The URL can be used to link to this page

Home My WebLink AboutITEM 3 SUPPLEMENTAL IN LIEU FEE ANALYSIS ITEM 3 1 KEYS ADVISORS X11 N 0 1.1,C AIM REAL 5 µAE D Mie V M if-,,N MEMORANDUM A ISR M."y Read Estate, T w; Jerry Craig, is Devellopmentsin Redevelopment Affordable us City of Tustin Economic Development SAN F""WI, From,. Kathleen Head A.Jerry Keyser TimothyC Fell gate Earle Funk t 2,017 Debbie M.Kern Reed T,,Ka lea David Inclusilonary Housing Irl-Lieu Flee Analysis, LSAES Kathleen .Head James,A.Rabe At youres s Associates, Inc. analysis s i Gregory D.Soo-Hoo Kevin ,E ngstrorn thile City of'Tustin (City) t nisi i -lieu ants included in the Julie L.'Rorney City's, InclusionaryHousing c' Ordinance). The payment, in- SAN Paul C,Marra 111'eu feeis one of threle optionsthe, Citi plians to, offer for,fulfilling the requirements Ordinance. BACKGROUND STAT T The Draft Ordirlance appliesnew priesidential projectstInclude rl units. The Draft Ordinance priovildes developers with the,followingis, for fulfilling t inclusionary, housing requirements": 1. The provision of the inclusionarylinetih s to residential project, or 2. The provislon of the inch isIoff-sitelocation; or 3. Thepayment of anin-fieu fee., The KMA analysis is focuseld on the indleu fee option off the Draft Ordinance. ' es,timate,thelsupported under current market financial condi iii rl . priepared pro forma analyses of prototype apartment and ownership residential M t . 500 SOUTH GRAND AVENUE,,SUIT1480 S ANGELES,,CALIFORNIA I; 1 e PHONE 2,13,622.8095 170,502-,w US,:.K H WWWKEYSERMARST04COM 198,30.007.001 Jerry Craig, City of Tustin May 22, 2017 Inclusionary Housing In-Lieu Fee Analysis Page The Cityhas not yetdeterminedthe affordability requirment that will be included in the Draft Ordinance. For the purposes of this analysis, KMA has been instructed to assume that developers will be allowed to choose one of the following options: 1. A 15% requirement that is allocated to 6%very-low income plus 4.5% low income plus 4.5% moderate income units; or . A 12.5% requirement that is allocated to 7.5%very-low income plus 5% moderate income units. The scenarios that KMA evaluated can be described as follows: 1. Apartment Development: a. KMA prepared pro forma analyses for market rate apartment projects that provide the following mixes of affordable units: i. 6%very lover income plus 4.5% low income plus 4.5% moderate income units. N. 7.5%very low income plus 5 moderate income units. b. To illustrate the impact created by the use of outside leveraging sources, KMA prepared an analysis of 100% affordable project that is financed with Tax-Exempt Multifamily Bonds (Bonds) allocated by the California Debt Limit Allocation Committee (CDLAC) coupled with the automatically awarded % Low Income Housing Tax Credits (TaxCredits). . KMA prepared pro forma analyses for ownership housing projects that include the following affordable housing components: a. 6%very low income plus 4.5% low income pias 4.5% moderate income u n its. b. 7.5%very low income plus 5% moderate income units. B. To provide additional context, KMA prepared a summary of in-lieu fees currently being charged by a sample of Southern California jurisdictions. 17050 0.TUS:KHH 19830.007.001 Jerry Craig, City of Tustin May 22, 2017 Inclusionary Housing 1n-Lieu Fee Analysis Page B , The conceptual development scopes used in the pro forma analyses are based on project types-currently being developed in Tustin. However, actual development within Tustin will vary from these assumptions on a project-by-project basis. Moreover,the timing of development will influence the projects' costs and revenues. To reflect this, the in-lieu fee recon mend ations are based on a conservative set of assumptions. The pro forma analyses are presented in the following Appendices and Exhibits which follow this memorandum: Appendix A: Apartment Development Prototypes Exhibit 1 tool Market Bate Scenario Exhibit II Unleveraged: 4.5% Moderate, 4.5% Low Very-Lover Income Units Exhibit III Unleveraged: % Moderate &7.5%Very-Low Income Unit Exhibit IV Tax-Exempt Multifamily Bonds/4%Tax Credits Appendix B: Apartment Data . Exhibit i Apartment Rent Information Exhibit II Affordable Rent Calculations Appendix : Ownership Housing Prototypes Exhibit 1 l00% Market fate Scenario Exhibit 11 4.5% Moderate, 4.5% Low and Very-L w lncome Units Exhibit Ili % Moderate and 7.5%Very-Low Income Units Appendix : ownership Housing Data Exhibit 1 Home Sales Information Exhibit lI Affordable Sales Price Information EXECUTIVE SUMMARY The following IFMA analysis evaluates the supportable ire-lieu fees under the two affordable housing requirement options currently being considered by the City. Under the assumption that developers will be allowed to choose between the options, it is appropriate to base the in-lieu fee amount on the scenario that generates the smaller 17050 0.TUS: H H 19830.007.001 Jerry Craig, City of Tustin May 2 , 2017 Inclusionary Housing In-Lieu Fee Analysis Page 4 affordability gasp. Based on the results of the KMA analysis,the smaller gap is associated with the % moderate and 7.5%very-low income scenario. Using that scenario as the- measurement tool,the supportable*in-lieu fees are as follows: Apartment Ownership Allocation Methodology Development Housing Per market rate unit in a proposed $21,400 $85,1700 project Per square foot of GBA in a proposed $21 $ project Factors the City should consider in creating an in-lieu fee structure are: 1. An lieu fee that is charged per unit can be have a disproportionate impact on projects with small units. An in-lieu fee based on unit sizes corresponds more closely to the affordability gap associated with a project. . The in-lieu fee amounts identified in the table above represent the maximum supportable amounts under current conditions. At the City's discretion,the in- lieu fees can be set at lower amounts. The key issues that should be considered are: a. If the City wishes to encourage on-site affordable housing production,the in-lieu fee should be based on the product type's affordability gap. b. The City may Irish to use in-lieu fees revenue to provide assistance to affordable housing projects that can obtain assistance from outside sources. The KIV]A analysis indicates that, at a minimum,the ire-lieu fee should be set at$17,600 per unit or$17 per square foot of GBA. METHODOLOGY The first step in establishing an in-lieu fee is to quantify the financial impact associated with fulfilling the affordable housing requirements within market rate projects. That financial impact is estimated using the following methodology: 17050 O.TUS: HH 19830.007.001 Jerry Craig, City of Tustin May 22, 2017 Inclusionary Housing In-Lieu Fee Analysis Page 1. A pro forma analysis is prepared for a project where all the units are rented or sold at unrestricted market rate prices (Base Case): a. For apartment projects,the Base Case pre forma analysis provides an esti rnate of the return on total inve tment generated by the rnarl et rate scenario. b. For ownership housing project,the Base Case pro forma analysis provides an estimate of the developer profit generated by the market rate scenario. . Lying the scope of development and return on total investment/profit from the Base Case, pro forma analyses are thea prepared for scenarios that include the inclusionary housing requirements proposed by the Draft Ordinance. The two alternative standards that are currently being considered are: a. 4.5% moderate, 4.5% lover and %very-lover income units; and b. 5% moderate and 7.5%very-low income units. B. The estimated financial gap derived from these analyses is known n as the affordability gap. . The affordability gap is translated into a fee that will be paid in lieu of providing any incl#usionary units. The total-lieu fee amount is translated into a fee charged per unit in a proposed market rate project, or a fee per square foot of building area in a proposed market rate project. IN-LIEU FEE ANALYSIS -APARTMENT T DE EL PME T Basic Assumptions The conceptual pro forma analyses for the apartment development scenarios are based on the Ivey assumptions identified in the following sections of this memorandum. Project Scope The development scope applied to the apartment development scenarios is based on the following assumptions: 170 o o.YU :KHH 19830.007.001 Jerry Craig, City of Tustin May , 2017 Inclusionary Housing In-Lieu Fee Analysis Page 6 1. The development site is set at 3.2 acres. . The project density is set at 50 units per acre, which yields 160 units. 3. Parking: a. Two spaces per unit are provided in an above-ground garage; and b. Surface parking spaces are used to fulfill the guest parking requirement. One guest space is provided for every four units. . The unit mixes and unit sizes are based on the results of a KMA rent survey. The survey is presented in Appendix B—Exhibit f, and summarized in the following table: Number of Unit Size Units (Square Feet) . Studios 16 530 One Bedroom 56 760 Two Bedrooms 56 1,030 V Three Bedrooms 32 11310 Total/Weighted Average 160 811 Estimated Development Costs The construction cost estimates applied in this analysis are based on the assumption that prevailing enrage requirements will not be imposed on the project. The key assumptions applied in the development cost estimates are as follows: Property Acquisition Costs The property acquisition costs are estimated at$30 per-square foot of land area. The total cost is estimated at$4.2 million. . Direct Costs 1. The sitework costs are estimated at$15 per square foot of land area. 17050 0.TU .KHH 19830.007.001 Jerry Craig, City of Tustin May 2 21 2017 Inclusionary Housing In-Lieu Fee Analysis Page 7 . Parking costs are estimated at$5,000 per space for surface parking spaces and $15,000 per space for above-ground spaces. . Direct building costs are estimated at$1.1.5 persquare foot of gross building area (GBA). . A 1.7 allowance is provided for contractors costs, builder's risk insurance and direct cost contingencies. Indirect Costs 1. The architecture, engineering and consulting; and takes, insurance, legal and accounting costs are estimated based on industry standard percentages of direct costs. . The public permits and fees costs are set at$25,000 per unit. . A$2,500 per unit allowance is provided for marketing and basing costs. . The Developer Fee is set at the following amounts: a. In the Unleveraged Scenarios the Developer Fee is set at 5 of total construction costs. b. The Tac Credit program allows the Developer Fee to equal 15%of eligible costs, with no cap on the total dollar amount. 5. A soft dost contingency allowance equal to 5%of other indirect costs is provided. Financing Costs 1. Construction period interest: a. The interest rate on the construction loan is set at 5.5%for the conventional financing and 4%for the Bonds/4%Tax Credit Scenarios. b. The construction period is set at 21 months. . The loan origination fees are estimated as follows: 17050 0.TU :KHH 19330.007.001 Jerry Craig, city of Tustin May 22, 2017 Inclusionary Housing In-Lieu Fee Analysis Page a. The fees for the conventional financing scenarios are set at '.0 points for the construction loan and 2.0 points for the permanent financing loan. b. The fees for the Beads Tax Credit Scenarios are set a 2.5 points for the Series A Bonds, and 4.0 points for the Series B Bands. 3. Additional costs related to the Bonds/4%Tax Credit Scenarios are as follows: a. In accordance with the Tait Credit regulations, a three month reserve for operating expenses and debt service is provided. b. Tax Credit fees include a $2,000 application fee and a $410 per unit monitoring fee. In addition a fee equal to 1 f the gross Tax Credit proceeds for one year is applied. Stabilized Net Operating income Bent Revenue Market Rate Rents 1 l lA compiled information on the rents being achieved by apartment projects located in Tustin. The rent survey is presented in Appendix B—Exhibit I. The market rent estimates used in this analysis include a 15% premium to reflect the increased marketability of newly constructed units. The resulting rent estimates are: Studios $2..049 One-Bedroom Units $2,614 Two-Bedroom m Units $2,665 Three-Bedroom Units $3,116 H&SC Section 50053 3 Rents Linder the terms of the Graft Ordinance,the affordable rents are calculated based on the standards imposed by California Health and Safety Code H& Section 50056. 1 . 'The household incomes used in the calculations are published annually by the California Mousing and Community Development D partment(AICD). 17050 0.Tu :KHH 19830.007.001 Jerry Craig, City of Tustin May 22, 2017 Inclusionary Housing In-Lieu Fee Analysis Page 9 The rent calculations, and the deductions required for monthly utility allowances, are presented ire Appendix B— Exhibit 11, and summari ed in the fo I lowingtable. Moderate Very-Lover Income Lover Income Income Studios $1,643 $880 $727 One Bedroom r $1,866 $994 $820 Two Bedrooms $2,898 $1,117 $920 Three Bedrooms $2,302 $1.1212 $994 Bondsl4% Tax Credit Scenario Rents In this scenario,the rents are set at the more stringent of the standards set by the Draft Ordinance, and the Tax Credit rents published by T A . The rent calculations are presented in Appendix B---Exhibit 11, and summarized in the following tables: H&SC Moderate Tac Credit at Income 6 AM 12 Applicable Rent Studios $1,643 $x.,060 $1,060 One Bedroom $1,866 $x.,122 $1,122 Two Bedrooms $2,098 $1,347 $1,1347 Three Bedrooms $2,302 $1.,531 $1,531 H&SC Very-Low Tac Credit at Income 60%AM Applicable Fent Studios $727 $877 $727 One Bedroom $820 $926 $820 Two Bedrooms $920 $1,112 $920 Three Bedrooms $994 $1,260 $994 AMI=Area Median Income. 1705 0-TUS: HH 19830.007.001 Jerry Craig, City of Tustin May 22, 2017 Inclusionary Housing Ire-Lieu Fee Analysis Page 10 As can be seen in the pre eding table , the Tax Credit rents at 0 f AMI are lover than the H&SC 50053 moderate income rents. Comparatively, the H&SC 50053 very-loin income rents are ]owe r than the Tax Credit rents at 50% of AM 1. Vacancy All wain a and Operating Expenses 1. A % allowance is provided for vacancy and collection costs. . The general Operating expenses are estimated at$3,500 per unit per year. i B. The property tax expenses are estimated as follows: a. For the Unleveraged Scenarios,the property tax expense is based on the property's value estimated using a capitalization rate, and a 1.1% property to rate. b. For the Bonds %Tax Credit Scenarios it is assumed that the development team would include a member that is entitled to receive the property tax abatement accorded-to non-profit organizations that own and operate apartment projects restricted to lover income households. . Deposits ta reserve for capital repairs are set at$150 per unit per year for the Unleveraged Scenarios and $250 per unit per year for the Bonds/4%Tait Credit Scenario. Outside Leveraging Assumptions The Bonds/4%Tax Credit Scenario is predicated On the assumption that outside funding sources are available to fill a portion of the financial gap associated with in orne- restri ted units. The funding assumptions associated with this scenario are: 10 1. The supportable permanent debt is estimated based on a 125% debt service coverage ratio ars the stabilized net operating income. The interest rate is set at T . . All of the units in the Bonds/4%Tax Credit Scenario qualify for the receipt of Tac Credits. The yield on the gross Tax Credit amount is set at$38 per Tax Credit dollar. 17050o.TUS:KHH 19830.007.001 t Jerry Craig, City of Tustin May , 2017 Inclusionary Dousing In-Lieu Fee Analysis Page 11 . TCAC allows the developer to include a Developer Fee of up to 15 f eligible development costs in the project's budget. The KIVIA analysis assumes that the developer will defer Developer Fee proceeds in excess of$2.5 milli n. The deferred amount becmesa fundingsource tthe project. Supportable In-Lieu Fees: Apartment Development %Market Rate Scenario The conceptual pro forma analysis for the 100% Market Rate Scenario is presented in AppendixA—Exhibit 1, as is organized asfollows: Table 1: Estimated Development Costs Table : Estimated Stabilized Net Operating Income Table : Projected Return on Total Investment The results of this analysis are summarized in the following table: Stabilized let Operating Income $3.,363..000 Total Development Cost $49,750,000 keturn n Total Investment 6.8% The 6.8%return on total investment is applied as the threshold return in the prototypes that include affordable lousing units. In this way it is possible to measure the financial impact created by the imposition of income and affordability covenants. Affordable Housing Scenarios The conceptual pro forma analyses for the three apartment development scenarios that include affordable housing units are organized asfollows: Historically,the Tac Credit program capped the allowable Developer Fee at$2.5 million. The cap has since been removed,but a deferral requirement has been imposed her T A . 4 17050 0.TUS-. H H 19830.007.001 Jerry Craig, city of Tustin May 2 2, 2017 Inclusionary Housing Ire-Lieu Fee Analysis Page 1 Table 1: Estimated Development Costs Table : Estimated Stabilized Net Operating Income Table B: Estimated f=inancial Gap Unleveraged Scenario 1: 4.5% Moderate 4.5% Lour Very-Low Income Units The results of the scenario that includes the identified mix of moderate, low and very- low income units are presented in the following table: Stabilized Net Operating Income $3,069,000 Threshold Return on Total Investment 6.8% Total Funds Available for Development Costs $45,401,000 Total Development cost $49,750,000 Estimated Financial Gap $4.3491000 Per affordable unit that would be required in $181,200 a proposed project Per market rate unit in a proposed project $27,200 Per square foot of CBA in a proposed project $27 Unleveraged Scenario #2: % Moderate and 7.5%Very-Lo IncomeU�, The second affordable housing allocation beim considered by the City increases the percentages of moderate and very-low income units, and eliminates the requirement to provide the low income units. The results of the conceptual pro forma analysis for this scenario are summarized in the following table: a. oso o.Tu :KHH 19830-007-001 Jerry Craig, City of Tustin May 22, 2017 Inclusionary Housing 1n-Lieu Fee Analysis Page 13 Stabilized Net Operating rating Income $3,132.,000 Threshold return on Total Investment 6.8% Total Funds Available for Development Costs $4613331000 Total Development Cost $49,750,000 Estimated Financial Gap $3.,417.,000 Per affordable unit that would be required In $170.0900 proposed project Per market rate unit in a proposed project $21,400 Per square foot of GBA in a proposed project $21 Bonds Tax Credit Scenario The conceptual pro forma analysis for the Bonds Tac Credit Scenario is'based on the ` assumption that 100%of the units are subject to income and affordability restrictions. For this analysis, KMA maintained the ratio of the 5% moderate and 7.5%very-low income units in our allocation of the units in the Bonds/4%Tax Credit scenario. This results in o% moderate and 60 very-lour income units. The results of the analysis are presented in the following table: - Y Supportable Tax-Exempt MF Bond $13.1055,000 Net Tax Credit Value 14,163,000 Deferred Developer Fee 31504,000 Total Funds Available for Development Costs $30.,722.,000 Total Development Cost $53,222.0000 Estimated Financial Cap $22,500,000 Per affordable unit that would be required in $140,1600 a proposed project Per market rate unit in a proposed project $17,660 Per square foot of CBA In a proposed project $17 17050o.Tu : HH 1 s o.GO7.001 } Jerry Craig, City of Tustin May 22, 2017 Inclusionary Housing In-Lieu Fee Analysis Page 14 Summary: Ire-Lieu Fee Analysis—Apartment Development Based on the results of the apartment development in-lieu fee analysis, the supportable in-lieu fees are presented in the following table: Supportable In-Lieu Fees Per Affordable Per Total Per Square Scenarios Unit Unit foot ofBA Unleveraged Scenarios: 4.5% Mod, 4.5% Low $181,200 $27.,200 $ Very-Low Income Units Moderate &7.5%Very- $170,P900 $21,400 $21 Low Income Units Bonds/4%Tac Credits $140,100 $17,,600 $17 Based on the assumption that developers will be allowed to choose between the two affordable housing allocation options, it is appropriate to base the in-lieu fee amount on the scenario that generates the smaller affordability gap. Under that assumption., the in-lieu fee should be based on the % moderate and 7.5%very-lour income allocation. This results in a supportable in-lieu fee that can be defined in any of the following ways: Allocation Methodolo In-Lieu Fee Per affordable unit that would be required its a proposed project $170,900 Per market rate unit in a 100% market rate project $21,400 Per square foot of CBA in a 1001 market rate project $21 IN-LIED FEE ANALYSIS— OWNERSHIP HOUSING DEVELOPMENT Basic Assumptions The conceptual pro formai analyses for the ownership housing development scenarios are based on the following basic assumptions. 170 o o.TU :KHH 19830.007.001 { Jerry Craig, City of Tustin May 22, 2017 Inclusionary Housing In-Lieu Fee Analysis Page 15 Project Scope The-development scope applied to the ownership housing scenarios is based on the following assumptions: 1. The development site is set at 10 acres. . The project density is set at 1 units per acre, which results in a 100 unit project. B. It is assumed that a two-car attached garage is provided for each unit. The requirement for one guest parking space for every four units is fulfilled with surface parting spaces. 4; The unit.mixes and unit sizes used in the conceptual pro formai analyses are based on a KMA survey of new home construction in Tustin. The survey is presented in Appendix D Exhibit 1, and summarized in the following table: Number of Unit Size Units (Square Feet) Three Bedrooms 20 11870 Four Bedrooms so 21680 Five Bedrooms 30 3fiOO Total/Weighted Average 100 2,794 Estimated Development Costs As was the case for the apartment development scenarios,the construction cost estimates are based on the assumption that prevailing wage requirements will not be imposed on the project. The major assumptions applied in the development cost estimates are: Property Acquisition Costs The property acquisition costs are estimated at per square foot of land area. The total cost is estimated at$13.1 million. F 170500.TU : H H 19830.007.001 Jerry Craig, City of Tustin May 22, 2017 Inclusionary Housing In-Lieu Fee Analysis Page 1 Direct Costs . The sitework costs are estimated at$25 per square foot of land area. 2. The surface parking costs are estimated at$5,000 per space. B. The direct building costs for the home and the attached garages are estimated at $110 per square foot of GBA. . A 17% allowance is provided for contractors costs, builder's risk insurance and direct cost contingencies. Indirect Costs 1. The architecture, engineering and consulting; and taxes, insurance, legal and accounting costs are estimated based on 'industry standard percentages of direct . costs. r 2. The public permits and fees costs are set at$25,000 per unit. . A$10.,000 per unit allowance is provided for marketing costs. 4. The Developer Fee is set at 3.0%of gross sales revenues. . A soft cost contingency allowance equal to of other indirect costs is provided. Financing Costs I. Construction and absorption period interest costs: a. The interest rate is set at %. b. The total development period is estimated at 40 months. This is comprised of a 21-month construction period and a 19 month absorption period. 2. The construction loan is based on a o% loam to cost-ratio. The loan origination fees are estimated at two points. 170 0 o.TUS:KHH 19830.007.001 Jerry Craig, City of Tustin May 22, 2017 Inclusionary Housing In-Lieu Fee Analysis Page 17 Projected Net Sales Revenue Cross sales Revenues KMA gathered sales information for homes that were constructed in Tustin in 2015 and 2016, and the results are presented in Appendix D—Exhibit I. Based on this information, KMA used the following market rate sales prices in the conceptual pro forma analyses: Three-Bedroom Units $719.0200 Four-B'edro m Units $952,400 Five-Bedroom Units $1,207,000 The Draft Ordinance calls for the affordable sales prices to be set using the H&SC 50052.5 calculation methodology The rent calculations, and the deductions required for monthly utility allowances, are presented in Appendix D—Exhibit IL The resulting affordable sales prices are estimated as follows: Moderate Very-Low Income Low Income Income Three-Bedroom Units $430,500 $2031P000 $125,100 Four-Bedroom gnats $450,800 $205,100 $120,800 Fire-Bedroom Units $481,600 $219,200 $128,600 Cost of soles The net sales revenue is equal to the projected gross sales revenues minus following costs of sale: 1. Sales commissions equal to %of gross sales revenue; . Closing costs equal to %of gross sales revenue; and B. Horne buyer warranties costs at. %of gross sales revenue. 17050 0.TU : HH 19830.007.001 r Jerry ralg, City of Tustin May 22, 2017 Inclusionary Housing In-Lieu Fee Analysis Page 1 Supportable In-Lieu Fees: Ownership Housing Development %Market lute Scenario The conceptual pro forma analysis for the 1 Market Rate Scenario is presented in Appendix C—Exhibit 1, and is organized as follows: Table 1: Estimated Development Costs Table 2: Projected Net Sales Revenue Table : Projected Developer Profit The results of the market rate analysis are summarized in the following'table: Net Sales Revenue $92,813,000 Total Development Cost $80,818,000 Developer Profit $111995.1000 r As a Percentage of Total Development Cost 14.8% The 14.8% developer profit is used as the threshold profit in the analyses of the two affordable housing prototypes. In this war it is possible to measure the financial impact created by the imposition of the identified income and affordability restrictions. Affordable Housing Scenarios The conceptual pro formai analyses for the two ownership housing affordability scenarios are organized as follows: Table 1: Estimated Development Costs Table 2: Projected Net Sales Revenue Table : Estimated Financial Gap Scenario#1: 4.5% Moderate, 4.5% Low & 6%Very-Low Income Units The results of the Scenario ##1 analysis are presented in the following table: 17 5020.TU :KHH 19830.007.001 r Jerry Craig, City of Tustin May 22, 2017 Inclusionary Housing In-Lieu Fee Analysis Page 19 Net Sales Proceeds $82,409,000 (Less) Developer Profit @ 14.8% of Cost (11,941,000) Total Funds Available for Development Costs $70,468,000 Total Development Cost $8%457,000 Estimated Financial Cap' $9,989,000 Per affordable unit that would be required in $665,900 a proposed project Per market rate unit in a proposed project $99,900 Per square foot of CBA in a proposed project $36 Scenario#2: % Moderate and 7.5%Ver r-Low Income Units The results of the Scenario#2 analysis are summarized in the following table: Net Sales Proceeds $83.,916.,000 (Less) Developer Profit @ 14.8%of Cost (11,952,000) Total Funds Available for Development Costs $71,964..000 Total Development Cost $80,530,000 Estimated Financial Cap , , 00 Per affordable unit that would be required its $658.1900 a proposed project Per market rate unit in a proposed project $85,300 Per square foot of CBA in a proposed project $B1 170 O O.TUS:KH l 19830.007.001 Jerry ra ig, City of Tustin May 22, 201 Inclusionary Housing Ire-Lieu Fee Analysis Page 20 Summary: 1n-Lieu Fee Analysis— ownership housing Development Based on the results of the ownership housing in-lieu fee analysis, the supportable in- lieu fees are presented in the following table: Supportable Ire-Lieu Fees { Per Affordable Per Total Per Square Scenarios Unit Unit foot of GBA Moderate, 4.5% Low& 6% $665,900 $99.'900 $36 Very-Low Income Units 5Moderate &7.5%Very- $658.,800 $85,,700 $31 Low Income Unit The 5% moderate and 7.5%very-low income scenario generates the smaller affordability gasp of the two available options. The resulting supportable in-lieu fee would be: Allocation 1111ethodolo 1n-Lieu Fee Per affordable unit that would be required in a proposed project $658,800 Per market rate unit in a proposed project $85,700 Per square foot of GBA in a proposed project $31 IN-LIEU FEE SURVEY For reference purposes, KMA has provided the following summary of the in-lieu fees currently being charged by a sample of California Jurisdictions: Brea An in-lieu fee can only be paid under extenuating circumstances. City Council approval is required. 17050 0.rtu .KHH 19830.007.001 Jerry Craig, City of Tustin IIIA a y 22, 2017 Inclusionary Housing in-Lieu Fee Analysis Page 21 The ire-lieu fee amount is set on a case-bar-case basis. The in-lieu fee amount is equal t the median price for a home in Brea minus the maximum affordable price for a comparable unit-. Calabasas The in-lieu fee is charged per market rate unit in a proposed project. The currently applicable in-lieu fees are: Apartments $17,713 per unit To nhomes and condominiums $44,947 per unit Single-Family Homes $62,500 per unit Chino Hills The in-lieu fee is set at$1.00 per square foot of GBA. Claremont An in-lieu fee can be paid by right for projects with fire or six units. City Council approval is required for projects with seven or more units. The ire-lieu fee is charged per market rate unit in a proposed project. The currently applicable in-lieu fees are: 5 Units $12,400 per unit Units $13,700'per unit 7 + Units $17,400 per unit Del Mar An in-lieu fee must be paid for units in single-family home subdivisions. For all other projects,an in-lieu fee can only be paid for projects with fewer than fire units. The in- lieu fee is set at$23,508 per market-rate unit in a proposed project. 1 050 0.TUS:KHH 19830.007.001 Jerry Craig, City of Tustin May 2 2, 2017 Inclusionary Housing In-Lieu Fee Analysis Page 22 Encinitas The in-lieu fee is calculated on a case-by-case basis. The ire-lieu fee amount is based on the aff rd bility, ap between the projected market rate price of the proposed units and the defined affordable sales prices. Huntington Beach An in-lieu fee can be paid by right f r: r jects with 30 or fewer units, and:for fractional unit requirements. City Council approval is required for projects with more than 30 units. The City produces a schedule that identifies the in-lieu fee amount per market rate unit in ar proposed project. The City also identifies the in-lieu fee amount per affordable unit that would be r quired in aproposed project. This amount is used to calculate the in- lieu fee for a fractional unit requirement. The currently applicable ire-lieu fees are: Units $16,420 per unit . 4 Units $18,480 per unit Units $20,520 per unit 6 Units $22,580 per unit 7 Units $24,640 per unit Units $26,760 per unit Units $28,750 per unit 10 Units $30,790 per unit 11—15 Units- $35,960 per unit 16—20 Units $41,,128 per unit } 21—25 Units, $46,297 per unit 6—30 Units $51,466 per unit 1 05020.Tu :KHH 19830.007.001 Jerry Craig, City of Tustin May 22, 2017 Inclusionary Housing In-Lieu Fee Analysis Page 23 Irvine An in-lieu fee can be paid by right for projects with 50 or fewer unit. Under extenuating circumstances, an in-lieu fee can be paid for larger projects with City Council approval. The in-lieu fee is set at$17,008 per market-rate unit in a proposed project. Newport Beach An in-lieu fee can be paid by right for projects with 50 or fewer units. Projects with more than 50 units carp only pay an in-lieu fee under the terms of ars approved Affordable Housing Implementation Plan (AHIP). The ire-lieu fee is set at$31,076 per market rate unit in a proposed project. Pasadena An ire-lieu fee can be paid by right for any size residential development. In-lieu fee schedules are published for rental and ownership projects in four subareas of the city. The in-lieu fee is charged per square foot of building area in a proposed project. The currently applicable in-lieu fees are: Rental Units Ownership Units 10—49 Units 10—49 Unit Subarea A TBD Subarea A $43.56/sf Subarea B $1.14/sf Subarea B 16.04sf Subarea C $25.21/sf Subarea C $26-36/sf Subarea D $22.92/sf Subarea D $20.63/sf 5B+ Units 5B+ Units r Subarea A TBD Subarea A $60.75/sf Subarea B $1.14/sf Subarea B $21.78/sf Subarea C $34.39/sf Subarea C $36.68/sf Subarea D $3 .10f Subarea D 8.65sf 1705020.TU : HH 19830.007.001 Jerry Craig, City of Tustin May 22, 2017 Inclusionary Housing In-Lieu Fee Analysis Page 24 [rancho Palos Verdes City Council approval is required for the payment of an in-lieu fee. Approval will only be paid Cinder extenuating circumstances. The in-lieu fee amount is set at$201,653 per affordable unit that would be required in a proposed project. San Diego An in-lieu fee can be paid by right for any size residential development. In-lieu fee schedules are published for new development rid condominium conversions. The in- lieu fee is charged per square foot of building area in a proposed project. The currently applicable ire-lieu fees are: New Development Condominium Conversions Units $1.87/sf 2 Units $0.93/sf Units $2.81/sf Units $1.40/sf 4 Units $ 4 Units i $1.87/sf Units $4.68/sf 5 Units $2.34/sf Units $5.62/sf 6 Units $2.81/sf 7 Units $6.55/sf 7 Units $3.27/sf Units $7.49/sf 8 Units $3.74/sf 9 Units $8.42/sf 9 Units $ 1 + Units $9.36/sf 1 + Units $4.68/sf Santa Ana An in-lieu fee can be paid by right for projects with 20 or fewer units. Under extenuating circumstances, an in-lieu fee can be paid for larger projects with City F Council approval. The in-lieu fee is charged per square foot of building area in a proposed project. The currently applicable in-lieu fees are: 170 O 0.TUS:f HH 19830.007.001 Jerry Craig, City of Tustin May 22, 2017 Inclusionary Housing In-Lieu Fee Analysis Page 25 5—20 Units $5.00 per square foot 21+ Units $15.00 per square foot Santa Monica An in-lieu fee can be paid by right for apartment projects of any size. An in-lieu fee can only be paid for ownership projects that inlude two or three units. The current in-lieu fees are: Apartment Projects $32.38 per square foot Ownership Housing Projects $37.82 per square foot West Hollywood + The City of West Hollywood has an affordable housing impact fee that can be Paid for projects of a ray size. The city a[so has an inclusionary housing in-lieu fee that can be paid for projects with up to 10 units. Developers can choose between the two options. The ire-lieu fee is charged per square foot of building area in a proposed project. The currently applicable in-lieu fees are: In-Lieu Fee Impact Fee 2 Units $ 2 Units $ Units $14.47 3 Units $14.47 Units $15.28 4 Units . $16.28 5 Units $18.09 5 Units $18.09 5 Units $19.90 6 Units $1.9.90 7 Units $21.71 7 Units $21.71. Units $23.53 8 Units $23.53 9 Units $25.33 9 Units $25.33 10 Units $27.13 10 Units $27.13 w 11+ Units $ 17050 0.TUS*KH 19830.007.001 F Jerry Craig, City of Tustin May 2 2, 2017 ' Inclusionary Housing In-Lieu Fee Analysis Page 26 FINDINGS Based on the results of the preceding financial analysis, 1 MA estimates the supportable r ire-lieu fees at the following amounts: Apartment Ownership Allocation Methodology Development Housing Per market rate unit in a proposed $21,400 $85.0700 project Per square foot of CBA in a proposed $21 $31 project The in-lieu fees programs CTIA surveyed are evenly divided in the methodology used t set the fee amounts. Seven of the programs charge the in-lieu fee on a per unit basis and six programs charge the in-lieu fee per square foot of building area. RECOMMENDATIONS 4 The supportable in-lieu fee is directly tied to the affordability gap between the market rate price for a unit and the defined affrdable rent or sales price. Recognizing that unit size is a significant determinant in a home's value, ars lieu fee that is charged per unit can be detrimental to projects with small units and beneficial to projects with large units. An ire-lieu fee based on the square footage of the units provides a better representation of the actual affordability gap. The ire-lieu fee amounts identified in the preceding analysis represent the maximum amounts that can be charged by the City based on current marl et and financial conditions. However, the City has the discretion to set the in-lieu fees at less than the maximum amounts determined in the E MA analysis. The factors that should be considered when setting the in-lieu fee are: Two of the programs set the in-lieu fee on a case-by-case basis. 17050O.Tu :KHH 19830.007.001 Jerry Craig, City ofTustin May 22, 2017 Inclusionary Housing In-Lieu Fee Analysis Page 27 1. If the City wishes to encourage developers to produce inclusionary units rather than paging the in-lieu fee,the fee should be set at amounts that approximate the project's affordability gap. . The City can use in-lieu fees revenue to provide assistance to dedicated affordable housing projects that can access outside leveraging sources. a. At a minimum,the in-lieu fee should be set at an amount that is sufficient to produce a comparable number of units as would have been required under the terms of the Draft ordinance. b. Based on the KMA analysis,this equates to in-lieu fees of$17,600 per unit or 17 per square foot of GBA. a 17050 0.TU ;ICH H 19830.007.001 APPENDIX PRO FORMA ANALYSES APARTMENT SCENARIOS IN-LIEU FEE ANALYSIS TUSTII , CALIFORNIA Prepared by:Keyser Marston Associates,Inc. File name:Rent ILF 5_22_17;Apt Pf Page 1 of 22 i i APPENDIX A" EXHIBIT I 4 APARTMENT T PFO FORMA ANALYSIS 100% MARKET RATE SCENARIO IIS-LIEU FEE ANALYSIS TUSTII , CALIFORNIA 4 4 Prepared by;lag er 1 Marston Associates,Inc. File name:Rent ILF 52217;Mkt Apt Page 2 of APPENDIX A-EXHIBIT 1-TABLE 1 ESTIMATED DEVELOPMENT COSTS APARTMENT PRO FORMA ANALYSIS- 100 MARKET RATE SCENARIO IN-LIEU FEE ANALYSIS TUSTIN,CALIFORNIA I. Property Acquisition Costs 139,392 5f Land $30 f Land $4,x.82,000 II. Direct Costs Site Improvement Costs 139,392 5f Land $15 f Land $200910000 Parking Costs Surface Parking 40 Spaces $5,000 /Space 200.POOO Above-Ground Spaces 320 Spaces $15,000 /Space 4,8000000 Building Costs 152,100 5f of GBA $115 f of GBA 18.p6420000 Contractor Fees/General Requirements 10.0 Construction Costs 2,5730000 Builder's Risk Insurance 2.0% Construction Costs 515,000 Contingency Allowance 5.0% Other Direct Costs 104419,000 Total Direct Costs 160 Units $189,x.00 Unit $30,262,000 III. Indirect Costs Architecture,Engineering&Consulting 8% Direct Costs $2,4210000 Public Permits&Fees 160 Units $25,000 /Unit 4#000,000 Taxes,Insurance,Legal&Accounting 2.0 Direct Costs 005,000 Marketing&Leasing 160 Units $2,500 /Unit 400,000 Developer Fee 5.0%Total Construction Cost 2,2780000 Contingency Allowance 5.01 Other Indirect Costs 485,000 Total Indirect Costs $10,189,000 III. Financing osts Interest During Construction Property Acquisition Costs 2 $4,182,000 Financed 5,501 Interest $422,000 Construction Costs 3 $45,588,000 Financed 5.501 Interest 3,237,000 Loan Origination Fees Construction Loan $45568,000 Financed 2.00 Points 911,000 Permanent Loan 4 $27,341,000 Financed 2.00 Points 547,000 Total Financing Costs $50117,000 V. Total Construction Cost 160 Units $284,800 /Unit $450558,000 Total Development Cost 160 Units $310,900 /Unit $49,750,000 1 Direct costs assume prevailing gage requirements will NOT be imposed on the Project. 2 Based on 21 months of construction with a 100%average outstanding balance,and 5 months of lease up with a 1009 average outstanding balance. Based on 21 months of construction with a 501 average outstanding balance,and 5 months of lease up with a 1001 average outstanding balance. 4 See APPENDIX A-EXHIBIT I-TABLE 3. Prepared by:Keyser Marston Associates,Inc. File name:Rent ILF 5_22_17;Mkt Apt Page 3 of 22 APPENDIX A-EXHIBIT I-TABLE ESTIMATED STABILIZED NET OPERATING INCOME APARTMENT PFO FORMA ANALYSIS 108%MARKET RATE SCENARIO IN-LIEU FEE ANALYSIS TUSTIN,CALIFORNIA I, Rental Income � Market Rate Studios 16 Units $2,049 /Unit/Month $3931,000 One Bedroom 56 Units $2,314 /Unit/Month 10555,000 Two Bedrooms 56 Units $2,666 /Unit/Month lr791,000 Three Bedrooms 32 Units $3,113 /Unit/Month 1,196,000 Total Rental Income $4,934,000 (Less)Vacancy&Collection Allowance 5.0% Rental Income (247,000) Effective Gross Income $4,687,000 II. Operating Expenses General Operating Expenses 160 Units $3,500 /Unit $5600,000 Property Takes 2 160 Units $4,625 /Unit 740,OD0 Reserves Deposits 3 160 Units $150 /Unit 24,000 Total Operating Expenses 160 Units $8,280 /Unit $1,324F000 III. IStabilized Net Operating Income $3,363,000 1 Based ori the apartment survey presented in APPEND IX B-EXHIBIT I,and a 15%prerniurn for new construction, The average rent is equal to$2.34 per square foot of gross building area. Project value is estimated based on stabilized net operating income capitalized at a 5.0%cap rate. The property tax rate is set at 1.1`0 of the estimated value. 3 Based on the contributions applied to typical market rate projects. Prepared by:Keyser Marston Associates,Inc. Fife name:Rent ILF _ _17;Mkt Apt Page 4 of 22 APPENDIX A-EXHIBIT 1-TABLE PROJECTED RETURN ON TOTAL INVESTMENT APARTMENT PRO FORMA ANALYSIS 100%MARKET RATE SCENARIO IIS-LIEU FEE ANALYSIS TU TIN,CALIFORNIA I. Stabilized Net Operating Income See APPENDIX A-EXHIBIT I-TABLE 2 $3,363,000 II. Total Development Cost See APPENDIX A-EXHIBIT I-TABLE 1 $4 ,750,0Q0 III. Return on Total Investment 6.8 k Prepared by:Keyser Marston Associawtes,Inc. Fite name:Rent 1LF 5_22_17;Mkt Apt Page 5 of 22 APPENDIX - EXHIBIT 11 APARTMENT PRO FORMA ANALYSIS I UNLEVERAGED El ARI ##1: 4.5% MODERATE;ATE; .5% LOW; &6.0%VERY-LOW INCOME UNIT IN-LIEU FEE ANALYST TU TIN, CALIFORNIA , i t Prepared by.4 Keyser Marston Associates,Inc. File name:Rent SLF 5_22_12;Uniev I Page 6 of 22 APPEr DID A-EXHIBIT II-TABLE 1 ESTIMATED DEVELOPMENT COSTS APARTMENT PRO FORMA ANALYSIS UNLEVERAGED SCENARIO#1:4.5 MODERATE;4.5%LOIN;&6.0 VERY-LEAN INCOME UNITS IN-LIEU FEE ANALYSIS TUSTI1,CALIFORNIA I. Property Acquisition Costs 139,892 5f Land $30 Sf Land - $4,182,000 II. Direct Costs Site Improvement Costs 139,392 Sf Land $15 f Land $2,091,000 Parking Costs Surface Parking 40 Spaces $5000 /Space 200,000 Above-Ground Spaces 320 Spaces $15,000 /Space 4,800,000 Building Costs 1.62,1.00 5f of GBA - $115 Sf of GBA 18,642p0Q0 Contractor Fees/General Requirements 10.09 Construction Costs 2,523,000 Builder's Risk Insurance 2.0 Construction Costs 515000 Contingency Allowance 5.0% Other Direct Costs 1,441,000 Total Direct Costs 160 Units $189,100 Unit $301262,000 III. Indirect Costs Architecture,Engineering&Consulting Direct Costs $2,421,000 Public Permits He s=ees 160 Units $25,000 Unit 41000,000 Takes,Insurance,Legal&Accounting 2.01 Direct Costs 6050000 Marketing&Leasing 160 Units $2,500 /Unit 400,000 Developer Fee 5.0 Total Construction Cast 2,278,000 Contingency Allowance 5.0 Other Indirect Costs 485,000 Total Indirect Casts $10,1890000 IV. Financing Costs Interest During Construction P ro pe rty Acq u i siti o n Costs 2 $4,182,000 Financed 5.50% Interest $422,000 Construction Costs 3 $45,568,000 Financed 5.50% Interest 8,237,000 Loan Origination Fees Construction Loan $45,568,000 Financed 2.00 Points 9111000 Permanent Loan 4 $27,341,000 Financed 2.00 Points 547,000 Total Financing Costs $5,117,000 V. Total Construction Cost 160 Units $284,800 Unit $45,568,000 Total Development Cost 160 Emits $310,900 /Unit $49,750,000 I Direct costs assume prevailing wage requirements will NOT be imposed on the Project. 2 Based on 21 months of construction with a 1009 average outstanding balance,and 5 months of lease up with a 100%average outstanding balance. 3 Based on 21 months of construction with a 509 average outstanding balance,and 5 months of lease up with a 100%average outstanding balance. 4 See APPENDIX A-EXHIBIT II-TABLE 3. Prepared by:Keyser Marston Associates,Inc. File name:Rent ILF 5_22_12;Unlev I Page 7 of 22 APPENDIX A-EXHIBIT II-TABLE ESTIMATED STABILIZED NET OPERATING INCOME APARTMENT PRO FORMA ANALYSIS UNLEVERAGED S ENARI 0 t#1:4.5%MODE RATE; .5 LOW;&6.0 VER -L W IN COME UNIT IN-LIEU FEE ANALYSIS ` TUSTIN,CALIFORNIA I. Rental Income 1 Market Rate Studios 14 Units $21049 Unit/Month $344,000 One Bedroom 48 Units $2,314 /unit/Month 1,333,000 Two Bedrooms 48 Units $2, 55 /Unit/Month 1,535,000 Three Bedrooms 25 Units $30113 Unit Month 971,000 Moderate Income Studios 0 Units $1,643 /Unit/Month 0 One Bedroom 2 Units $1,866 /Unit/Month 45,000 Two Bedrooms 3 Units $2,098 Unit/Month 76,000 Three Bedrooms 2 Units $2,302 Unit Month 551,000 Low Income Studios 1 Unit $880 /Unit/Month 110000 One Bedroom 3 Units $994 /Unit/Month 36,000 Two Bedrooms 2 Units $1,,117 /Unit/Month 271000 Three Bedrooms 1 Unit $1,212 /Unit/Month 15,000 Very-Low Income Studios 1 Unit $727 /Unit/Month 9,000 One Bedroom 3 Units $820 Unit Month 30,000 Two Bedrooms 3 Units $920 /Unit/Month 33,000 Three Bedrooms 3 Units $994 /Unit/Month 36,000 Total Rental Income $4,556,000 (Less)Vacancy&Collection Allowance 5.0% Rental Income (22 ,000) Effective Gross Income $4,328,000 Il. Operating Expenses General Operating Expenses 160 Units $3,500 /Unit $560,000 Property Taxes 2. 160 .Units $4,220 /Unit 675,000 Reserves Deposits 3 160 Units $150 Unit 24,000 Total Operating Expenses 150 Units $7,870 Unit $1,259,000 III. I.Stabilized Net Operating Income $3,069,000 I Based on the apartment survey presented its APPENDIX B-EXHIBIT 1,and a 15%premium for new construction. The average rent is equal to$2.34 per square foot of gross buitoing area. The affordable rents calculations are presented in AP P EN DIX B-E HIBIT Il. 2 Project value is estimated based on stabilized net operating income capitalized at a 5.0 cap rate. The property tax rate is set at 1.10 of the estimated value. 3 Based on the contributions applied to typical market rate projects. Prepared by:Keyser Marston Associates,Inc. File name:Rent ILF 5_22#17;Unlev 1 Page 8 of 22 APPENDIX A-EXHIBIT 11-TABLE ESTIMATED FINANCIAL EMAP APARTMENT PRO FORMA ANALYSIS UNLEVERAGED SCENARIO#f1:4.5 MODERATE;4.5%LOIN;&t 6.8 VERY-LOW INCOME UNIT IN-LIEU FEE ANALYSIS TUSTIN,CALIFORNIA 1. Funds Available for Development Costs Stabilized Net Operating Income See APPENDIX A-EXHIBIT 11-TABLE 2 $310590000 Threshold Return on Total Investment 6.8 Total Funds Available for Development Casts $45,401,000 It. Total Development Cast See APPENDIX A-EXHIBIT II-TABLE 1 $49,750,000 III. Estimated Financial Gap 24 ($40349j,000)Affordable Units ($181, 00) Affordable Unit 160 Total Unit ($27,,200) /Total Unit 162,100 Sf of CBA ( ) f of GBA f Prepared by:Keyser Marston Associates,.Inc. File name:Rent ILF 5_22_17;Unlev 1 Page 9 of 22 } u Y APPENDIX A- EXHIBIT III APARTMENT PFO FORMA ANALYSIS UNLEVERAGED 5CE NAI I #2: a. %'MODEF ATE &7.0%VERY-LOW W IME UNITS IIS-LIEU FEE ANALYSIS TUSTI1 , CALIFORNIA f i a { 1 1 Prepared by:Keyser Marston Associates,Inc. File name:Rent ILF 5_22,17;Unlev 2 Page 10 of APPEIDIC A-EXHIBIT 111-TABLE 1 ESTIMATED DEVELOPMENT COSTS APARTMENT PRO FORMA ANALYSIS UNLEVERAGED SCENARIO#Z:5.0 MODERATE&7.50%VERY-LOW INCOME UNITS IN-LIEU FEE ANALYSIS TUSTIN,CALIFORNIA I. Property Acquisition Costs 139,3921{ Sf Land $30 Sf Land $4,182,000 11. Direct Costs Site Improvement Costs - 139,392 Sf Land $15 Sf Land $2,091,000 Parking Costs Surface Parking 40 Spaces $5,000 Space 200,000 Above-Ground Spaces 320 Spaces $15,000 /Space 4,8000000 Building Costs 162,100 5f of GBA $115 f of GBA 18,642,000 Contractor Fees/General Requirements 10.0% Construction Costs 21573,000 Builder's Risk Insurance 2.0 Construction Costs r 515,000 Contingency Allowance 5.0% Other Direct Costs 1,441,000 Total Direct Costs 160 Units $189,100 Unit $30,262,000 111. Indirect Costs Architecture,Engineering&Consulting Direct Costs $2,421,000 Public Permits&Fees 160 Units $25,000 /Unit 41000,000 Takes,Insurance,Legal&Accounting 2.0% Direct Costs 605,000 Marketing&Leasing 160 Units $2,500 Unit 400,000 Developer Fee 5.0% Total Construction Cost 2,278,000 Contingency Allowance 5.0Other Indirect Costs 4 5,0 0 Total Indirect Costs $10.189,000 IV. Financinosts Interest During Construction Property Acquisition Costs 2 $4,182,000 Financed 5.509 Interest $422,000 Construction Costs 3 $45,568,000 Financed 5.50% Interest 3,2370000 _ Loan Origination Fees Construction Loan $45568,000 Financed 2.00 Points 9110,000 Permanent Loan 4 $27,341,000 Financed 2.00 Points 547,000 Total Financing Casts $5,117,000 V. Total Construction Cost 160 Units $284,800 Unit $45,568,000 Total Development Cost 160 Units $310,900 /Unit $49,750,000 S I Direct costs assume prevailing wage requirements will NOT be imposed on the Project. Based on 21 months of construction with aG 100 average outstanding balance#and 5 months of lease Ftp with a 100%average outstanding ba[ance. 3 Based on 21 months of construction with a 509 average outstanding balance,and 5 months of lease tip with.@ 100%average outstanding balance. 4 See APPENDIX A-EXHIBIT III- `ABLE 3. Prepared by:Keyser Marston Associates,Inc. File name.Rent ILF 5_22_17;Unlev 2 Page 11 of APPENDIX A-EXHIBIT Ill-TABLE ESTIMATED STABILIZED NET OPERATING INCOME APARTMENT PFO FORMA ANALYSIS UNLEVERAGED SCENARIO#2:5.0%MODERATE&7.50%VERY-LOW INCOME UNITS IN-LIEU FEE ANALYSIS TUSTIN,CALIFORNIA I. Rental Income 1 Market Rate Studios 14 Units $7,043 /Unit/Month $344,000 One Bedroom 49 Units $2,314 /Unit/Month 1,361,000 Two Bedrooms 49 Units $2,665 /Unit/Month 1567,000 Three Bedrooms 28 Units $3,113 /Unit/Month 11046,000 Moderate Income Studios 1 Unit $1,643 /Unit/Month 20,000 One Bedroom 3 Units $1,866 /Unit/Month 671,000 Two Bedrooms 2 Units $ ,O I /Unit/Month 50,ODD Three Bedrooms 2 Units $2,302 /Unit/Month 55,000 Very-Lour Income Studios 1 Unit $727 /Unit/Month 91000 One Bedroom 4 Units $620 /Unit/Month 39,000 Two Bedrooms 5 Units $920 /Unit/Month 55,000 Three Bedrooms 2 Units $994 /Unit/Month 24,000 Total Rental Income $4,637,000 (Less)Vacancy&Collection Allowance 5.0 Rental Income (2320000) Effective Gross income $4,405,000 II. Oneratina.Expenses General Operating Expenses 160 Units $3,500 /Unit $560,000 Property Taxes 2 160 Units $4,305 /Unit 663,000 Reserves Deposits 3 160 Units $150 /Unit 24,000 Total Operating Expenses 160 Units $7,960 /Unit $1,2730000 III. IStabilized Net Operating Income $3,132,00 I Based on the apartment survey presented in APPENDIX B-EXHIBIT 1,and a 15 prerniurn for new construction. The average rent is equal to$2.34 per square foot of gross building area. The affordable ants calculations are presented in APPENDIX B-EXHIBIT 11. z Project value is estimated based on stabilized net operating income capitalized at a 5.0%cap rate. The property tax rate is set at 1.1%of the estimated value. 3 Based on the contributions applied to typical market rate projects. Prepared by:Keyser Marston Associates,Inc. File name:Rent ILF 5_2217;UnIev 2 Page 12 of 22 APPENDIX A-EXHIBIT III-TABLE ESTIMATED FINANCIAL CAP APARTMENT PRO FORMA ANALYSIS UNLEVERAGED ACED CENARIO#2:5.0%MODERATE&7.50%VERY-LOW INCOME UNIT IN-LIEU FEE ANALYSIS TITIN,CALIFORNIA I. Funds Available for Development Costs Stabilized Net Operating Income See APPENDI (A T EXHIBIT 111-TABLE 2 $3,132,000 Threshold return on Total Investment 6.8% Total Funds Available for Development Costs $46.33%000 II. Total Development Cost See APPENDIX A-EXHIBIT 111-TABLE 1 $49,750,000 III. Estimated Financial Cap ($8,417,000) 0 Affordable Units ($170,900) /Affordable Unit 160 Total Units ($21,400) /Total Unit ei 162,100 f of CBA ( 1) /Sf of CBA r i • Prepared by:Keyser Marston Associates,Inc. File name:Rent ILF 5 22 17;UnIev 2 Page 13 of 22 APPENDIX EXHIBIT IV 3 APARTMENT T PRO FORMA ANALYSIS I BLD 50 TAX CREDIT SCENARIO:: % MODERATE ATE %VERY-LOW IQ I[ COME UNIT IN-LIEU FEE ANALYSIS TU TIN, CALIFORNIA Prepared by:Keyser Marston Associates,,Inc. File name:Rent ILF 22_17;4 TC Page 14 of 22 { APPENDIX A-EXHIBIT Ill-TABLE 1 ESTIMATED DEVELOPMENT COSTS APARTMENT PRO FORMA ANALYSIS BONDS/4 TALC CREDIT SCENARIO:40%MODERATE&60 VE RY-LOW INCO E UNITS IN-LIEU FEE ANALYSIS TUSTIN,CALIFORNIA I. Property Acquisition Casts 139,392 Sf Land $30.00 /Sf Land $4t182,,000 IL Direct Casts Site Improvement Costs 139,392 sf Land $15 /Sf Land $21091,000 Parking Costs Surface Parking 40 Spaces $5,000 /Space 200,000 Above-Ground Spaces 320 Spaces $15,000 /space 4,800,000 Building Costs 162,100 Sf of GBA $115 /Sf of GBA 18,642,000 Contractor Fees/General Requirements 10.09 Construction Costs 215730000 Builder's Risk Insurance 2.0 Construction Costs 515,000 Contingency Allowance 5.0% Other Direct Costs 1,441,01 0 Total Direct Costs 160 Units $189,100 /Unit $30,262,000 III. Indirect Costs Architecture,Engineering&Consulting % Direct Costs $20421,000 Public Permits&Fees 160 Units $25,000 /Unit 4,000,000 Taxes,Insurance,Legal&Accounting 2.0% Direct Costs 605,OOO Marketing&Leasing 160 Units $2,500 /Unit 400,000 Developer-Fee 15.0% Eligible Costs 6,0040000 Contingency Allowance 5.0 Other indirect Costs 672,000 Total Indirect Costs $14J02,000 Ill. Financing Costs Interest During Construction Series A Bond 2 $13,055,000 Financed 4.009 Interest $5660000 Series B Bond 3 40,167,000 Financed 4.00% Interest 1,741,000 Loan Origination Fees Series A Bond $13,055,000 Financed 2.50 Points 326,000 Series B Bond 4 $40,167,OOO Financed 4.03 Paints 1,607,000 Operating Reserve 3 Months Operating Expenses/Debt Service. 4 420,000 TCAC Fees 5 16,000 Total Financing Costs $40676,000 V. Total Construction Cost 160 Units $306,500 /Unit $49,040,000 Tota[Development Cast 150 Units $332,600 /Unit $53,222,000 I Direct costs assume prevailing wage requirements will NOT be imposed on the Project. 2 Based on the debt supported by the project's stabilized net operating income. Assumes an 21-month construction period with a 0%average outstanding balance,and a 5-month lease-up period with a 100 average outstanding balance, 3 Based on the estimated development costs minus the Series A bond. Assumes an 1-month construction period with a 50 average outstanding balance,and a 5-month lease-up period with a 100%average outstanding balance. 4 See APPENDIX A-EXHIBIT i -TABLE 3. 5 Includes a$2,000 application fee;a 410 per unit monitoring fee;and 1 of the gross Tac Credit proceeds for one year. Prepared b :Beyer Marston Associates,Inc. Page 15 of 22 File name:Rent ILF 5_22_17;4 TC APPENDIX A-EXHIBIT IV-TABLE ESTIMATED STABILIZED NET OPERATING INCOME APARTMENT PREF FORMA ANALYSIS BONDS/4%TAX CREDIT SCENARIO:40MODERATE&60 VERY-LOW INCOME UNITS . IN-LIEU FEE ANALYSIS TUSTIN,CALIFORNIA I. Rental Income H SC 50053 Moderate Income Tax Credit @ 0 ILMI Studios 6 Units $1,060 /Unit/Month $76,000 One Bedroom 22 Units $1,122 /Unit/Month 296,000 Two Bedrooms 22 Units $1,347 /Unit/Month 356,000 Three Bedrooms 13 Units $1,531 /Unit/Month 239,000 H SC 50053 Very-Low Income/Tax Credit @ 50 AMI Studios 10 Units $727 /Unit/Month 87,000 One Bedroom 84 Units $620 /Unit/Month 335,000 Two Bedrooms 84 Units $920 /Unit/Month 375,000 Three Bedrooms 19 Units $994 /Unit/Month 27,DD0 Total Rental Income $1,991,000 (Less)Vacancy&Collection Allowance 5.0 Rental Income (100,F000) Effective Gross Income $1,891p000 II. Operating Expenses General Operating Expenses 160 Units $5,000 /Unit $800,000 Property Tax Expense 2 160 Units $0 /Unit 0 Reserves Deposits 3 160 Units $250 /Unit 40,000 Total Operating Expenses 1.60 Units $5,250 /Unit $640,000 III. IStabillized Net Operating Income $1,051,000 i 1 The applicable rents are equal to the lesser of the HSC Section 50053 rents and the rents published by TCAC.The affordable rents calculations are presented in APPENDIX B-EXHIBIT 11. 2 Assumes that the developer wiII be entitled to the property tax abatement accorded to non-profit organizations that own and operate apartment projects restricted to low income households. 3 Based on the minimum contribution required by TC C. Prepared by:Keyser Marston Associates,Inc. File narne:Rent ILF 5_22_17;4 TC Page 16 of 2 APPENDIX A-EXHIBIT IV-TABLE ESTIMATED FINANCIAL[SAF APARTMENT PRO FORMA ANALYSIS BONDS 4%TALC CREDIT SCENARIO:IO:40 6 MODER TE&60%VERY-LOW INCOME U NITS IN-LIEU FEE ANALYSIS TU TIN,CALIFORNIA I. Funds Available for Development Costs A. Supportable Tax-Exempt Multifamily Bond Stabilized Net Operating Income See APPENDIX A-EXHIBIT IV-TABLE 2 $1#0510000 Income Available for Mortgage 125% DSOR $841,000 Debt Service 5.00 Interest Rate 5.44% Mtg Constant Supportable Tax-Exempt Multifamily Bond $13,055,000 B. Net Tax CreditValue $14,163,000 C. Deferred Developer Fee 2 $3,5041,000 Total Funds Available for Development Costs $80,722,000 It. Total Development Cost See APPENDIX A-EXHIBIT I -TABLE 1 ($53,2220000) III. Estimated Financial Cap, Per Affordable Unit 3 160. Affordable Units ($140,500) /Affordable Unit ($221500,000) Per Total Unit in a Market Rate Project 4 ($17,500) Per SF of GBA in a Market Rate Project 4 ($17)1 ' Assumes a$45.17 million exigible basis;a Oho difficult-to-develop premium,a 3.21 Tax Credit rate;an applicable fraction of 100%;and a$0.9 dollar Syndication Value. Equal to the amount by which the Developer Fee ekeed $2.50 million. 3 The ratio of very-1 ow and moderate income units is based on the mix included in UNLEVE RAG ED S ENARI0#2:5.0%MO DERATE&7.50%VERY-LOW INCOME UNITS. 4 The estimates are extrapolated from the results of the UNLEVERAGED SCENARIO #2:5.0 MODERATE&7.501 VERY-LOW INCOME 1E UNITS. Prepared by:Keyser Marston Associates,Inc. File name:Rent ALF 5_22_17;4%TC Page-17 of 22 APPENDIX B APARTMENT D T IN-LIEU FEE ANALYSIS TU STI N, CALIFORNIA Prepared by:i eyser Marston Associates,Inc. File name:Rent I L F 5_22_17;Apt Data Page-18 of 22 APPENDIX B-EXHIBIT I APARTMENT RENT INFORMATION Ili-LIEU FEE ANALYSIS TUSTIN,CALIFORNIA Rent Number ber f Number of Unit Size Per Square Project Name Address Bedrooms Bathrooms (SF) Total Foot I. Studio Units Sierra Vista 2955 Champion Way 0 1 490 $1,750 $3.57 Sierra Vista 2955 Champion Way 0 1 515 $1,805 $3.50 Amalfi Apartment Homes 16000 Legacy Road 0 1 584 $1,790 $3.07 Average 530 $1j782 $3.38 Minimum 490 $1,750 $3.07 Maximum 580 $1,305 $3.57 11. One-Bedroom Units Amalfi Apartment Homes 15000 Legacy Road 1 1 552 $1,930 $3.50 Si6rra Vista 2955 Champion Way 1 1 640 $2,050 $3.20 Sierra Vista 2955 Champion Way 1 1 640 $2,050 $3.20 Amalfi Apartment Homes 16000 Legacy Road 1 1 681 $1,300 $2.79 El Pay eo 14901 Newport Avenue 1 1 695 $10850 $2.66 Amalfi Apartment Homes 16000 Legacy Road 1 1 695 $2,050 $2.95 Rancho Monterey 100 Robinson Dr ve 1 1 703 $1,900 $2.70 Rancho Monterey 100 Robinson Drive 1 1 703 $1,975 $2.81 Rancho Monterey 100 Robinson Drive 1 1 703 $2,115 $3.01 Rancho Alisal Apt Homes 13800 Parkcenter Lane 1 1 706 $10805 $2.55 Rancho Monterey 100 Robinson Drive 1 1 718 $1,835 $2.56 Rancho Monterey 100 Robinson Drive 1 1 718 $1,835 $2.56 Rancho Monterey 100 Robinson Drive 1 1 718 $1,835 $2.56 Amalfi Apartment Homes 16000 Legacy Road 1 1 730 $2,100 $2.88 Amalfi Apartment Homes 16000 Legacy Road 1 1 741 $21005 $2.71 Amalfi Apartment Homes 16000 Legacy Road 1 1 746 $2,050 $2.75 Anton Legacy 3100 Parr Avenue 1 1 749 $1,824 $2.44 Rancho Maderas 13408 heritage Way 1 1 750 $1,915 $2.55 Amalfi Apartment Homes 16000 Legacy Road 1 1 751 $1,905 $2.54 Amalfi Apartment Hames 16000 Legacy Road 1 1 760 $2,120 $2.79 Anton Legacy 3100 Park Avenue 1 1 761 $1,824 $2.40 Anton Legacy 3100 Park Avenue 1 1 764 $1,824 $2.39 Rancho Monterey 100 Robinson Drive 1 1 764 $2,020 $2.64 Rancho Monterey 100 Robinson Drive 1 1 764 $2,170 $2.84 Rancho AllsaI Apt Homes 13800 PaGrkcenter Lane 1 1 777 $1,780 $2.29 Anton Legacy 3100 Parr Avenue 1 1 784 $1,824 $2.33 Amalfi Apartment Homes 16000 Legacy Road 1 1 800 $2,095 $2.62 Amalfi Apartment Homes 16000 Legacy Road 1 1 813 $21270 $2.79 Sierra Vista 2955 Champion Way 1 1 895 $2,065 $2.31 Sierra Vista 2955 Champion lay 1 1 895 $2,100 $2.35 Sierra Vista 2955 Champion Way 1 1 895 $2,175 $2.43 Amalfi Apartment Hoaxes 16000 Legacy Road 1 1 906 $2,275 $2.51 Sierra Vista 2955 Champion Way 1 1 930 $2,215 $2.38 Sierra Vista 2955 Champion~lay 1 1 930 $2,365 $2.54 Amalfi Apartment Hoaxes 16000 Legacy Road 1 1 955 $2,390 $2.50 Average 760 $2,013 $2.66 Minimum 550 $1,780 $2.29 Maximum 960 $2,390 $3.50 Prepared by: Keyser Marston Associates,Inc. File name: Rent ILF 52217;Apt Comps Page 19 of APPENDIX B-EXHIBIT I APARTMENT RENT INFORMATION IN-LIEU FEE ANALYSIS USTIN,CALIFORNIA Rent Number of Number of Unit Size Per Square Project Name Address Bedrooms Bathrooms ( F) Total Foot III. Two-Bedroom Units El Paseo 14901 Newport Avenue 2 2 902 $2,190 $2.43 Rancho Alial Apt Homes 13800 Parkcenter Lane 2 2 925 $2,140 $2.31 Rancho Alisal Apt Homes 13800 Parkcenter Lane 2 2 925 $2,140 $2.31 Rancho Alisal Apt Homes 13800 Parkcenter Lane 2 2 925 $2,270 $2.45 Rancho Tierra Apartments 13202 Myford Road 2 2 935 $2,260 $2.42 Anton Legacy 3100 Park Avenue 2 2 944 $2,052 $2.17 Amalfi Apartment Homes 16000 Legacy Road 2 2 963 $2,480 $2.58 Rancho Alisal Apt Homes 13800 Parkcenter Lane 2 2 1,005 $21190 $2.18 Rancho Alisal Apt Homes 13800 Parkcenter Lane 2 2 1005 $2,215 $2.20 Rancho Alisal Apt Homes 13800 Parkcenter Lane 2 2 11,005 $2,265 $2.25 Anton Legacy 3100 Park Avenue 2 2 10,016 $2,052 $2.02 Rancho Monterey 100 Robinson Drive 2 2 1,018 $2,365 $2.32 Rancho Monterey 100 Robinson Drive 2 2 1,018 $2,385 $2.34 Amalfi Apartment Homes 16000 Legacy Road 2 2 10021 $2,460 $2.41 Anton Legacy 3100 Park Avenue 2 2 1,031 $2,052 $1.99 Rancho Tierra Apartments 13203 Myford Road 2 2 1,035 $21275 $2.20 Rancho Tierra Apartments 13204 Myford Road 2 2 1,035 $2,335 $2.26 Rancho Vierra Apartments 13204 Myford Road 2 2 1,035 $2,365 $2.29 Sierra Dista 2955 Champion Way 2 2 1,040 $20325 $2.24 Sierra Vista 2955 Champion Way 2 2 1,040 $2,325 $2.24 Sierra Nista 2955 Champion Way 2 2 1,040 $2,405 $2.31 Rancho Maderas 13408 Heritage Warr 2 2 1,058 $2,250 $2.13 Sierra Nista 2955 Champion Way 2 2 10050 $2,335 $2.20 Sierra Vista 2955 Champion Way 2 2 1,060 $20425 $2.29 Sierra Nista 2955 Champion Way 2 2 10060 $2,485 $2.34 Amalfi Apartment Homes 16000 Legacy Road 2 2 10095 $2,685 $2.45 Rancho Monterey 100 Robinson Drive 2 2 1,110 $2,435 $2.19 Rancho Monterey 100 Robinson Drive 2 2 1,110 $2,460 $2.22 Rancho Monterey 100 Robinson Drive 2 2 11110 $2,510 $2.26 Anton Legacy 3100 Park Avenue 21 2 1,119 $21052 $1.83 Amalfi Apartment Hames 16000 Legacy Road 2 2 10206 $2,655 $2.20 Average 10030 $2,317 $2.26 Minimum 900 $2,052 $1.83 Maximum 1.r21 $20685 $2.58 Prepared by: geyser Marston Associates,Inc. File name: Fent ILF 52217;Apt Camps Page 20 of 22 APPENDIX B-EXHIBIT I APARTMENT FENT INFORMATION IN-LIEU FEE ANALYSIS TI TIN,CALIFORNIA Rent Number of Number of Unit Size Per Square Project Name Address Bedrooms Bathrooms ( F) Total Fant 111. Three-Bedroom Units Rancho Alisal Apt Homes 13800 Parkcenter Lane 3 2.0 1#063 $20595 $2.44 Rancho Alisal Apt Homes 13300 Parkcenter Lane 3 2.0 1,063 $2,675 $2.52 Rancho Alisal Apt Fomes 13800 Parkcenter Lane 3 2.0 1,053 $2,025 $2.52 Rancho Alisal Apt Homes 13800 Parkcenter Lane 3 2.5 1,205 $20835 $2.35 Rancho Tierra Apartments 13203 Myford Road 3 2.5 10205 $2,875 $2.39 Rancho Tierra Apartments 13203 Myford load 3 2.5 11205 $20930 $2.43 Anton Legacy . 3100 Park Avenue 3 2.0 1,315 $2,247 $1.71 Anton Legacy 3100 Park Avenue 4 3 2.0 1,334 $2,247 $1.68 Tustin Cottages 1361 EI Camino Real 3 2.5 1,582 $21885 $1.82 Tustin Cottages 1361 EI Camino Real 3 2.5 1,69 . $2,940 $1.74 Tustin Cottages 1301 EI Camino Real 3 2.5 10715 $20870 $1.07 Average 10310 $7,707 $2.12 Minimum 10050 $2,247 $1.67 Maximum 10220 $2,940 $2.52 Source: Zillow.,May 2017 Prepared by: Keyser Marston Associates,Inc. File name: Rent till"5_22_17;Apt Comps Page 21 of 22 APPENDIX B-EXHIBIT II AFFORDABLE RENT CALCULATIONS IIS-LIEU FEE ANALYSIS TUSTIN,CALIFORNIA Studios One Bedroom Two Bedrooms Three Bedrooms H&SC 50053 stents-2016 1. 2016 H0D Median Income $61,050 $69,750 $78,500 $870200 11. Moderate Income Renu Household Income @ 110 AMI $67,155 $76,725 $861350 $35,920 30 of Income Alloted to Housing Costs $20,147 $23,018 $259,905 $28,776 Maximum Monthly Cross Bent $1,679 $1,918 $2,159 $2,398 (Less)Monthly Utility Allowance 2 ($36) ($52) ($61) ($96) Maximum Moderate Income Rents $1,643 $1.0866 $2,098 $2,302 111. Lover Income Rents Household Income @ 60 ANTI $36,630 $41.,850 $47,100 $52,320 30 of Income Alloted to Housing Costs $10, 89 $12,555 $14,130 $1.5,696 Maximum Monthly Cross Rent $916 $1.,046 $10178 $10303 (Less)Monthly Utility Allowance 2 ($36) ( 52) ( 61) ($96) Maximum Low Income Rents $880 $994 $1,117 $10217 III. VeMLow Income Rents Household Income @ 50 AMI $30,525 $34,875 $39,250 $43,600 30 of Income Alloted to dousing Costs $90158 $10,463 $11,775 $13,080 Maximum Monthly Gross Fent $763 $872 $981 $1,090 (Less)Monthly Utility Allowance 2 ($3 ) ($52) ($61) ($96) Maximum Very-Lover Income Rents $727 $820 $920 $994 Bond/Tax Credit Rents-2017 I. Tac Credit @ 606 AIIIII 3 Maximum Monthly Cross Rent $1.,096 $1,174 $1,408 $10627 (Less)Monthly Utility Allowance 2 ($36) ($5 ) ($61) '($96)- Maximum Tax Credit @ 60%AMI $11060 $11122 $1,347 $1,531 II. Tax Credit @ 50 AMI 3 Maximum Monthly Cross Rent $913 $978 $1,173 $1,356 (fess)Monthly Utility Allowance 2 ($36) ($52) ($61) ($96) Maximum Tax Credit @ 50%AMI $877 $926 $1,112 $10260 1 The California Department of Housng and Community Development(110)has not yet published 2017 household income information. 2 Based on information published by the Orange County Housing Authority 10/1/2016. Assumes Cas:Cooking,,Heating,Water Heater. Electric:Basic 3 Based on rents published by the California Tax Credit Allocation Committee for 2017. Prepared by: Keyser Marston Associates,Inc. File name: Rent ILF 5_22_17;Aff Rents Page 22 of 2 x f APPENDIX PILO FORMA ANALYSES OWNERSHIP EF SHIP-HOUSIi SCENARIOS IN-LIED FEE ANALYSIS TUSTI , CALIFORNIA Prepared by:Keyser Marston Associates,Inc. File Name:-Own ILF 52217;Own Pf Page 1 of 20 APPENDIX - EXHIBIT I OWNERSHIP HOUSING PRO FORMA ANALYSIS 100% MARKET FATE SCENARIO IN-LIEU FEE ANALYSIS .TUSTIf , CALIFORNIA Y r + 4 Prepared by:!Geyser Marston Associates,Inc. _ File Name:Own LLF 5_22_17;Own Mkt Page 2 of 20 APPENDIX C-EXHIBIT I-TABLE 1 ESTIMATED DEVELOPMENT COSTS OWNERSHIP HOUSING PRC FORMA ANALYSIS 100%MARKET RATE SCENARIO IN-LIEU FEE ANALYSIS TUSTIN..CALIFORNIA I. Property Acquisition Costs 435,600 5f of Land $ 0 Sf $13108,000 11. Direct Costs Un-Sites Landscaping 435,600 Sf of Land $25 Sf $10,590,000 Guest Parking 25 Spaces $5,000 /Space 1251000 Building Costs 2 279,400 Sf of CBA $110 f of CSA 30,734,000 ContractorDC Contingency Allow 17% Other Direct Costs 7,097,000 i Total Direct Casts 100 Units $453,500 /Unit $45,846,000 III. Indirect Costs Architecture,Eng&Consulting 5. Direct Costs $3,9O8,000 Public Permits&Fees 100 Units $25,000 /Unit 2,500,000 Tate ,Ins.Legal Accounting .0 Direct Costs 1,465,000 Marketing 100 Units $10,000 /Limit 10000,000 Developer Fee 3.0% Gross Sales Revenue 2,946,000 Soft Cost Contingency Alloy a n ce 5.0% Other indirect Costs 591,000 Total Indirect Costs $12,4100000 Ill. Financing Costs Interest During Con truction 3 $5,602,000 Loam Origination Fees 60.0% Loan to Cost 2.0 Points 592,000 S Total Financing Casts 6#404,000 V. Total Construction Cost 100 Units $678,000 /Unit $67,750,000 Total Development Cost 100 Units $503,000 /Unit $500815,000 I Direct costs assume prevailing wage requirements will NOT be imposed on the Project. 2 Includes the cast for two-car attached garages. 3 A 7.0 interest cost for debt;a 21 month construction period;a 19 month absorption period; 0 of the units are presold and close daring first month after completion;and 2.0 points for loan origination fees. Prepared by:Keyser Marston Associates,Inc. File{Name:Own ILF 5_22_17;Own Mkt Page 3 of 20 APPENDIX C-EXHIBIT I-TABLE PROJECTED NET SALES REVENUE ,OWNERSHIP HOUSING PRO FORMA ANALYSIS 100%MARKET FATE SCENARIO IN-LIEU FEE ANALYSIS TUSTII ,CALIFORNIA I. Gross Sales Revenue Three Bedrooms 20 Units @ $719,200 /Unit $14,384,000 Four Bedrooms 50 Units @ $952,400 Unit 47,620,000 Fire Bedr oras 30 Units @ $1,207,000 Unit 86,210,000 Total Cross Sales Revenue $981-2140000 fl. Cost of Sales Commissions 3.0 Cross Sales Revenue $2,946,000 Closing 2.01 Cross Sales Revenue 11964,000 Warranty 0.5% Cross Sales Revenue 491,000 Total Cost of Sales ($5,401#000) III. Net Sales Revenue $920813,000 4 1 ti l Based on the average sales price per square foot derived from the sales data presented in APPENDIX D-EXHIBIT I1-TABLE 1. The weighted average price equates to$352-per square foot of saleable area. F Prepared by:Keyser Marston Associates,Inc. File Marne:Own ILF 5_22_17;Own Mkt Page 40.20 APPENDIX C-EXHIBIT I-TABLE PROJECTED DEVELOPER PROFIT OWNERSHIP HOUSING PESO FORMA ANALYSIS 100%MARKET FATE SCENARIO IN-LIEU FEE ANALYSIS TU TI 1,CALIFORNIA I. Net Sales Revenue See APPEND1 X C-E H1BIT I-TABLE 2 $92,8130000 ' II. Total Development Cost See APPENDIX C-EXHIBIT I-TABLE 1 $60,818,000 III. Developer Profit 14.8%Total Development Cost $11P99 4 f f i '7 i Prepared by:Keyser Marston Associates,Inc. Fife Larne:Own ILF 5_22_17;Own Mkt Page 5 of 20 S T APPENDIX - EXHIBIT 11 _ 4 OWNERSHIP H U IN PFO FORMA ANALYSIS AFFORDABLE SCENA I 0 #1: 4,5% M 0 D ERATE;4.5% LOIN; &6. %VE[ Y-LOW I N CO i iE'UNITS 1111-LIEU FEE ANALYSIS TU TIN, CALIFORNIA r a i Prepared by:Keyser Marston Associates,Inc. . File Name:Orn 1LF 52217;Dern Aff 1 Page 6 of 20 APPENDIX O-EXHIBIT 11-TABLE 1 ESTIMATED DEVELOPMENT T COSTS OWNERSHIP HOUSING PFO FORMA ANALYSIS AFFORDABLE SCENARIO ##1:4.5%MODERATE;ATE;4.5 6 LOW;&6.0%VERY-LOW INCOME UNITS IN-LIED FEE ANALYSIS TUSTII ,CALIFORNIA I. Property Acquisition Costs 435,600 Sf of Land $30 f $13,068,000 11. Direct Costs I On-Sites Landscaping 435,600 Sf of land $25 Sf $10,890,000 Guest Parking 25 Spaces $5,000 /Space 125,000 Building Ousts 2 2791400 Sf of GBA $110 f of CBA 300734,000 Contractor/DC Contingency Allow 17 Other Direct Costs 7,097,000 Total Direct Costs 100 Units $483,500 /Unit $48,846,000 III. Indirect Costs Architecture,Eng&Consulting 8.0% Direct Costs $3,908,000 Public Permits&Fees 100 Units $25,000 Unit 2,5000000 Takes,Ins.Legal&Accounting 3.09 Direct Costs 1145,000 Marketing 100 Units $10,000 /Unit 1,000,000 Developer Fee 3.01 Gross Sales Revenue 2,016,000 Soft Cast Contingency Allowance 5.0 Other Indirect Costs 574,000 Total Indirect Costs $12,D3,000 IV. Finaneeng Costs Interest During Construction 3 $5,592,000 Loan Origination Fees 60.0% Loan to Cost 2.0 Paints 8880000 Total Financing Costs $6,480,000 V. Total Construction Cost 100 Units $674,000 /Unit $67,389,000 Total Development Cost 100 Units $805,001 Unit $50,457,000 I Direct costs assume prevailing wage requirements will NOT be imposed on the Project. . 2 Includes the cost for two-car attached garages. 3 A 7.0%interest cost for debt;a 21 month construction period;a 16 month absorption period;309 of the units are presold and close during first month after completion;and 2.0 points for loam origination fees. Prepared by:Keyser Marston Associates,Inc. Fite Marne:Own ILF 52217;Own Aff 1 Page 7 of 2 APPENDIX C-EXHIBIT II-TABLE PROJECTED NET SALES REVENUE OWNERSHIP HOUSING PBC FORMA ANALYSIS AFFORDABLE SCENARIO #1:4.5 MODERATE;4.5%LOW;&6.0VERY-LOW INCOME UNITS II -LIEU FEE ANALYSIS TUSTIN,CALIFORNIA I. Cross Sales Revenue A. Market Rate-Units I Three Bedrooms 17 Units @ $719,,2-00 /Unit $12,226,400 Four Bedrooms 42 Units @ $952,400 /Unit 40,000,800 Fire Bedrooms 26 Unit @ $1,207,000 /Unit 31,682;000 B. Moderate Income Units 2 Three Bedrooms 1 Unit @ $430,500 /Unit 460,500 Four Bedrooms 2 Units @ $450,800 /Unit 901,600 Five Bedrooms J. Unit @ $481,600 Unit 481,600 Low Income Units 2 Three Bedrooms J. Unit @ $203,000 /Unit 203,000 Four Bedrooms 3 Units @ $285,100 /Unit 615,600 Five Bedrooms 1 Unit @ $219,200 /Unit 219..200- D. Very-Low Income Units 2 Three Bedrooms 1 Unit @ $125,100 /Unit 125,100 Four Bedrooms 3 Units @ $120,800 /Unit 362,400 Five Bedrooms 2 Units @ $128,600 /Unit 25 , OO Total Cross Sales Revenue $8702050100 L II. Cast of Sales Commissions 3.0Cross Sales Revenue $2,616,2DO Closing 2.0% Cross Sales Revenue 1,744,100 Warranty 0.5 Cross Sales Revenue 466,000 Total Cost of Sales ($4,796,300) . Ill. Net Sales Revenue $82,4080500 Based on the average sales price per square foot derived from the sales data presented in APPENDIX D-EXHIBIT II-TABLE 1. The weighted average price equates to$352 per square foot of saleable area. 2 See AP PEN DIC D-E CHIBIT II-TABLE J.for AFF RDABLE SALES PRICE CALCULATI 0 NS. Prepared by:Keyser Marston Associates,Inc. File-Name:Own ILF 5_22_17;Own Aff 1 Page 8 of 20 APPENDIX C-EXHIBIT Il-TABLE 3 ESTIMATED FINANCIAL CAP OWNERSHIP HOUSING PRO FORMA ANALYSIS AFFORDABLE SCENARIO ##1:4.5%MODERATE;4.S LOW;&6.0%VERY-LOW INCOME UNITS IN-LIEU FEE ANALYSIS TUSTIN,CALIFORNIA 1. Funds Available for Development Costs Net Sales Revenue See APPENDIX -EXHIBIT 11-TABLE 2 $82,4090000 (Less)Threshold Developer Profit 14.89 Total Development Cost (110941,000) Total Funds Available for Development Costs $70,468,,000 11. Total Development Cost See.APPENDI C C-EXHIBIT II-TABLE 1 $80,4570000 111. Estimated Financial Gap ($9,989,000) 15 Affordable Units ($665,900) /Affordable Unit 100 Total Units ($99,900) /Total Unit 279,400 Sf of G BA ($35) Sf of CBA 4 Based on the profit as a percentage of Total Development Cost estimated to be generated by the 100%MARKET RATE SCENARIO. Prepared by:Keyser Marston Associates,Inc. File Marne;Own ILF 5_22_17;Own Awff 1 Page 9 of 20 APPENDIX - EXHIBIT III OWNERSHIP HOUSING PRO FORMA ANALYSIS AFFORDABLE SCENARIO#2: 5.0% MODERATE &7.5%VERY-EOMI INCOME IE U IT IN_:LIEU LIEU FEE ANALYSIS r TUST I , CALIFORNIA { Prepared by:Keyser Marston Associates,Inc. File dame:Own ILF 52217;Own Aff 2 Page 10 of 20 APP ENDI C C-EXHIBIT III-TABLE 1 ESTIMATED DEVELOPMENT COSTS OWNERSHIP HOUSING PRO FORMA ANALYSIS AFFORDABLE SCENARIO#2:5.0 MODERATE&7.3%VERY-LOW INCOME UNIT IN-LIED FEE ANALYSIS TUSTIN,CALIFORNIA I. Property Acquisition Costs 435,600 Sf of Land $30 Sf $13, 6B4000 11. Direct Casts I On-Sites Landscaping 435,600 Sf-of Land $25 Sf $10,890,000 Guest Parking 25 Spaces $5,000 /Space 125,000 Building Costs 2 279,400 Sf of GBA $110 Sf of GBA 30,734,0 0. Contractor/DC ontingency Allow 17 Other Direct Costs 7,097,000 Total Direct Costs 100 Units $488,500 /Unit $4%846,,000 III. Indirect Costs Architecture,Eng&Consulting 8.0% Direct Costs $3,908,000 Public Permits&Fees 100 Units $25000 /Unit 2,500,000 Taxes,Ins.Legal&Accounting 3.0% Direct Costs 1,465,000 Marketing 100 Units $10,O00 Unit 10,0000000 Developer Fee _ 3.0% Gross Sales Revenue 2p664.pOOO Soft Cost Contingency Allowance 5.0% Other Indirect Costs 577,000 Total Indirect Costs $120114,000 Ili. Financing Costs Interest During Construction $5,614,OOD Loan Origination Fees 60.0% Loan to Cost 2.0 Points 888,000 Total Financing Costs $6,502,000 V. Total Construction Cost 100 Units $625,000 /Unit $67,462,000 Total Development Cost 100 Units $805,000 /Unit $90,530,000 5 1 Direct costs assume prevailing wage requirements will NOT be imposed on the Project. Includes the cost for two-car attached garages. 3 A 7.0%interest cost for debt;a 21 month construction period;a 17 month absorption period;30%of the units are presold and close during first ,Month after completion;and 2.0 points for loan origination fees. Prepared b :Keyser Marston Associates,Inc. Fite Name:Own ILF 52217;Own Aff 2 Page 11 of 20 APPENDIX C-EXHIBIT III-TABLE PROJECTED NET SALES REVENUE OWNERSHIP H U ING-PRO FO RIVIA ANALYST AFFORDABLE SCENARIO#Z:5.0 MODERATE&7.5%VERY-LOW INCOME UNIT ITV-LIEU FEE ANALYSIS TUSTII ,CALIFORNIA 1. Gross sales Revenue A. Market Rate Units I Three Bedrooms 17 Units @ $719,200 /Unit $12,226,400 Four Bedrooms 44 Units @ $952,400 Unit 41,F905,600 Five Bedrooms 26 Units @ $1,207,000 /Unit 31,362,000 B. Moderate Income Units 2 Three Bedrooms I Unit @ $430,500 /Unit 430,500 Four Bedrooms 2 Units @ $450,800 /Unit 901,600 Fire Bedrooms 2 Units @ $481,600 /Unit 963,200 C Low Income Units 2 Three Bedrooms 0 Units @ $203,000 /Unit 0 Four Bedrooms D Units @ $ 05,100 Unit 0 Fire Bedrooms D Units @ X219,200 /Unit 0 D.Ver -Low'Income Units 2 Three Bedrooms 2 Units @ $125,100 /Unit 250,200 Four Bedrooms 4 Units @ $120,800 /Unit 463,200 Fire Bedrooms 2 Units @ $128,600 Unit 257,200 Total Cross sales Revenue $88,,799p9OO 11. Cost of sales Commissions 3.0% Gross Sales Revenue nue $2,664,000 Closing 2.0Gross sales Revenue 1,776,000 Warranty 0.51 Cross sales Revenue 444,000 Total Cost of sales ($4,384,000) III. Net sales Revenue $83,91s 00 Based on the average sales price per squaMre foot derived from the sales data presented in APPEN DI X D-EXHIBIT II-TABLE 1. The weighted average price equates to$352 per square foot of saleable area. 2 See APPENDI ,D-E HIBIT 11-TABLE I for AFFORDABLE SALES PRICE CALCULATIO NS. Prepared by:Keyser Marston Associates,Inc. File Name:Dern ILF 17;Own Aff 2 Page 12 of.20 APPENDIX C-E HIBIT Ill-TABLE ESTIMATED FINANCIAL GAP OWNERSHIP HOUSING PRO FORMA ANALYSIS AFFO DABLE SCENARIO#2:S.0%-MODE ATE&7.5%VER LOIN INCOME UNITS IN-LIED FEE ANALYSIS TUSTIN,CALIFORNIA L Funds Available for Development Costs . Net Sales Revenue See APPENDIX C.-EXH[BIT Ili-TABLE 2 $83,916#000 (Less)Threshold-Devel per Profit 1 14.8%Total Development Cost (11,952,000) Total Funds Available for Development Costs $71,964,000 II. Total Development Cost See APPENDIX C-EXHIBIT ill-TABLE 1 $800530,000 III. Estimated Flnanclat a - ($8.P566,,000) 13 Affordable Units ($658,900) Affordable Chit 100 Total-Unit ($65,700) /Total Unit 279,400 Sf of GBA ($ 1) /Sf of GiA r Based on the profit as a percentage of Total Development Cost estimated to be generated by the 100%MARKET RATE SCENARIO. Prepared by:Keyser Marston Associates,Inc. f Pile Name:Dern ILF 5_22_17;Own Aff 2 Page 13 of 20 APPENDIX D OWNERSHIP HOUSING DATA IN-LIEU FEE ANALYSIS I 'I U TIN, CALIFORNIA { Prepared by:Keyser Marston Associates,Inc. Pile Name:Own ILF 52217;Own Info Page 14 of 20 APPENDIX D-EXHIBIT II-TABLE 1 HOME SALES INFORMATION ILII-LIEU FEE ANALYSIS TUSTIN,CALIFORNIA Sales Price Number of Number of Per Square Address Sale Date Year Built Bedrooms Baths Unit Size.(5f) Total Foot I. Three-Bedroom Units 1885 Harvest Cir 10/14/16 2016 3 2 1,804 $714,047 396 93 Barnes Rd 11/23/16 2016 3 3 1.0860 $775,000 417 35 Barnes Rd 5/17/16 2015 3 3 1,860 $799,900 430 17019 Traditions lay 9/24/16 2016 3 3 1,867 $590.0629 316 1387 Harvest Cir 10/31/16 2016 3 3 1,929 $715,000 371 1878 Harvest Cir 1/13/17 2016 3 3 10929 $732,000 379 Average 1,870 $721,100 $336 Minimum 1,800 $590,600 $316 Maximum 1,930 $799,900 $430 II. Four-Bedroom Units 13682 Green Malley Dr 12/7/16 2016 4 3 10900 $648,000 341 207 Barnes Rel 8/5/16 2016 4 3 2,126 $824,900 388 126 Barnes Rd 2016 4 3 20126 $876,000 412 169 Barnes Rd 2016 4 3 2,142, $820,000 383 36 Brisbane Ct 2015 4 3 2,144 $999,000 466 133 Barnes Rd 1/20/17 2015 4 3 2,171 $755,000 346 181 Barnes Rd 9/30/16 2015 4 3 2,171 $795,900 367 201 Barnes Rd 6/22/16 2015 4 3 2,171 $829,900 332 137 Barnes Rd 2016 4 3 2,171 $9021500 416 1876 Harvest Cir 3/1/17 2016 4 3 2.0258 $715,000 317 1879 Harvest Or 10/28/16 2016 4 4 2,258 $805,460 357 203 Barnes Rd 7/7/16 2015 4 4 2,342 $890,900 380 127-Barnes Rd 12/23/16 2015 4 3 2,343 $876,000 374 197 Barnes Rd 2015 4 3 2,344 $9500000 405 129 Evelyn PI 3/24/17 2016 4 3 20604 $968000 372 1521 Lanai lay 8/8/16 2016 4 3 20614 $888,000 321 263 Barnes Fid 6/1/16 2016 4 3 20,614 $910,000 348 265 Barnes d 6/24/16 2016 4 3 2,807 $ 2,b00 332 299 Barnes Rd 11/4/16 2016 4 5 3pOO8 $1,010,055 336 127 Evelyn PI 12/19/16 2016 4 5 3,008 $1,057,539 352 230 Downs Rd 7/15/16 2016 4 3 3,012 $1,0750900 357 230 Barnes Rd 2016 4 3 3,p012 $1,076,000 357 278 Barnes Rd 1/27/17 2016 4 3 3,012 $1,099,900 '365 117 Patton Way 10/13/16 2015 4 4 3,412 $1,122,000 329 273 Downs Rd 3/31/17 2016 4 4 3,612 1.01970000 331 118 Evelyn P1 3/13/17 2016 4 4 31612 $1.0200,000 32 207 Downs Rd 9/13/16 2015 4 5 3,866 $1,149,900 297 295 Downs Rd 3/31/17 2016 4 4 4,096 $1,,313fOOO 321 Average 2,680 $951,400 $355 Minimum 1.0900 $648,000 $297 Maximum 4.0100 $1,313.0000 $466 Prepared by:Keyser Marston Associates,Inc. File name:Own iL1=52217;Sales Comps Page 15 of 20 APPENDIX D-EXHIBIT 11-TABLE 1 HOME SALES,INFORMATION IN-LIEU FEE ANALYSIS TUSTI1,CALIFORNIA Sales Price Number of Number of Per Square Address Sale Date Year Built Bedrooms Baths Unit Size(5f) -Total Foot III. Five-Bedroom Units 18 Brisbane Ct 12/2/16 2016 5 3 2,343 $882,000 376 291 Barnes Rd 2016 5 3 2,836 $974,000 343 291 Downs Rd 317/17 2016 5 4 31280 $111650000 355 218 Barnes Rd 5/31/16 2015 5 4 30412 $10174,900 344 119 Patton Way 11/2/16 2016 5 5 3,612 $1,160,000 321 226 Barnes Rd 12/80/16 2015 5 5 3,679 $1,1500900 313 86 Holmes PI 3/10/17 2016 5 5 3,834 $1,300,000 339 128 Cape Myrtle PI 10/3/16 2015 5 5 3,834 $1.,333,000 348 901 indwalker Way," 15 1 2016 5 5 3,842 $1,350,000 351 27 Meadow PI 6/27/16 2016 5 5 30880 $1,100,000 284 22 Stafford PI 2017 5 5 3,880 $1,407,900 363 18 Windrow Rd 1/30/17 2016 5 5 3,918 $10,180,000 301 16 Stafford PI 2017 5 5 3,961 $1,464,900 370 220 Barnes Rd 9/20/16 2015 5 6 4,096 $1,257,900 307 Average j,,600 $1,207,200 $335 Minimum 2,840 .F $882,000 $284 Maximum 40100 $10464,900 $376 Source: Redfin,May 2017 Prepared by:Keyser Marston Assodate s,Inc. File name:Own ILF 5_22_17;Sales Comps Page 16of 20 i r • t APPENDIX EXHIBIT II AFFORDABLE SALES PENCE CALCULATIONS 2016 INCOME STANDARDS-ORANGE COUNTY -LIEU FEE ANALYSIS I TU TI I , CALIFORNIA t Prepared by: reser Marston Associates File name: Orn 1LF 5_2217;Aff Sales Price Page 17 of 20 APPENDIX D-EXHIBIT II-TABLE 1 rt. AFFORDABLE SALES PRICE CALCULATIONS 2016 INCOME STANDARDS-ORANGE COUNTY MODERATE INCOME HOUSEHOLDS IIS-LIEU FEE ANALYSIS TUSTIN,CALIFORNIA Three Bedrooms Four Bedrooms Fire Bedrooms I. 2016 H D Median Income $870200 $94,200 $101,150 II. Income Information Household Income @ 110%AMI $95,920 $103,620 $111,265 35° of Income Allotted to Housing Costs $33,570 $36,270 $38,940 III. Ongoing Expenses Annual Utility Allowance 1 $10812 $21064- $2,220 HDA Fees(Maintenance&Insurance) 22,880 3,960 4,320 Property Takes @ 1.101 of Affordable Sales Price 4,736 4,960 5,298 Total Ongoing Expenses $9,428 $10,984 $11,838 Ili. Income Available for Mortgage $24,142 $25,286 $27,102 V. Affordable Sales Price Supportable Mtg @ 4.25%Interest $409,000 $428,300 $459,100 Home Buyer Down Payment @ 5 Affordable Sales Price 21,500 22,500 22,500 Affordable Sales Price $430,500 $450,800 $481,600 Y P 1 Based on information published by the Orange County Housing Authority 10/1/16. Assumes Gas:Cooking,,Heating,Water Heater. Electric:Basic.Water and Trash. Based on the.average HOA dues derived from the home sales surrey. Prepared by: Keyser Marston Associates I^ile name: Own ILF 5_22_17;Aff Sales Price - Page 18 of 20 APPENDIX D-EXHIBIT Il-TABLE AFFORDABLE SALES PRICE E AL ULATION 2016 INCOME STANDARDS-ORANGE OUNTY LOW INCOME HOUSEHOLDS IN-LIEU FEE ANALYSIS TU TI ,CALIFORNIA Three Bedrooms Four Bedrooms Fire Bedrooms I. 2016 H D Median Income $87,200 $94,200 $1010150 11. Income Information f Household Income @ 0 AMI $61,040 $65,940 $70,805 0 of Income Allotted to Housing Costs $18,310 $19,780 $21,240 Ill. Ongoing-Expenses Annual Utility Allowance $1,812 $2.pO $2-,220 HDA Fees(Maintenance&InsuraNnce) 2 2,880 3,960 40320 Property Takes @ 1.10%of Affordable Sales Price 2,234 2,256 20411 Total Ongoing Expenses $6,926 $8,280 $80951 IV. income Available for Mortgage $110384 $11,500 $12,289 V. Affordable Sales Price Supportable Mtg @ 4.25%Interest $192,800 $194,800 $2081200 Horne Buyer Down Payment @ 5 Affordable Sales Price 10,200 10,300 11,000 Affordable Sales Price $203#000 $2050100 $219,200 4 1 1 1 Based on information published by the Orange County Housing Authority 10/1/16. Assumes Gas.Cooking,Heating,Water r Heater. Electric:Basic.Water and Trash. 2 Based on the average HOA dues derived from the home sales surrey. Prepared by: Keyser Marston Associates .File name: bwn ILF 522_17;Aff Sales Price Page 19 of 20 r APPENDIX D-EXHIBIT 11-TABLE AFFORDABLE SALES PRICE CALCULATIONS 2016 INCOME STANDARDS-ORANGE COUNTY VERY-LOVA INCOME HOUSEHOLDS. IN-LIEU FEE ANALYSIS TUSTIN,CALIFORNIA Three Bedrooms Four Bedrooms Five Bedrooms 1. 2016 HCD Median Income $17,200 $94,200 $101,150 11. Income Information Household Income @ 60 AMI $43,600 $47,100 $50,575 30 of Income Allotted to Housing Costs $13,D8O $14,1 0 $15,170 111. Ongoing Expenses Annual Utility Allowance 1 $1,812 $2,014 $21220 HDA Fees(Maintenance&Insurance) 2 20880 30960 4,320 Property Takes @ 1.101 of Affordable Sales Price 11376 1,329 1,416 Total Ongoing Expenses $60068 $7,363 $7,955 IV. Income Available for Mortgage $7,012 $61,777 $70215 V. Affordable Sales Price Supportable Mtg @ 4.2S%Interest $118,800 $114,800 $122r2OO Horne Bayer Down Payment @ 5%Affordable Sales Price 6,300 6,000 60400 Affordable Sales Price $125,100 $120,800 $128,600 Based on information published by the Orange County Housing Authority 10/1/16. Assumes Gas:Cooking,Heating,Water Heater. Electric;Basic.Water and Trash. 2 Based on the average HOA dues derived from the home sales surrey. Prepared by: Keyser Marston Associates File name: Own ILF 5_22,17;Aff Sales Price Page 20 of 20