Item 18 - Approve a Pre-Commitment for HOME Program Funds

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Judson Brown, City of Santa Ana December 10, 2024 Habitat Alton – Preliminary Financial Gap Analysis Page 11 2412001v2.SA.TRB 19090.018.038 CONCLUSIONS / RECOMMENDATIONS The following summarizes the conclusions of the KMA analysis: 1. Based on currently available information, KMA estimates the Project’s financial gap at $9.84 million. In comparison, the Developer is requesting $9.81 million in financial assistance from the City. As such, the Developer’s request is supported by the Project economics. 2. Based on the preliminary HOME Cost Allocation Analysis, the City must designate at least 30 units in the Project as HOME units. 3. It is important to note that the City cannot formally commit HOME funds to the Project until after all of the other financing sources have received formal commitments. At that time, the City must prepare a HOME Subsidy Layering Review in order to formally commit HOME funds to the Project. 4. 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. 5. 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. 6. KMA recommends that the City retain 10% of the City’s financial assistance amount (or $981,800) until after the completion of construction. If the assumptions utilized in this analysis change materially, the financial gap analysis should be re-evaluated prior to the release of that amount to ensure that the $981,800 is still warranted by the Project. 7. The City’s HOME funds have various expenditure deadlines. KMA recommends that the City include a schedule of performance in the preliminary commitment documentation to ensure that the Project moves forward in time to meet the HOME fund expenditure deadlines. EXHIBIT 3