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EXHIBIT 1
<br />Judson Brown, City of Santa Ana
<br />May 12, 2017
<br />First Street Apartments Financial Feasibility
<br />Paqe 4 of 7
<br />Total Other Costa
<br />$2,781,280
<br />$2,781,280
<br />$0
<br />Subtotal Project Costs
<br />$27,999,913
<br />$27,529,742
<br />($0.70,171)
<br />Developer Fee
<br />$2,199,087
<br />$2,205,612
<br />$6,525
<br />Total Development Costs $30,199,000 $29,735,354 ($463,646)
<br />PERMANENT SOURCES
<br />JPMorgan Chase -Perm Loan
<br />$5,109,022
<br />$5,413,350
<br />$304,328
<br />See Discussion, below_ _
<br />JPMorgan Chase -Section $ Loan _ _ _
<br />_ $1,451,023
<br />$1,537,459
<br />$86,436
<br />See Discussion, below
<br />Reduction to balance budget while
<br />maintaining same approximate CTCAC tle-
<br />CiyofSantaAna-Inclusionary Funda
<br />$2600,000
<br />$2,327,740
<br />($272,260)
<br />breaker
<br />CRy of Santa Ane -Housing Funds
<br />$6195,000
<br />$6,195,000
<br />$0
<br />Deferred Developer Fee
<br />$0
<br />$0
<br />$0
<br />Low Income Housing Tax Credit
<br />SJ/SPLU$/iDERSCrt) to $0 $0 I
<br />Discussion of Table 3
<br />The "Uses" portion of Table 3 shows the Developer's budget, contrasted with modifications proposed by
<br />CSG.
<br />• Pradevelopmant Interest/Holding Costs: The Developer's sources for acquiring the site include an
<br />unsecured note from a davaleper-related entity (AMCAL 1440 Santa Ana Fund) in the amount of
<br />$1,151,000 at an Interest rate of 10%. The interest rate would appear high given the relationship of
<br />the parties: because the transaction Is extant, the City may want to provide consideration of this cost
<br />In other aspects of the transaction.
<br />• Total New Construction Casts. CSG has not received information from the developer concerning Its
<br />estimates of construction costs. The Developer proposes to use a related entity, AMCAL General
<br />Contractors, to serve as the general contractor for the project. While such an arrangement may
<br />provide for cost savings, It also can result in abuses. The City may want to consider requiring
<br />competitive bidding not only for the sub -contractors, but also for the general contractor.
<br />• Relocation Costs: The Developer has provided a relocation pian prepared by Overland, Pacific &
<br />Cutler indication total relocation costs of only $865,000. The City should require the Developer to
<br />provide justification for their budgeted amount.
<br />• Construction Loan Interest. Perthe Chase commitment letter, the base rate today would be 0.99%
<br />plus Indicated spread of 2%. The total rate would be 2.99%. We have added 0.25% "cushion" to
<br />total 3.24% annual interest. Considering the Developer's construction loan amount of $17,385,665
<br />and a total construction period (I.e., to conversion), the Developer's construction loan interest of
<br />$1,017,061 would represent an average outstanding balance of 90%, which is unlikely, given the other
<br />sources. A more typical underwriting would be 60% average outstanding balance. So underwritten,
<br />the outstanding construction Interest is reduced to approximately $676,000.
<br />• Origination Fee. The Chase commitment letter indicates a 0.75% construction loan origination fee.
<br />0.7S% of the construction loan amount equals the Indicated orlg)nation fee.
<br />C,sQ Iadvisors SAN FRANCISCO I , LOS ANGELES NEW YORK
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