HomeMy WebLinkAboutCORRESPONDENCE - 65A - Passed out at daisMEMORANDUM
A:
$6)3/23 ).
To: Natalie Verlinich, Housing Programs Analyst
Real Estate
Redevelopment
City of Santa Ana
Affordable Housing
Economic Development
From: Kathleen Head
SF
!. RANCISCO
A. Jerry Keyser
Tim Bretz
Timothy C. Kelly
Kate Earle Funk
Debbie M. Kern
Reed T. Kawahara
Date: April 15, 2016
David Doezema
LA
/3 NGELES
Subject: First Street Apartments: Financial Gap Analysis
Kathleen H. Head
James A. Rabe
Gregory D. Soo-Hoo
Kevin E. Engstrom
Julie L. Romey
At your request, Keyser Marston Associates, Inc. (KMA) prepared a financial gap analysis
SD
!. IEGO
for the First Street Apartments project being proposed by AMCAL Multi-Housing Inc.
Paul C. Marra
(Developer). The purpose of the KMA analysis is to quantify the amount of financial
assistance necessary to provide the proposed affordable housing units.
EXECUTIVE SUMMARY
The Developer is proposing todevelop the2.15-acre site located at 1440 East First
Street (Site) with a 69-unit apartment project (Project). Sixty-eight (68) of the units will
be subject to long-term income and affordability covenants, and one unit will be
provided to an on-site manager.
Estimated Financial Gap
KMA conducted an independent pro forma analysis of the Project. While the KMA
analysis varied on a line-by-line item basis from the Developer’s proposal, KMA’s
estimate of the Project’s financial gap is approximately equal to the Developer’s request
for financial assistance.
500 SOUTH GRAND AVENUE, SUITE 1480 LOS ANGELES, CALIFORNIA 90071 PHONE 213.622.8095
1604007:SA;TRB
WWW.KEYSERMARSTON.COM 19090.014.001
Natalie Verlinich, City of Santa AnaApril 15, 2016
First Street Apartments: Financial Gap Analysis Page 2
The following outlines the financial gap calculations derived from the KMA pro forma
analysis:
Total Development Cost $28,506,000
(Less ) Available Outside Funding Sources (19,711,000)
Estimated Financial Gap $8,795,000
As shown in the preceding table, KMA estimates the financial gap at $8.79 million. This
is $105,000less than the Developer’s request fro $8.9 million in financial assistance.
This represents a 2% differential, which can be considered insignificant. As such, KMA
concludes that the Developer’s financial assistance request is necessary to provide the
proposed affordable housing units.
Available Funding Sources
KMA estimates that $19.71 million in outside funding sources are available to the
Project as follows:
1.The net operating income generated from the affordable rents supports
approximately $7.02million in permanent financing.
2.The revenue generated from the Project-Based Section 8 rental assistance
vouchers (PBVs) provided by the Santa Ana Housing Authority (Housing
Authority) supports approximately $1.46 million in permanent financing.
3.The Developer anticipates receiving an allocation of 9% Federal Low Income
Housing Tax Credits (Tax Credits) that are competitively awarded by the
California Tax Credit Allocation Committee (TCAC). KMA estimates the net Tax
Credit proceeds at $11.23 million.
The Developer is requesting $8.9million in financial assistance from the City for the
Project. The Developer intends to utilize in-lieu fee funds generated by the Housing
Opportunity Ordinance (HOO) as the funding source for this financial assistance request.
PROJECT DESCRIPTION
The proposed scope of development can be described as follows:
1604007:SA;TRB
19090.014.001
Natalie Verlinich, City of Santa AnaApril 15, 2016
First Street Apartments: Financial Gap Analysis Page 3
1.The Site is comprised of 2.15 acres, or 93,654 square feet of land area.
2.The Project’s unit mix is as follows:
Number of Unit Size
Units (SF)
Two-Bedroom Units35 782
Three-Bedroom Units28 1,031
Four-Bedroom Units61,219
Total / Weighted Average 69 921
3.The Project’s gross building area (GBA) is estimated at 81,218 square feet, and is
comprised of the following:
a.The residential GBA is estimated at 63,549 square feet; and
b.The circulation / common area GBA is estimated at 17,669 square feet.
4.The Project includes 119 tuck-under parking spaces, which equates to
approximately 1.7 parking spaces per unit.
5.The Project’s proposed affordability mix is as follows:
1
Very-LowInc H&SC / Tax Credit @ 30% TC Median 7
Very-Low Inc H&SC / Tax Credit @ 35% TC Median 7
Very-Low Inc H&SC / Tax Credit @ 40% TC Median 7
2
Very-Low Inc H&SC / Tax Credit @ 45% TC Median 7
Low Inc H&SC / Tax Credit @ 50% TC Median 7
Moderate Inc H&SC / Tax Credit @ 60% TC Median 33
Unrestricted On-Site Manager’s Unit 1
Total Units69
1 H&SC = the California Health and Safety Code, and the “Median” represents the Orange County Median
Income published by HCD. The median income published by TCAC is referred to as the TC Median.
2 The Developer’s rent for 2-Bedroom units at 45% of the TC Median is higher than the H&SC Very-Low
Income rent. The Developer’s pro forma should be updated to reflect the H&SC very-low income rent.
1604007:SA;TRB
19090.014.001
Natalie Verlinich, City of Santa AnaApril 15, 2016
First Street Apartments: Financial Gap Analysis Page 4
FINANCIAL GAP ANALYSIS
KMA prepared a pro forma analysis to assist in evaluating the Developer’s proposal. The
analysis is located at the end of this memorandum, and is organized as follows:
Table 1: Estimated Development Costs
Table 2: Stabilized Net Operating Income
Table 3: Financial Gap Calculation
Estimated Development Costs (Table 1)
KMA reviewed the Developer’s development cost estimates, and then independently
prepared a pro forma analysis for the Project. The resulting development costs are
estimated as follows:
Property Assemblage Costs
The total property assemblage costs are estimated at $5.47 million, and they are
comprised of the following components:
1.The proposed purchase price for the Site is $4.5 million, or $48 per square foot
of land area. The Developer submitted an appraisal prepared by Lidgard and
Associates, Inc. on January 20, 2015 to validate the purchase price. The appraisal
estimated the market value of the Site at $4.55 million, which is approximately
equal to the purchase price.
2.The Developer included a $942,000 allowance for relocation expenses. A
relocationplan prepared byOverland, Pacific & Cutler, Inc.on December 18,
2015 estimates the relocation costsat $865,000. The additional $77,000 in costs
are assumed to represent the estimated costs to implement the relocation plan.
3.The Developer included$25,000 in closing costs.
1604007:SA;TRB
19090.014.001
Natalie Verlinich, City of Santa AnaApril 15, 2016
First Street Apartments: Financial Gap Analysis Page 5
Direct Costs
The direct cost estimates assume that the Project will not be subject to State of
California or Federal Davis Bacon prevailing wage requirements. The direct costs
applied in this analysis are estimated at $14.38 million, and can be summarized as
follows:
1.A $550,000 allowance for remedial work and demolition costs is provided.
2.The Developer estimated the off-site improvement costs at $319,000. City staff
should verify the scope and cost of the off-site improvements required to serve
the Project.
3.The on-site improvement costs are estimated at $17 per square foot of land
area, or $1.63 million.
4.The residential shell costs are estimated at $115 per square foot of residential
GBA, or $9.34 million.
5.A $76,000 allowance for furnishings, fixtures and equipment is provided.
6.A 14% allowance for contractor fees and general requirements is provided.
7.An allowance for construction bonds / general liability insurance at 2% of
construction costs is provided.
8.A direct cost contingency allowance equal to 5% of other direct costs is provided.
Indirect Costs
KMA estimated the indirect costs at approximately $6.5 million, based on the following
assumptions:
1.The architecture, engineering and consulting costs are estimated at 10% of direct
costs.
2.The Developer estimated the public permits and fees costs at $2.2 million, or
$31,900 per unit. City staff should verify the accuracy of this estimate.
1604007:SA;TRB
19090.014.001
Natalie Verlinich, City of Santa AnaApril 15, 2016
First Street Apartments: Financial Gap Analysis Page 6
3.The taxes, insurance, legal and accounting costs are estimated at 3% of direct
costs.
4.A $1,700 per unit allowance for marketing and leasing costs is provided.
5.The Developer Fee is set at $2.0 million, whichis the maximum amount allowed
for the Project by TCAC.
6.An indirect cost contingency allowance equal to 5% of other indirect costs is
provided.
Financing Costs
KMA estimated the Project’s financing costs at $2.17 million. The financing cost
assumptions are as follows:
1.The Developer purchased the property in part with a $3.74 million loan from the
Low Income Investment Fund (LIIF). The estimated loan term is 30 months, and
the loan carries a 4.70% interest rate. The interest costs are estimated at
$440,000.
2.The Developer provided a $1.15 million loan to the Project to fund acquisition
and predevelopment expenses. The estimated loan term is 30 months at a
stated interest rate of 10%. However, KMA contends that the interest rate on a
loan provided by a party related to the Project should be in line with the interest
charged on similar loans. In this case, the Developer obtained a predevelopment
loan with an interest rate of 5.25%. KMA applied this same interest rate to the
Developer’s $1.15 million acquisition and predevelopment loan. The interest
costs are estimated at $151,000.
3.The Developer obtained a $2.21 million predevelopment loan with a 30-month
loan term and a 5.25% interest rate. The interest costs are estimated at
$290,000.
4.The interest costs on the approximately $17 million construction loan are
estimated at $446,000. These costs are based on the following assumptions:
1604007:SA;TRB
19090.014.001
Natalie Verlinich, City of Santa AnaApril 15, 2016
First Street Apartments: Financial Gap Analysis Page 7
a.The interest costs incurred during the construction period are estimated
based on a 2.5% interest rate, a 16-month construction period, and a 60%
average outstanding loan balance.
b.The absorption period interest costs are based on a three-month
absorption period and a 100% average outstanding loan balance.
5.The financing fees are estimated at $547,000, and are based on 1.0 pointfor the
LIIF acquisition loan, and 2.0 points for the construction and permanent loans.
6.A $221,000 capitalized operating reserve account is provided. This equates to
approximately three months of operating expenses and debt service payments
on the permanent loans supported by the Project’s base income and PBV
income.
7.The Tax Credit fees are estimated at $71,000 based on the following:
a.A $2,000 application fee;
b.A $410 per unit monitoring fee; and
c.Four percent (4%) of gross Tax Credit proceeds for one year.
Total Development Costs
As shown in Table 1, the total development costs at $28.51 million, which equates to
approximately $413,100 per unit.
Stabilized Net Operating Income (Table 2)
The Project’s funding sources include City HOO in-lieu fees, Tax Credits, and PBVs. The
Project’s income and affordability standards must comport with the most stringent of
the following standards:
1.Income Restrictions: The tenants’ household incomes cannot exceed the
strictest of:
1604007:SA;TRB
19090.014.001
Natalie Verlinich, City of Santa AnaApril 15, 2016
First Street Apartments: Financial Gap Analysis Page 8
a.H&SC Section 50105 for very-low income households, 50079.5 for low
income households andSection 50093 for moderate income households;
and
b.Federal Low Income Housing Tax Credits income restrictions defined
under United States Code, Title 26, Section 142(d)(2)(B).
2.Affordability Restrictions: Rents applied to all of the units must reflect the most
stringent of:
a.H&SC very-low, low and moderate income rents based on the calculation
methodology defined in Section 50053;and
b.Tax Credit rents published annually by TCAC.
Achievable Rent Income
The rents used in this analysis are based on 2016 information published by TCAC, and
3
2015 information published by HCD. The maximum allowable rents, net of the
4
appropriate utility allowances, are estimated as follows:
H&SC TCAC Applicable
RentsRentsRents
Rent Restriction
Two-Bedroom Units
VL Inc H&SC / TC @ 30% TC Median $902 $579$579
VL Inc H&SC / TC @ 35% TC Median $902 $689$689
VL Inc H&SC / TC @ 40% TC Median$902$799$799
VL Inc H&SC / TC @ 45% TC Median $902 $908$902
Low Inc H&SC / TC @ 50% TC Median $1,099 $1,018$1,018
Mod Inc H&SC / TC @ 60% TC Median$2,080$1,238$1,238
3 As of April 15, 2016, HCD has not yet published the 2016 household income information required to
calculate the affordable rents under H&SC Section 50053.
4 The monthly utility allowances are estimated at: $79 for two-bedroom units; $115 for three-bedroom
units; and $128 for four-bedroom units.
1604007:SA;TRB
19090.014.001
Natalie Verlinich, City of Santa AnaApril 15, 2016
First Street Apartments: Financial Gap Analysis Page 9
H&SC TCAC Applicable
RentsRentsRents
Rent Restriction
Three-Bedroom Units
VL Inc H&SC / TC @ 30% TC Median $975 $645$645
VL Inc H&SC / TC @ 35% TC Median $975 $772$772
Mod Inc H&SC / TC @ 60% TC Median $2,283 $1,406$1,406
H&SC TCAC Applicable
RentsRentsRents
Rent Restriction
Four-Bedroom Units
VL Inc H&SC / TC @ 30% TC Median $1,050 $720$720
Mod Inc H&SC / TC @ 60% TC Median $2,463 $1,568$1,568
The Developer is proposing that the Housing Authority provide eight PBVs to the
Project. The PBV payments are equal to the difference between the tenants’ rent
payments and the fair market rents (FMRs) approved by the Housing Authority. The
2016 FMRs for the Project are as follows:
Two-Bedroom Units$1,543
Three-Bedroom Units $2,160
The PBVs are proposed to be applied as follows:
1.Three 2-bedroom units at 30% of the TC Median;
2.Three3-bedroom units at 30% of the TC Median;
3.One 2-bedroom unit at 35% of the TC Median; and
4.One 3-bedroom unit at 35% of the TC Median.
The PBV assistance is estimated at $106,900 per year.
1604007:SA;TRB
19090.014.001
Natalie Verlinich, City of Santa AnaApril 15, 2016
First Street Apartments: Financial Gap Analysis Page 10
Estimated Effective Gross Income
KMA estimates the Project’s effective gross income at approximately $962,100 based on
the following assumptions:
1.The base rental income is estimated at $898,300.
2.The PBV income is estimated at $106,900.
3.Laundry and miscellaneous income is estimated to average $9 per unit per
month for a total of $7,500 per year.
4.A vacancy and collection allowance equal to 5% of gross income is provided. This
equates to $50,600.
Estimated Operating Expenses
The residential operating expenses are estimated at $371,700 based on the following
assumptions:
1.The general operating expenses are estimated at $4,790 per unit per year.
2.KMA assumes the Developer will apply for the property tax abatement that is
accorded to non-profit housing organizations that own and operate apartment
units that are restricted to households earning less than 80% of the Median. The
Developer estimates that the Project will incur $2,500 per year in property tax
assessment override costs.
3.The Developer is proposing to provide social services at an estimated cost of
$18,000 per year.
4.Annual deposits to a capital replacement reserve account are estimated at $300
per unit per year. This exceeds the minimum amount required by TCAC.
Stabilized Net Operating Income
The Project’s effective gross income is estimated at $962,100, and the operating
expenses are estimated at $371,700. This results in an estimated stabilized net
operating incomeof $590,400.
1604007:SA;TRB
19090.014.001
Natalie Verlinich, City of Santa AnaApril 15, 2016
First Street Apartments: Financial Gap Analysis Page 11
Financial Gap Calculation (Table 3)
Available Funding Sources
The outside funding sources anticipated to be received by the Project are estimated at
$19.71 million. These funding sources can be described as follows:
Permanent Loan – Base Net Operating Income
To estimate the maximum permanent loan that can be supported by the Project’s base
income, KMA assumed that the loan would be underwritten at a 115% debt service
coverage ratio, a 5.0% interest rate, and a 35-year amortization period. Based on these
assumptions, KMA estimates that the $488,800 in Base Net Operating Income can
support a $7.02 million permanent loan.
Permanent Loan – PBV Subsidy
To estimate the maximum permanent loan that can be supported by the eight PBVs,
KMA assumed that the loan would be underwritten at a 115% debt service coverage
ratio, a 5.0% interest rate, and a 35-year amortization period. Based on these
assumptions, KMA estimates that the $101,600 in PBV income can support a $1.46
million permanent loan.
Tax Credit Proceeds
Tax Credit Basis
It can be assumed that the Project’s eligible Tax Credit basis is equal to the lesser of the
depreciable costs for the 69Tax Credit units, or the basis limits established by TCAC.
KMA calculated the eligible Tax Credit basis as follows:
1.The Project’s depreciable costs are estimated at $20.39 million, and the
threshold basis limits applied by TCAC equal $17.67 million.
2.The threshold basis limit is less than the depreciable costs. As such, the Project’s
eligible basis is set at $17.67 million.
1604007:SA;TRB
19090.014.001
Natalie Verlinich, City of Santa AnaApril 15, 2016
First Street Apartments: Financial Gap Analysis Page 12
3.The Developer targeted a 46% tiebreaker score for the competitive TCAC
application process. To obtain this tiebreaker score it is necessary to reduce the
Project’s requested eligible Tax Credit basis to $8.65 million.
Tax Credit Proceeds
KMA estimates the net Tax Credit proceeds at $11.23 million based on the following
assumptions:
1.KMA calculated the gross Tax Credit amount for the Project at $10.12 million
based on the following assumptions:
a.The Project is located in a designated “Difficult to Develop” census tract.
This allows the requested eligible Tax Credit basis to be increased by 30%.
b.The current Tax Credit regulations set the annual Tax Credit rate at 9.0%.
This rate is applied over the 10-year Tax Credit period.
c.100% of the Project’s building area is located in units that qualify for Tax
Credits.
2.The net syndication value supported by the Tax Credit is ultimately determined
based on competitive market conditions and on the timing of the disbursements.
Based on currently available information, KMA and the Developer estimated the
proceeds at $1.11 per gross Tax Credit dollar.
Estimated Financial Gap
Based on the assumptions outlined in this analysis, KMA estimates the Project’s financial
gap as follows:
Total Development Costs $28,506,000
(Less) Total Available Outside Funding Sources(19,711,000)
Financial Gap $8,795,000
Per Unit$127,500
1604007:SA;TRB
19090.014.001
Natalie Verlinich, City of Santa AnaApril 15, 2016
First Street Apartments: Financial Gap Analysis Page 13
The Developer is requesting $8.9million in financial assistance from the City, which is
$105,000 higher than the financial gap identified in the KMA financial analysis. This less
than 2% differential can be considered inconsequential. As such, KMA concludes that
the Developer’s request for $8.9 million in financial assistance is warranted by the
Project economics.
ADDITIONAL FINANCIAL CONSIDERATIONS
Tax Credit Consideration
Approximately 40% of the Project’s funding is anticipated to be derived from the receipt
of competitively awarded 9% Tax Credits. While the Project is structured to achieve the
maximum available points in the competitive process, the Tax Credit Program is
consistently oversubscribed. As a result, TCAC created an allocation process that
distributes Tax Credits on a geographical basis, and applies a tie-breaker formula in each
region. The tie-breaker calculation is weighted heavily towards the amount of outside
financial assistance as a function of the project’s development costs.
The Orange County region receives funding for one or two projects in each Tax Credit
allocation round. Historically, there have not been sufficient Tax Credit dollars to fund
all the projects submitted, and thus the tie-breaker formula comes into play. As
currently structured, the Project generates a tie-breaker score of 46%. This score falls
within the range of the tie-breaker scores that have receivedTax Credit awardsin the
Orange County region during recent Tax Credit allocation rounds. However, the tie-
breaker scores have been volatile in Orange County, so it uncertain what tie-breaker
score will win in any Tax Credit allocation round.
Developer Fee
Under TCAC regulations, the proposed Project qualifies for a Developer Fee of up to $2.0
million. However, it is important to note that only $1.4 million of the Developer Fee can
be included in the Project’s eligible Tax Credit basis. In some cases, it would be
financially prudent to require the Developer to defer payment of $600,000 of the
Developer Fee, and to recoup those funds from the cash flow generated by the Project
over time. To test this concept, KMA prepared pro forma analyses for the Project with
and without the requirement that $600,000 of the Developer Fee be deferred. The
results of this comparative analysis indicate that given tiebreaker considerations
1604007:SA;TRB
19090.014.001
Natalie Verlinich, City of Santa AnaApril 15, 2016
First Street Apartments: Financial Gap Analysis Page 14
associated with the competitively awarded 9% Tax Credits, the financial gap is
approximately equal under both scenarios. As such, it is KMA’s recommendation that
no Developer Fee deferral be required.
CONCLUSION
Based on the results of the preceding analysis, the Developer’s request for $8.9 million
in direct financial assistance from the City is warranted by the Project economics.
1604007:SA;TRB
19090.014.001
TABLE 1
ESTIMATED DEVELOPMENT COSTS
FIRST STREET APARTMENTS
SANTA ANA, CALIFORNIA
I.Property Assemblage Costs
1
Property Acquisition Costs93,654Sf Land$48/Sf Land$4,500,000
2
Relocation Costs942,000
3
Closing Costs0.6%Purchase Price25,000
Total Property Assemblage Costs$5,467,000
4
II.Direct Costs
3
Remedial Work / Demolition$550,000
Off-site Improvements319,000
On-site Improvements93,654Sf Land$17/Sf Land1,628,000
Residential Shell Costs81,218Sf GBA$115/Sf GBA 9,340,000
Furnishings, Fixtures & Equipment 76,000
Contractor Fees / General Rqts14%Construction Costs 1,580,000
Construction Bonds2%Construction Costs 226,000
Contingency Allowance5%Other Direct Costs 658,000
Total Direct Costs81,218Sf GBA$177/Sf GBA$14,377,000
III.Indirect Costs
Architecture, Engineering & Consulting10%Direct Costs$1,438,000
5
Public Permits & Fees69Units$31,900/Unit2,201,000
Taxes, Insurance, Legal & Accounting3%Direct Costs431,000
Marketing & Leasing69Units$1,700/Unit117,000
6
Developer Fee11%Eligible Basis2,000,000
Contingency Allowance5%Other Indirect Costs309,000
Total Indirect Costs$6,496,000
IV.Financing Costs
Interest During Construction
Acquisition Loan #1$3,743,000Loan Amount4.70%Interest$440,000
Acquisition Loan #2$1,151,000Loan Amount5.25%Interest151,000
7
Predevelopment Loan$2,209,000Loan Amount5.25%Interest290,000
8
Construction Loan$16,992,000Loan Amount2.50%Interest446,000
Financing Fees
Acquisition Loan #1$3,743,000Loan Amount1.00Points37,000
Construction Loan$16,992,000Loan Amount2.00Points340,000
Permanent Loan$8,477,000Loan Amount2.00Points170,000
Operating Reserve3Months Operating Exp / Debt Svc221,000
9
TCAC Fees71,000
Total Financing Costs$2,166,000
V.Total Development Costs69Units$413,100/Unit$28,506,000
1 Based on Developer estimate and supported by an appraisal prepared by Lidgard and Associates, Inc. on January 20, 2015.
2 Based on Developer estimate. Overland, Pacific & Culter, Inc. prepared a relocation plan on December 18, 2015, and estimated the relocation
expenses at $865,000. The $77,000 in additional costs are assumed to be the estimated costs to implement the relocation plan.
3 Based on Developer estimate.
4 Estimates assume prevailing wage requirements will not be imposed on the Project.
5 Based on Developer estimate. The estimate should be verified by City staff.
6 This represents the maximum amount allowed by TCAC to be included in the Project's total development costs.
7 The Developer provided an acquisition loan to the Project with a 10% interest rate. KMA contends that the maximum interest rate that should be
charged on this loan is 5.25% which is equal the interest rate on the predevelopment loan.
8 Includes debt on the 80% of the Tax Credit Equity that will not be funded during construction. Assumes a 16-month construction period with a 60%
average outstanding balance and a 3-month absorption period with a 100% average outstanding balance.
9 Includes a $2,000 application fee; $410/unit monitoring fee; and 4% of the gross Tax Credit proceeds for one year.
Prepared by: Keyser Marston Associates, Inc.
File name: AMCAL_4 15 16; PF_9% ; trb
TABLE 2
STABILIZED NET OPERATING INCOME
FIRST STREET APARTMENTS
SANTA ANA, CALIFORNIA
1
I.Income
Manager's Unit1Unit$0/Unit/Month$0
2-Bedroom Units @ (782-Sf)
VL Inc H&SC/TC @ 30% TC Median3Units$579/Unit/Month20,800
VL Inc H&SC/TC @ 35% TC Median6Units$689/Unit/Month49,600
VL Inc H&SC/TC @ 40% TC Median7Units$799/Unit/Month67,100
VL Inc H&SC/TC @ 45% TC Median7Units$902/Unit/Month75,800
Low Inc H&SC/TC @ 50% TC Median7Units$1,018/Unit/Month85,500
Mod Inc H&SC/TC @ 60% TC Median4Units$1,238/Unit/Month59,400
3-Bedroom Units @ (1,031-Sf)
VL Inc H&SC/TC @ 30% TC Median3Units$645/Unit/Month23,200
VL Inc H&SC/TC @ 35% TC Median1Unit$772/Unit/Month9,300
Mod Inc H&SC/TC @ 60% TC Median24Units$1,406/Unit/Month404,900
4-Bedroom Units @ (1,219-Sf)
VL Inc H&SC/TC @ 30% TC Median1Unit$720/Unit/Month8,600
Mod Inc H&SC/TC @ 60% TC Median5Units$1,568/Unit/Month94,100
PBV Subsidy
2
VL Inc H&SC/TC @ 30% TC Median
2-Bedroom Units @ (782-Sf)3Units$885/Unit/Month31,900
3-Bedroom Units @ (1,031-Sf)3Units$1,400/Unit/Month50,400
VL Inc H&SC/TC @ 35% TC Median
2-Bedroom Units @ (782-Sf)1Unit$775/Unit/Month9,300
3-Bedroom Units @ (1,031-Sf)1Unit$1,273/Unit/Month15,300
Laundry/Miscellaneous Income69Units$9/Unit/Month7,500
Gross Income$1,012,700
(Less) Vacancy & Collection Allowance5%Gross Base Income(50,600)
Effective Gross Income$962,100
II.Operating Expenses
General Operating Expenses69Units$4,790/Unit$330,500
3
Property Taxes69Units$36/Unit2,500
Services69Units$261/Unit18,000
Replacement Reserve69Units$300/Unit20,700
Total Operating Expenses69Units$5,400/Unit$371,700
III.Stabilized Net Operating Income$590,400
1 As pertinent, rents are based on the 2016 rents published by TCAC, and the rents calculated under H&SC Section 50053. The H&SC Section 50053
rents are calculated based on 2015 income information published by HCD. Utility Allowances per the Developer: $79 for 2-Bdrm units; $115 for 3-
Bdrm units; and $128 for 4-Bdrm units.
2 The Section 8 subsidy is equal to the difference between the Fair Market Rent (FMR) established by HUD and the rent paid by the tenant.
Based on Developer estimate. Assumes that the Developer will receive the property tax abatement accorded to non-profit housing organizations
3
that own and operate apartment units that are restricted to households earning less than 80% of the County median income.
Prepared by: Keyser Marston Associates, Inc.
File name: AMCAL_4 15 16; PF_9% ; trb
TABLE 3
FINANCIAL GAP CALCULATION
FIRST STREET APARTMENTS
SANTA ANA, CALIFORNIA
I.Available Funding Sources
Permanent Loan - Base Income
1
Net Operating Income$488,845NOI (See Table 2)
Income Available for Mortgage1.15DCR$425,100Debt Service
Interest Rate5.00%Interest Rate6.06%Mortgage Constant
Permanent Loan - Base Income$7,019,000
Permanent Loan - PBV Subsidy
2
Net Operating Income$101,555EGI
Income Available for Mortgage1.15DCR$88,309Debt Service
Interest Rate5.00%Interest Rate6.06%Mortgage Constant
Permanent Loan - PBV Subsidy$1,458,000
3
Tax Credit Equity
Gross Tax Credit Value$10,121,000
Syndication Rate$1.11/Tax Credit Dollar
Net Tax Credit Equity$11,234,000
Deferred Developer Fee$0
Total Available Funding Sources$19,711,000
II.Financial Gap Calculation
Total Available Funding Sources$19,711,000
(Less) Total Development Costs (28,506,000)
Financial Gap Calculation69Units$127,500/Unit$8,795,000
III.Estimated Tie-Breaker Score46%
Assumes a 35-year amortization term.
1
Assumes a 35-year amortization term.
2
3 Assumes an $8.7 million requested unadjusted eligible basis, which includes a $9,017,000 voluntary basis reduction, a 130% difficult-to-develop
premium, a 9.0% Tax Credit rate and an applicable fraction of 100%.
Prepared by: Keyser Marston Associates, Inc.
File name: AMCAL_4 15 16; PF_9% ; trb