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Judson Brown, City of Santa Ana
<br />May 9, 2017
<br />Santa Ana Arts Collective Financial Feasibility
<br />Page 4 of 5
<br />➢ Required MHP Debt Service 20765
<br />➢ Available to Support First Mortgage $177,815
<br />➢ Interest rate/Amortization Term 5.65%/35yrs
<br />Total Other Costs: The Developer's budget includes Relocation costs of $1,610,000. However, the
<br />Developer has provided supporting documentation for only $1,486,811. We have adjusted the cost
<br />to reflect the supporting documentation.
<br />The "Sources" portion of the table illustrates proposed corrections to certain of the sources.
<br />• CCRC: We have adjusted the CCRC permanent loan to reflect the most recently released 2107
<br />restricted rents, as illustrated below
<br />Table 3: 2016 vs 2017 Restricted Rents
<br />• Deferred Developer Fee: The Developer budgets shows $3.4M of deferred developer fee. The
<br />Developer has indicated that this was intended to demonstrate the size of the financing deficit (the
<br />project only can earn, per CTCAC restrictions, a $2M developer fee).
<br />• General Partner (GP) Capital Contribution: CSG proposes that the Developer/GP contribute a
<br />portion of its Developer Fee to the partnership in the form of a GP capital contribution. This amount
<br />is subject to negotiation between the Developer and the City (and may be limited by tax concerns),
<br />but is suggested as tool to reduce the remaining financial deficit. Based on the project's cashflows,
<br />approximately $371,912 is available to repay of Developer Fee within 14 years. We have discounted
<br />the annual cashflows by 4% (i.e., a risk adjustment) in order to derive a net amount of fee to be
<br />deferred (i.e., $250,526). The suggested GP capital contribution, when subtracted from the total
<br />Developer Fee of $2,000,000, yields the total Developer fee to be paid in cash — to be allocated
<br />between the net present value of deferred fee paid over time and cash fee received during
<br />development and construction. The amount of suggested GP capital contribution, therefore, equals:
<br />' HUD, 04/2016
<br />2 California Tax Credit Allocation Committee, April 2016
<br />3 California Tax Credit Allocation Committee, April 2017
<br />CSG Iadvisors SAN FRANCISCO 65AL-48 •
<br />LOS ANGELES NEW YORK
<br />2016 Low
<br />Home Rent
<br />AMI
<br />(by bedroom
<br />2016 CTCAC
<br />2017 CTCAC
<br />Utility
<br />Bedroom Size
<br />Restriction
<br />onl t
<br />Rent=
<br />Rent'
<br />Allowance
<br />Net Rent
<br />1 Bedroom
<br />30%
<br />$553
<br />$548
<br />$587
<br />$43
<br />$544
<br />1 Bedroom
<br />35%
<br />NA
<br />$640
<br />$685
<br />$43
<br />$642
<br />_
<br />1 Bedroom
<br />40%
<br />NA
<br />$731
<br />$783
<br />$43
<br />$740
<br />2 Bedrooms
<br />30%
<br />$1,097
<br />$658
<br />$704
<br />$49
<br />$655
<br />2 Bedrooms
<br />60%
<br />NA
<br />$1,316
<br />$1,408
<br />$49
<br />$1,359
<br />3 Bedrooms
<br />30%
<br />$1,267
<br />$760
<br />_ _
<br />$813
<br />$71
<br />$742
<br />3 Bedrooms
<br />60%
<br />NA
<br />$1,520
<br />$1,627
<br />$71
<br />$1,556
<br />• Deferred Developer Fee: The Developer budgets shows $3.4M of deferred developer fee. The
<br />Developer has indicated that this was intended to demonstrate the size of the financing deficit (the
<br />project only can earn, per CTCAC restrictions, a $2M developer fee).
<br />• General Partner (GP) Capital Contribution: CSG proposes that the Developer/GP contribute a
<br />portion of its Developer Fee to the partnership in the form of a GP capital contribution. This amount
<br />is subject to negotiation between the Developer and the City (and may be limited by tax concerns),
<br />but is suggested as tool to reduce the remaining financial deficit. Based on the project's cashflows,
<br />approximately $371,912 is available to repay of Developer Fee within 14 years. We have discounted
<br />the annual cashflows by 4% (i.e., a risk adjustment) in order to derive a net amount of fee to be
<br />deferred (i.e., $250,526). The suggested GP capital contribution, when subtracted from the total
<br />Developer Fee of $2,000,000, yields the total Developer fee to be paid in cash — to be allocated
<br />between the net present value of deferred fee paid over time and cash fee received during
<br />development and construction. The amount of suggested GP capital contribution, therefore, equals:
<br />' HUD, 04/2016
<br />2 California Tax Credit Allocation Committee, April 2016
<br />3 California Tax Credit Allocation Committee, April 2017
<br />CSG Iadvisors SAN FRANCISCO 65AL-48 •
<br />LOS ANGELES NEW YORK
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