80A - HOUSING AND SUBORDINATION LOANS

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EXHIBIT 2 Judson Brown, City of Santa Ana August 26, 2019 Cornerstone Apartments: Updated Resyndication Proposal Page 5 increase back to approximately $1.1 million. Given that 100% of the deferred Developer Fee must be recouped prior to the commencement of any residual receipts payments, the increase in the deferred amount would postpone the repayment of the City Loan. Allocation of Additional Bond Proceeds Under the current proposal JHC will obtain $2.4 million in additional Bond funds. As proposed these funds will be allocated to reduce the amount of the Developer Fee that must be deferred, and to increase the amount that will be prepaid on the City Loan. The issue from the City and Authority perspective is how these additional funds should be allocated between the City Loan repayment and the upfront Developer Fee payment. The KMA analysis of the allocation proposed by JHC is presented in the following table: November August 14, % Share of 2018 2019 Increase Developer Fee Total Developer Fee $2,158,000 $2,158,000 (Less) Deferred Developer Fee (1,050,432) (243,889) 32% Upfront Developer Fee $1,107,568 $1,914,111 City Loan Prepayment $500,000 $2,204,000 68% As indicated in the preceding table, the approximately 68% of the increased Bond funds are being allocated to prepayment of the City Loans, while 32% of the increased Bond funds are being used to reduce the amount of Developer Fee that will be deferred. It is important to note that as the deferred amount of the Developer Fee decreases, the proceeds available to repay the City Loan increases. City Loan Repayment The outstanding principal and interest balance of the City Loan is comprised of the following components: 1908008.SNA:KHH 80A-1 19190.017.003