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EXHIBIT 2 <br />Judson Brown, City of Santa Ana August 26, 2019 <br />Cornerstone Apartments: Updated Resyndication Proposal Page 2 <br />On August 14, 2019, JHC submitted a proposal to the City and Authority to modify the <br />agreed upon terms in the following ways: <br />1. JHC would prepay $2,204,000 of the principal balance on the City Loan; and <br />2. The remaining principal and interest balance of the City Loan would be <br />subordinated to $11.1 million in newly issued Bonds. <br />The August 14, 2019 JHC proposal is based on the following financial assumptions: <br />1. The Bond amount increased by $2.4 million based on the following changes to <br />the underwriting terms: <br />a. The mortgage interest rate decreased from 5.75% in November 2018 to <br />4.0% in August 2019. <br />b. The amortization period was increased from 35 years to 40 years. <br />2. The Developer Fee to be paid to JHC remains unchanged at $2,158,000. <br />However, the Developer Fee amount to be deferred and then repaid out of <br />Project cash flow was reduced from $1,050,432 to $296,204. <br />ANALYSIS <br />The KMA analysis evaluates the following: <br />1. The changes in the Project's development cost estimate; <br />2. The increase in Bond proceeds; <br />3. The viability of reverting to the affordable rent calculation methodology imposed <br />by California Health and Safety Code (H&SC) Section 50053; <br />4. The allocation of the additional Bond proceeds; and <br />5. The repayment of the City Loan in nominal and net present value terms. <br />A summary of the KMA analysis follows this memorandum. The detailed cash flow <br />projections are presented in Appendices A and B. <br />1908006.SNA:KHH <br />19190.017.003 <br />