA ANA,CALIFORNIA I. Silent Mortgage Capacity for City Financial Assistance A. Moderate Income: One-Bedroom Units Estimated Market Rate Sales Price 1 $345,600 (Less)Moderate Income Affordable Sales Price z (310,400) Available Silent Mortgage Capacity Per One-Bedroom Unit $35,200 Number of Units 8 Maximum Amount Secured as Silent Mortgage $281,600 B. Moderate Income: Two Bedroom Unit Estimated Market Rate Sales Price 1 $389,700 (Less)Moderate Income Affordable Sales Price z (350,500) Available Silent Mortgage Capacity Per Two-Bedroom Unit $39,200 Number of Units 1 Maximum Amount Secured as Silent Mortgage $39,200 II. ITotal Amount of City Development Assistance Secured as Silent Mortgages $320,800 III. Estimated City Development Assistance Provided as Grant to Habitat 3 Proposed City Development Assistance $720,000 (Less)Total Amount of City Development Assistance Secured as Silent Mortgages ($320,800) Estimated City Development Assistance Provided as Grant to Habitat $399,200 1 Based on KMA survey of sales comparables.The market rate sales price will be determined by a fair market value appraisal that assumes no income restrictions prior to the sale of each unit. 2 The final Affordable Sales Prices will be set prior to the sale of each unit. 3 For illustration purposes only.This calculation will need to be conducted at the time of sale of the units to reflect the current appraised values and current affordable sales prices for each unit. Prepared by:Keyser Marston Associates,Inc. File name:Habitat Wellington_2 10 25;Pf EXHIBIT 3 TABLE 5 AHOCO CALCULATIONS:2024 INCOME STANDARDS SANTA ANA,CALIFORNIA Median 80%Median 120%Median 1 Person $90,300 $72,240 $108,360 2 Person $103,200 $82,560 $123,840 3 Person $116,100 $92,880 $139,320 4 Person $129,000 $103,200 $154,800 5 Person $139,300 $111,440 $167,160 6 Person $149,650 $119,720 $179,580 7 Person $159,950 $127,960 $191,940 8 Person $170,300 $136,240 $204,360 I. Low Income:80%Median Income-30%of Income Allotted to Housing Expenses 1-Bdrm 2-Bdrm 3-Bdrm 4-Bdrm A. Income Benchmark Household Size 2 3 4 5 Household Income $82,560 $92,880 $103,200 $111,440 %of Income Allocated to Housing 30% 30% 30% 30% Income Allotted to Housing $24,770 $27,860 $30,960 $33,430 B. Ongoing Expenses HOA/Maintenance $4,800 $4,800 $4,800 $4,800 Insurance @ 0.75%Affordable Sales Price 1,360 1,539 1,711 1,828 Utility Allowances i 2,592 3,396 4,296 5,268 Property Taxes @ 1.25%of Affordable Price 2,266 2,565 2,851 3,046 Total Expenses $11,018 $12,300 $13,658 $14,942 C. Income Available for Mortgage $13,752 $15,560 $17,302 $18,488 D. Affordable Housing Price Supportable Mtg @ 7.00%Interest 2 $172,200 $194,900 $216,700 $231,500 Home Buyer Down Pymt @ 5%Affordable Price 9,100 10,300 11,400 12,200 Maximum Purchase Price $181,300 $205,200 $228,100 $243,700 II. Moderate Income:120%Median Income-30%of Income Allotted to Housing Expenses 1-Bdrm 2-Bdrm 3-Bdrm 4-Bdrm A. Income Benchmark Household Size 2 3 4 5 Household Income $123,840 $139,320 $154,800 $167,160 %of Income Allocated to Housing 30% 30% 30% 30% Income Allotted to Housing $37,150 $41,800 $46,440 $50,150 B. Ongoing Expenses Utility Allowances i $2,592 $3,396 $4,296 $5,268 HOA/Maintenance 4,800 4,800 4,800 4,800 Insurance @ 0.75%Affordable Sales Price 2,328 2,629 2,922 3,137 Property Taxes @ 1.25%of Affordable Price 3,880 4,381 4,870 5,228 Total Expenses $13,600 $15,206 $16,888 $18,433 C. Income Available for Mortgage $23,550 $26,594 $29,552 $31,718 D. Affordable Housing Price Supportable Mtg @ 7.00%Interest 2 $294,900 $333,000 $370,100 $397,200 Home Buyer Down Pymt @ 5%Affordable Price 15,500 17,500 19,500 20,900 Maximum Purchase Price $310,400 $350,500 $389,600 $418,100 i Based on the Santa Ana Housing Authority utilities allowances effective as of 10/1/24.Assumes:Electric Cooking;Electric Heating; Electric Water Heater;Basic Electric;Air Conditioning;Water;Sewer;and Trash. 2 Based on Habitat estimate. Prepared by: Keyser Marston Associates,Inc. File name: Habitat Wellington_2 10 25;DPA Wellington