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Judson Brown, City of Santa Ana <br />June 28, 2021 <br />Housing Opportunity Ordinance: Updated In -Lieu Fee Analysis Page 10 <br />1. The differences between the estimated achievable market rate monthly rents <br />and the defined Affordable Rents are calculated for studio, one -bedroom, two - <br />bedroom and three -bedroom units. <br />2. KMA assumed that the property taxes for projects that include designated <br />affordable housing units would be based on a lower assessed value due to the <br />reduction in net operating income that would be generated by the project. KMA <br />deducted this lower property tax expense from the estimated rent difference. <br />3. The estimated annual Affordability Gap is equal to the net rent difference minus <br />the property tax savings. <br />4. The net Affordability Gaps are estimated by capitalizing the annual Affordability <br />Gaps at the threshold returns derived from the pro forma analysis of a market <br />rate development. <br />5. The net Affordability Gaps are translated into the supportable in -lieu fees per <br />affordable unit and per square foot of leasable area. <br />The results of the in -lieu fee analysis are summarized in the following table: <br />Supportable In -Lieu Fees —Rental Residential Development <br />Very Low Income Low Income <br />In -Lieu Fee Alternative Alternative <br />Per Affordable Unit 5333,000 $289,000 <br />Per Total Unit in the Project $16,700 $17,300 <br />Per Sq. Ft. of Leasable Area $17.10 $17.80 <br />The current affordable housing requirement for ownership housing development <br />requires 10% of the units in a project that is subject to the modified Ordinance to be <br />sold to moderate income households. As can be seen in the Summary Table: Ownership <br />City Council 28 — 15 217dfialQ21i <br />19090 017 D21 <br />