SS3 - Financial Evaluation and Framework for Future Inclusionary Housing Ordinance (PA2022-045) — Newport Beach City Council, March 22, 2022 (part 2 of 2)

APPENDIX D - EXHIBIT I - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME

MARKET RATE SCENARIO
COYOTE CANYON PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Gross Income
A. Market Rate Units i
Studio Units
0 Units @
$0
/Unit/Month
$0
One -Bedroom Units
98 Units @
$3,349
/Unit/Month
3,938,000
Two -Bedroom Units
154
Units @
$3593
/Unit/Month
6,640,000
Three -Bedroom Units
28 Units @
$4,421
/Unit/Month
1,485,000
B. Miscellaneous Income
280
Units @
$75
/Unit/Month
252,000
Total Gross Income
$12,315,000
Vacancy & Collection Allowance
5%
Gross Income
(616,000)
II. Effective Gross Income
$11,699,000
III. Operating Expenses
General Operating Expenses
280
Units @
$4,500
/Unit
$1,260,000
Property Taxes
280
Units @
$6,700
/Unit
1,875,000
Replacement Reserve Deposits
280
Units @
$150
/Unit
42,000
Total Operating Expenses
($3,177,000)
IV. I Stabilized Net Operating Income $8,522,000
1 Based in part on the rent survey presented in APPENDIX A - EXHIBIT II. The weighted average monthly rent equates to $3.78 per square foot of leasable area.

Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF CC Mkt Page 43 of 126

APPENDIX D - EXHIBIT I - TABLE 3

ESTIMATED STABILIZED RETURN ON INVESTMENT

MARKET RATE SCENARIO
COYOTE CANYON PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Stabilized Net Operating Income See APPENDIX D - EXHIBIT I - TABLE 2 $8,522,000 II. Total Development Cost See APPENDIX D - EXHIBIT I - TABLE 1 $193,826,000 III. I Estimated Stabilized Return on Investment 4.4%
Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF CC Mkt Page 44 of 126

APPENDIX D - EXHIBIT II

PRO FORMA ANALYSIS
RECOMMENDED REQUIREMENT: 7% LOW INCOME UNITS
COYOTE CANYON PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF CC Base Low Page 45 of 126

APPENDIX D - EXHIBIT II - TABLE 1

ESTIMATED DEVELOPMENT COSTS
RECOMMENDED REQUIREMENT: 7% LOW INCOME UNITS
COYOTE CANYON PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Property Acquisition Costs
II. Direct Costs
On -Site Improvements/Landscaping
Parking
At -Grade Spaces
Above -Ground Spaces
Building Costs
Contractor/DC Contingency Allow
Total Direct Costs
1 304,920
Sf of Land
2 $5,000
304,920
Sf of Land
3 /Space
140
Spaces
560
Spaces
354,667
Sf of GBA
4 20%
Other Direct Costs
354,667
Sf of GBA
III. Indirect Costs
Architecture, Engineering & Consulting
Public Permits & Fees 6
Taxes, Insurance, Legal & Accounting
Marketing
Developer Fee
Soft Cost Contingency Allowance
Total Indirect Costs
IV. Financing Costs
Interest During Construction
Land
Construction
Loan Origination Fees
Total Financing Costs
V
6% Direct Costs
280 Units
2% Direct Costs
280 Units
5% Direct Costs
5% Other Indirect Costs
6 $45,213,800 Cost
7 $148,060,000 Cost
60% Loan to Cost
$150 /Sf of Land $45,738,000
$30
/Sf of Land
$9,148,000
$5,000
/Space
700,000
$25,000
/Space
14,000,000
$180
/Sf of GBA
63,840,000
17,538,000
$297
/Sf of GBA
$105,226,000
$6,314,000
$68,000 /Unit 19,040,000
2,105,000
$1,000 /Unit 280,000
5,261,000
1,650,000

3.6% Avg Rate $2,442,000

3.6% Avg Rate 3,998,000

1.5 Points 1,744,000
$34,650,000
$8,184,000
Total Construction Cost 280 Units $529,000 /Unit $148,060,000 Total Development Cost 280 Units $692,000 /Unit $193,798,000 1 Estimated in part based on a sales survey of properties available for residential development in Newport Beach. 2 Based on the estimated costs for similar uses.
3 The base requirement is for 2.0 spaces per unit plus 0.50 spaces per unit for guest parking. 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. s Based on the public permits and fees estimates and impact fee estimates provided in the August 2021 draft Housing Element. 6 Based on an 18 month construction period following receipt of entitlements, and a 100% average outstanding loan balance. 7 Based on an 18 month construction period following receipt of entitlements, and a 50% average outstanding loan balance.

Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF CC Base Low Page 46 of 126

APPENDIX D - EXHIBIT II - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
RECOMMENDED REQUIREMENT: 7% LOW INCOME UNITS
COYOTE CANYON PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Gross Income
A. Market Rate Units i
Studio Units
0 Units @
$0
/Unit/Month
$0
One -Bedroom Units
91 Units @
$3,349
/Unit/Month
3,657,000
Two -Bedroom Units
143
Units @
$3,593
/Unit/Month
6,165,000
Three -Bedroom Units
26 Units @
$4,421
/Unit/Month
1,379,000
B. Low Income Units z
Studio Units
0 Units @
$1,054
/Unit/Month
0 One -Bedroom Units
7 Units @
$1,203
/Unit/Month
101,000
Two -Bedroom Units
11 Units @
$1,334
/Unit/Month
176,000
Three -Bedroom Units
2 Units @
$1,464
/Unit/Month
35,000
C. Miscellaneous Income
280
Units @
$75
/Unit/Month
252,000
Total Gross Income
$11,765,000
Vacancy & Collection Allowance
5%
Gross Income
(588,000)
II. Effective Gross Income
$11,177,000
III. Operating Expenses
General Operating Expenses
280
Units @
$4,500
/Unit
$1,260,000
Property Taxes
280
Units @
$6,400
/Unit
1,781,000
Replacement Reserve Deposits
280
Units @
$150
/Unit
42,000
Total Operating Expenses
280
Units @
$11,011
/Unit
($3,083,000)
IV. I Stabilized Net Operating Income $8,094,000
i Based in part on the rent survey presented in APPENDIX A - EXHIBIT II. The weighted average monthly rent equates to $3.78 per square foot of leasable area.
z Under Section 50053, the low income rent calculations are based on household income at 60% of AMI, with 30% of income allotted to housing related expenses. See APPENDIX B.

Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF CC Base Low Page 47 of 126

APPENDIX D - EXHIBIT II - TABLE 3

INCLUSIONARY HOUSING IMPACTS
RECOMMENDED REQUIREMENT: 7% LOW INCOME UNITS
COYOTE CANYON PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX D - EXHIBIT II - TABLE 2 Threshold Return on Total Investment i
Total Supportable Investment
II. Total Development Cost See APPENDIX D - EXHIBIT II - TABLE 1 $8,094,000

4.40%
$184,091,000
$193,798,000
Total Financial Impact ($9,707,000)
Property Acquisition Cost Reduction 21% of Estimated Current Acquisition Prices Developer Return 4.2% Based on Estimated Current Property Acquisition Costs % Rent Increase to Offset Impact 5.1% Market Rate Units 1 Based on the Developer Return estimated to be generated by the ZONING COMPLIANT: MARKET RATE SCENARIO.

Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF CC Base Low Page 48 of 126

APPENDIX D - EXHIBIT III

PRO FORMA ANALYSIS

DENSITY BONUS SCENARIO
COYOTE CANYON PROTOTYPE: 50% SECTION 65915 DENSITY BONUS

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF CC DB Page 49 of 126

APPENDIX D - EXHIBIT III - TABLE 1

ESTIMATED DEVELOPMENT COSTS

DENSITY BONUS SCENARIO
COYOTE CANYON PROTOTYPE: 50% SECTION 65915 DENSITY BONUS

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Property Acquisition Costs 1
304,920 Sf of Land
$150
/Sf of Land
$45,738,000
II. Direct Costs z
On -Site Improvements/Landscaping
304,920 Sf of Land
$30
/Sf of Land
$9,148,000
Parking 3
At -Grade Spaces
0 Spaces
$5,000
/Space
0 Above -Ground Spaces
693 Spaces
$25,000
/Space
17,325,000
Semi -Subterranean Spaces
0 Spaces
$35,000
/Space
0 Building Costs
532,000 Sf of GBA
$200
/Sf of GBA
106,400,000
Contractor/DC Contingency Allow 4
20% Other Direct Costs
26,575,000
Total Direct Costs
532,000 Sf of GBA
$300
/Sf of GBA
$159,448,000
III. Indirect Costs
Architecture, Engineering & Consulting
6% Direct Costs
$9,567,000
Public Permits & Fees s
420 Units
$68,000
/Unit
28,560,000
Taxes, Insurance, Legal & Accounting
2% Direct Costs
3,189,000
Marketing
420 Units
$1,000
/Unit
420,000
Developer Fee
5% Direct Costs
7,972,000
Soft Cost Contingency Allowance
5% Other Indirect Costs
2,485,000
Total Indirect Costs
$52,193,000
IV. Financing Costs
Interest During Construction
Land 6
$45,738,000 Cost

3.6%
Avg Rate
$2,470,000
Construction 7
$222,533,000 Cost

3.6%
Avg Rate
6,008,000
Loan Origination Fees
60% Loan to Cost

1.5 Points
2,414,000
Total Financing Costs
$10,892,000
V.

Total Construction Cost 420 Units $530,000 /Unit $222,533,000 Total Development Cost 420 Units $639,000 /Unit $268,271,000 1 Estimated in part based on a sales survey of properties available for residential development in Newport Beach. z Based on the estimated costs for similar uses.
3 Section 65915 (p) requires jurisdictions to allow projects to meet statutorily established parking standards. For marketability reasons, KMA set the parking standards at 1.0 space per Studio Units unit; 1.0 space per One -Bedroom Units unit; 2.0 spaces per Two -Bedroom Units unit; and 2.0 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. s Based on the public permits and fees estimates and impact fee estimates provided in the August 2021 draft Housing Element. 6 Based on an 18 month construction period following receipt of entitlements, and a 100% average outstanding loan balance.

Based on an 18 month construction period following receipt of entitlements, and a 50% average outstanding loan balance.

Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF CC DB Page 50 of 126

APPENDIX D - EXHIBIT III - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME

DENSITY BONUS SCENARIO
COYOTE CANYON PROTOTYPE: 50% SECTION 65915 DENSITY BONUS

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Gross Income
A. Market Rate Units i
Studio Units
0 Units @
$0
/Unit/Month
$0
One -Bedroom Units
132
Units @
$3,349
/Unit/Month
5,304,000
Two -Bedroom Units
208
Units @
$3,593
/Unit/Month
8,968,000
Three -Bedroom Units
38 Units @
$4,421
/Unit/Month
2,016,000
B. Density Bonus Units z
Studio Units
0 Units @
$867
/Unit/Month
0 One -Bedroom Units
15 Units @
$990
/Unit/Month
178,000
Two -Bedroom Units
23 Units @
$1,094
/Unit/Month
302,000
Three -Bedroom Units
4 Units @
$1,197
/Unit/Month
57,000
C. Miscellaneous Income
420
Units @
$75
/Unit/Month
378,000
Total Gross Income
$17,203,000
Vacancy & Collection Allowance
5%
Gross Income
(860,000)
II. Effective Gross Income
$16,343,000
III. Operating Expenses
General Operating Expenses
420
Units @
$4,500
/Unit
$1,890,000
Property Taxes
420
Units @
$6,200
/Unit
2,595,000
Replacement Reserve Deposits
420
Units @
$150
/Unit
63,000
Total Operating Expenses
420
Units @
$10,829
/Unit
($4,548,000)
IV. I Stabilized Net Operating Income $11,795,000
i Based in part on the rent survey presented in APPENDIX A - EXHIBIT II. The weighted average monthly rent equates to $3.78 per square foot of leasable area.
z Under Section 65915 (f) (2), 15% of the Base Units are set aside for very -low income households. Section 65915 (c) (1) (B) (i) calculates very low income rents based on household income at 50% of AMI, with 30% of income allotted to housing related expenses. See APPENDIX B.

Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF CC DB Page 51 of 126

APPENDIX D - EXHIBIT III - TABLE 3

INCLUSIONARY HOUSING IMPACTS

DENSITY BONUS SCENARIO
COYOTE CANYON PROTOTYPE: 50% SECTION 65915 DENSITY BONUS

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX D - EXHIBIT III - TABLE 2 Threshold Return on Total Investment i
Total Supportable Investment
II. Total Development Cost See APPENDIX D - EXHIBIT III - TABLE 1 $11,795,000

4.40%
$268,268,000
$268,271,000
Total Financial Impact ($3,000)
Property Acquisition Cost Reduction 0% of Estimated Current Acquisition Prices Developer Return 4.40% Based on Estimated Current Property Acquisition Costs % Rent Increase to Offset Impact 0.0% Market Rate Units 1 Based on the Developer Return estimated to be generated by the ZONING COMPLIANT: MARKET RATE SCENARIO.

Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF CC DB Page 52 of 126

APPENDIX D - EXHIBIT IV

PRO FORMA ANALYSIS
5% LOW INCOME SCENARIO
COYOTE CANYON PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF CC 5% Low Page 53 of 126

APPENDIX D - EXHIBIT IV - TABLE 1

ESTIMATED DEVELOPMENT COSTS
5% LOW INCOME SCENARIO
COYOTE CANYON PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Property Acquisition Costs
II. Direct Costs
On -Site Improvements/Landscaping
Parking
At -Grade Spaces
Above -Ground Spaces
Building Costs
Contractor/DC Contingency Allow
Total Direct Costs
1 304,920
Sf of Land
2 $5,000
304,920
Sf of Land
3 /Space
140
Spaces
560
Spaces
354,667
Sf of GBA
4 20%
Other Direct Costs
354,667
Sf of GBA
III. Indirect Costs
Architecture, Engineering & Consulting
Public Permits & Fees 6
Taxes, Insurance, Legal & Accounting
Marketing
Developer Fee
Soft Cost Contingency Allowance
Total Indirect Costs
IV. Financing Costs
Interest During Construction
Land
Construction
Loan Origination Fees
Total Financing Costs
V
6% Direct Costs
280 Units
2% Direct Costs
280 Units
5% Direct Costs
5% Other Indirect Costs
6 $45,374,300 Cost
7 $148,068,000 Cost
60% Loan to Cost
$150 /Sf of Land $45,738,000
$30
/Sf of Land
$9,148,000
$5,000
/Space
700,000
$25,000
/Space
14,000,000
$180
/Sf of GBA
63,840,000
17,538,000
$297
/Sf of GBA
$105,226,000
$6,314,000
$68,000 /Unit 19,040,000
2,105,000
$1,000 /Unit 280,000
5,261,000
1,650,000

3.6% Avg Rate $2,450,000

3.6% Avg Rate 3,998,000

1.5 Points 1,744,000
$34,650,000
$8,192,000
Total Construction Cost 280 Units $529,000 /Unit $148,068,000 Total Development Cost 280 Units $692,000 /Unit $193,806,000 1 Estimated in part based on a sales survey of properties available for residential development in Newport Beach. 2 Based on the estimated costs for similar uses.
3 The base requirement is for 2.0 spaces per unit plus 0.50 spaces per unit for guest parking. 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. s Based on the public permits and fees estimates and impact fee estimates provided in the August 2021 draft Housing Element. 6 Based on an 18 month construction period following receipt of entitlements, and a 100% average outstanding loan balance. 7 Based on an 18 month construction period following receipt of entitlements, and a 50% average outstanding loan balance.

Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF CC 5% Low Page 54 of 126

APPENDIX D - EXHIBIT IV - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
5% LOW INCOME SCENARIO
COYOTE CANYON PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Gross Income
A. Market Rate Units i
Studio Units
0 Units @
$0
/Unit/Month
$0
One -Bedroom Units
93 Units @
$3,349
/Unit/Month
3,737,000
Two -Bedroom Units
146
Units @
$3,593
/Unit/Month
6,295,000
Three -Bedroom Units
27 Units @
$4,421
/Unit/Month
1,432,000
B. Low Income Units z
Studio Units
0 Units @
$1,054
/Unit/Month
0 One -Bedroom Units
5 Units @
$1,203
/Unit/Month
72,000
Two -Bedroom Units
8 Units @
$1,334
/Unit/Month
128,000
Three -Bedroom Units
1 Unit @
$1,464
/Unit/Month
18,000
C. Miscellaneous Income
280
Units @
$75
/Unit/Month
252,000
Total Gross Income
$11,934,000
Vacancy & Collection Allowance
5%
Gross Income
(597,000)
II. Effective Gross Income
$11,337,000
III. Operating Expenses
General Operating Expenses
280
Units @
$4,500
/Unit
$1,260,000
Property Taxes
280
Units @
$6,500
/Unit
1,810,000
Replacement Reserve Deposits
280
Units @
$150
/Unit
42,000
Total Operating Expenses
280
Units @
$11,114
/Unit
($3,112,000)
IV. I Stabilized Net Operating Income $8,225,000
i Based in part on the rent survey presented in APPENDIX A - EXHIBIT II. The weighted average monthly rent equates to $3.78 per square foot of leasable area.
z Under Section 50053, the low income rent calculations are based on household income at 60% of AMI, with 30% of income allotted to housing related expenses. See APPENDIX B.

Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF CC 5% Low Page 55 of 126

APPENDIX D - EXHIBIT IV - TABLE 3

INCLUSIONARY HOUSING IMPACTS
5% LOW INCOME SCENARIO
COYOTE CANYON PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX D - EXHIBIT IV - TABLE 2 Threshold Return on Total Investment i
Total Supportable Investment
II. Total Development Cost See APPENDIX D - EXHIBIT IV - TABLE 1 $8,225,000

4.40%
$187,071,000
$193,806,000
Total Financial Impact ($6,735,000)
Property Acquisition Cost Reduction 15% of Estimated Current Acquisition Prices Developer Return 4.2% Based on Estimated Current Property Acquisition Costs % Rent Increase to Offset Impact 3.4% Market Rate Units 1 Based on the Developer Return estimated to be generated by the ZONING COMPLIANT: MARKET RATE SCENARIO.

Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF CC 5% Low Page 56 of 126

APPENDIX D - EXHIBIT V

PRO FORMA ANALYSIS
10% LOW INCOME SCENARIO
COYOTE CANYON PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF CC 10% Low Page 57 of 126

APPENDIX D - EXHIBIT V - TABLE 1

ESTIMATED DEVELOPMENT COSTS
10% LOW INCOME SCENARIO
COYOTE CANYON PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Property Acquisition Costs
II. Direct Costs
On -Site Improvements/Landscaping
Parking
At -Grade Spaces
Above -Ground Spaces
Building Costs
Contractor/DC Contingency Allow
Total Direct Costs
1 304,920
Sf of Land
2 $5,000
304,920
Sf of Land
3 /Space
140
Spaces
560
Spaces
354,667
Sf of GBA
4 20%
Other Direct Costs
354,667
Sf of GBA
III. Indirect Costs
Architecture, Engineering & Consulting
Public Permits & Fees 6
Taxes, Insurance, Legal & Accounting
Marketing
Developer Fee
Soft Cost Contingency Allowance
Total Indirect Costs
IV. Financing Costs
Interest During Construction
Land
Construction
Loan Origination Fees
Total Financing Costs
V
6% Direct Costs
280 Units
2% Direct Costs
280 Units
5% Direct Costs
5% Other Indirect Costs
6 $45,003,200 Cost
7 $148,047,000 Cost
60% Loan to Cost
$150 /Sf of Land $45,738,000
$30
/Sf of Land
$9,148,000
$5,000
/Space
700,000
$25,000
/Space
14,000,000
$180
/Sf of GBA
63,840,000
17,538,000
$297
/Sf of GBA
$105,226,000
$6,314,000
$68,000 /Unit 19,040,000
2,105,000
$1,000 /Unit 280,000
5,261,000
1,650,000

3.6% Avg Rate $2,430,000

3.6% Avg Rate 3,997,000

1.5 Points 1,744,000
$34,650,000
$8,171,000
Total Construction Cost 280 Units $529,000 /Unit $148,047,000 Total Development Cost 280 Units $692,000 /Unit $193,785,000 1 Estimated in part based on a sales survey of properties available for residential development in Newport Beach. 2 Based on the estimated costs for similar uses.
3 The base requirement is for 2.0 spaces per unit plus 0.50 spaces per unit for guest parking. 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. s Based on the public permits and fees estimates and impact fee estimates provided in the August 2021 draft Housing Element. 6 Based on an 18 month construction period following receipt of entitlements, and a 100% average outstanding loan balance. 7 Based on an 18 month construction period following receipt of entitlements, and a 50% average outstanding loan balance.

Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF CC 10% Low Page 58 of 126

APPENDIX D - EXHIBIT V - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
10% LOW INCOME SCENARIO
COYOTE CANYON PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Gross Income
A. Market Rate Units i
Studio Units
0 Units @
$0
/Unit/Month
$0
One -Bedroom Units
88 Units @
$3,349
/Unit/Month
3,536,000
Two -Bedroom Units
139
Units @
$3,593
/Unit/Month
5,993,000
Three -Bedroom Units
25 Units @
$4,421
/Unit/Month
1,326,000
B. Low Income Units z
Studio Units
0 Units @
$1,054
/Unit/Month
0 One -Bedroom Units
10 Units @
$1,203
/Unit/Month
144,000
Two -Bedroom Units
15 Units @
$1,334
/Unit/Month
240,000
Three -Bedroom Units
3 Units @
$1,464
/Unit/Month
53,000
C. Miscellaneous Income
280
Units @
$75
/Unit/Month
252,000
Total Gross Income
$11,544,000
Vacancy & Collection Allowance
5%
Gross Income
(577,000)
II. Effective Gross Income
$10,967,000
III. Operating Expenses
General Operating Expenses
280
Units @
$4,500
/Unit
$1,260,000
Property Taxes
280
Units @
$6,200
/Unit
1,743,000
Replacement Reserve Deposits
280
Units @
$150
/Unit
42,000
Total Operating Expenses
280
Units @
$10,875
/Unit
($3,045,000)
IV. I Stabilized Net Operating Income $7,922,000
i Based in part on the rent survey presented in APPENDIX A - EXHIBIT II. The weighted average monthly rent equates to $3.78 per square foot of leasable area.
z Under Section 50053, the low income rent calculations are based on household income at 60% of AMI, with 30% of income allotted to housing related expenses. See APPENDIX B.

Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF CC 10% Low Page 59 of 126

APPENDIX D - EXHIBIT V - TABLE 3

INCLUSIONARY HOUSING IMPACTS
10% LOW INCOME SCENARIO
COYOTE CANYON PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX D - EXHIBIT V - TABLE 2 Threshold Return on Total Investment i
Total Supportable Investment
II. Total Development Cost See APPENDIX D - EXHIBIT V - TABLE 1 $7,922,000

4.40%
$180,179,000
$193,785,000
Total Financial Impact ($13,606,000)
Property Acquisition Cost Reduction 30% of Estimated Current Acquisition Prices Developer Return 4.1% Based on Estimated Current Property Acquisition Costs % Rent Increase to Offset Impact 7.3% Market Rate Units 1 Based on the Developer Return estimated to be generated by the ZONING COMPLIANT: MARKET RATE SCENARIO.

Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF CC 10% Low Page 60 of 126

APPENDIX D - EXHIBIT VI

PRO FORMA ANALYSIS
15% LOW INCOME SCENARIO
COYOTE CANYON PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF CC 15% Low Page 61 of 126

APPENDIX D - EXHIBIT VI - TABLE 1

ESTIMATED DEVELOPMENT COSTS
15% LOW INCOME SCENARIO
COYOTE CANYON PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Property Acquisition Costs
II. Direct Costs
On -Site Improvements/Landscaping
Parking
At -Grade Spaces
Above -Ground Spaces
Building Costs
Contractor/DC Contingency Allow
Total Direct Costs
1 304,920
Sf of Land
2 $5,000
304,920
Sf of Land
3 /Space
140
Spaces
560
Spaces
354,667
Sf of GBA
4 20%
Other Direct Costs
354,667
Sf of GBA
III. Indirect Costs
Architecture, Engineering & Consulting
Public Permits & Fees 6
Taxes, Insurance, Legal & Accounting
Marketing
Developer Fee
Soft Cost Contingency Allowance
Total Indirect Costs
IV. Financing Costs
Interest During Construction
Land
Construction
Loan Origination Fees
Total Financing Costs
V
6% Direct Costs
280 Units
2% Direct Costs
280 Units
5% Direct Costs
5% Other Indirect Costs
6 $44,639,500 Cost
7 $148,028,000 Cost
60% Loan to Cost
$150 /Sf of Land $45,738,000
$30
/Sf of Land
$9,148,000
$5,000
/Space
700,000
$25,000
/Space
14,000,000
$180
/Sf of GBA
63,840,000
17,538,000
$297
/Sf of GBA
$105,226,000
$6,314,000
$68,000 /Unit 19,040,000
2,105,000
$1,000 /Unit 280,000
5,261,000
1,650,000

3.6% Avg Rate $2,411,000

3.6% Avg Rate 3,997,000

1.5 Points 1,744,000
$34,650,000
$8,152,000
Total Construction Cost 280 Units $529,000 /Unit $148,028,000 Total Development Cost 280 Units $692,000 /Unit $193,766,000 1 Estimated in part based on a sales survey of properties available for residential development in Newport Beach. 2 Based on the estimated costs for similar uses.
3 The base requirement is for 2.0 spaces per unit plus 0.50 spaces per unit for guest parking. 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. s Based on the public permits and fees estimates and impact fee estimates provided in the August 2021 draft Housing Element. 6 Based on an 18 month construction period following receipt of entitlements, and a 100% average outstanding loan balance. 7 Based on an 18 month construction period following receipt of entitlements, and a 50% average outstanding loan balance.

Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF CC 15% Low Page 62 of 126

APPENDIX D - EXHIBIT VI - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
15% LOW INCOME SCENARIO
COYOTE CANYON PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Gross Income
A. Market Rate Units i
Studio Units
0 Units @
$0
/Unit/Month
$0
One -Bedroom Units
83 Units @
$3,349
/Unit/Month
3,335,000
Two -Bedroom Units
131
Units @
$3,593
/Unit/Month
5,648,000
Three -Bedroom Units
24 Units @
$4,421
/Unit/Month
1,273,000
B. Low Income Units z
Studio Units
0 Units @
$1,054
/Unit/Month
0 One -Bedroom Units
15 Units @
$1,203
/Unit/Month
217,000
Two -Bedroom Units
23 Units @
$1,334
/Unit/Month
368,000
Three -Bedroom Units
4 Units @
$1,464
/Unit/Month
70,000
C. Miscellaneous Income
280
Units @
$75
/Unit/Month
252,000
Total Gross Income
$11,163,000
Vacancy & Collection Allowance
5%
Gross Income
(558,000)
II. Effective Gross Income
$10,605,000
III. Operating Expenses
General Operating Expenses
280
Units @
$4,500
/Unit
$1,260,000
Property Taxes
280
Units @
$6,000
/Unit
1,678,000
Replacement Reserve Deposits
280
Units @
$150
/Unit
42,000
Total Operating Expenses
280
Units @
$10,643
/Unit
($2,980,000)
IV. I Stabilized Net Operating Income $7,625,000
i Based in part on the rent survey presented in APPENDIX A - EXHIBIT II. The weighted average monthly rent equates to $3.78 per square foot of leasable area.
z Under Section 50053, the low income rent calculations are based on household income at 60% of AMI, with 30% of income allotted to housing related expenses. See APPENDIX B.

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File name: 2 17 22 NB Rent; PF CC 15% Low Page 63 of 126

APPENDIX D - EXHIBIT VI - TABLE 3

INCLUSIONARY HOUSING IMPACTS
15% LOW INCOME SCENARIO
COYOTE CANYON PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX D - EXHIBIT VI - TABLE 2 Threshold Return on Total Investment i
Total Supportable Investment
II. Total Development Cost See APPENDIX D - EXHIBIT VI - TABLE 1 $7,625,000

4.40%
$173,424,000
$193,766,000
Total Financial Impact ($20,342,000)
Property Acquisition Cost Reduction 44% of Estimated Current Acquisition Prices Developer Return 3.9% Based on Estimated Current Property Acquisition Costs % Rent Increase to Offset Impact 11.6% Market Rate Units 1 Based on the Developer Return estimated to be generated by the ZONING COMPLIANT: MARKET RATE SCENARIO.

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File name: 2 17 22 NB Rent; PF CC 15% Low Page 64 of 126

APPENDIX D - EXHIBIT VII

PRO FORMA ANALYSIS
20% LOW INCOME SCENARIO
COYOTE CANYON PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF CC 20% Low Page 65 of 126

APPENDIX D - EXHIBIT VII - TABLE 1

ESTIMATED DEVELOPMENT COSTS
20% LOW INCOME SCENARIO
COYOTE CANYON PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Property Acquisition Costs
II. Direct Costs
On -Site Improvements/Landscaping
Parking
At -Grade Spaces
Above -Ground Spaces
Building Costs
Contractor/DC Contingency Allow
Total Direct Costs
1 304,920
Sf of Land
2 $5,000
304,920
Sf of Land
3 /Space
140
Spaces
560
Spaces
354,667
Sf of GBA
4 20%
Other Direct Costs
354,667
Sf of GBA
III. Indirect Costs
Architecture, Engineering & Consulting
Public Permits & Fees 6
Taxes, Insurance, Legal & Accounting
Marketing
Developer Fee
Soft Cost Contingency Allowance
Total Indirect Costs
IV. Financing Costs
Interest During Construction
Land
Construction
Loan Origination Fees
Total Financing Costs
V
6% Direct Costs
280 Units
2% Direct Costs
280 Units
5% Direct Costs
5% Other Indirect Costs
6 $44,267,300 Cost
7 $148,006,000 Cost
60% Loan to Cost
$150 /Sf of Land $45,738,000
$30
/Sf of Land
$9,148,000
$5,000
/Space
700,000
$25,000
/Space
14,000,000
$180
/Sf of GBA
63,840,000
17,538,000
$297
/Sf of GBA
$105,226,000
$6,314,000
$68,000 /Unit 19,040,000
2,105,000
$1,000 /Unit 280,000
5,261,000
1,650,000

3.6% Avg Rate $2,390,000

3.6% Avg Rate 3,996,000

1.5 Points 1,744,000
$34,650,000
$8,130,000
Total Construction Cost 280 Units $529,000 /Unit $148,006,000 Total Development Cost 280 Units $692,000 /Unit $193,744,000 1 Estimated in part based on a sales survey of properties available for residential development in Newport Beach. 2 Based on the estimated costs for similar uses.
3 The base requirement is for 2.0 spaces per unit plus 0.50 spaces per unit for guest parking. 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. s Based on the public permits and fees estimates and impact fee estimates provided in the August 2021 draft Housing Element. 6 Based on an 18 month construction period following receipt of entitlements, and a 100% average outstanding loan balance. 7 Based on an 18 month construction period following receipt of entitlements, and a 50% average outstanding loan balance.

Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF CC 20% Low Page 66 of 126

APPENDIX D - EXHIBIT VII - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
20% LOW INCOME SCENARIO
COYOTE CANYON PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Gross Income
A. Market Rate Units i
Studio Units
0 Units @
$0
/Unit/Month
$0
One -Bedroom Units
78 Units @
$3,349
/Unit/Month
3,134,000
Two -Bedroom Units
124
Units @
$3,593
/Unit/Month
5,346,000
Three -Bedroom Units
22 Units @
$4,421
/Unit/Month
1,167,000
B. Low Income Units z
Studio Units
0 Units @
$1,054
/Unit/Month
0 One -Bedroom Units
20 Units @
$1,203
/Unit/Month
289,000
Two -Bedroom Units
30 Units @
$1,334
/Unit/Month
480,000
Three -Bedroom Units
6 Units @
$1,464
/Unit/Month
105,000
C. Miscellaneous Income
280
Units @
$75
/Unit/Month
252,000
Total Gross Income
$10,773,000
Vacancy & Collection Allowance
5%
Gross Income
(539,000)
II. Effective Gross Income
$10,234,000
III. Operating Expenses
General Operating Expenses
280
Units @
$4,500
/Unit
$1,260,000
Property Taxes
280
Units @
$5,800
/Unit
1,611,000
Replacement Reserve Deposits
280
Units @
$150
/Unit
42,000
Total Operating Expenses
280
Units @
$10,404
/Unit
($2,913,000)
IV. I Stabilized Net Operating Income $7,321,000
i Based in part on the rent survey presented in APPENDIX A - EXHIBIT II. The weighted average monthly rent equates to $3.78 per square foot of leasable area.
z Under Section 50053, the low income rent calculations are based on household income at 60% of AMI, with 30% of income allotted to housing related expenses. See APPENDIX B.

Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF CC 20% Low Page 67 of 126

APPENDIX D - EXHIBIT VII - TABLE 3

INCLUSIONARY HOUSING IMPACTS
20% LOW INCOME SCENARIO
COYOTE CANYON PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX D - EXHIBIT VII - TABLE 2 Threshold Return on Total Investment i
Total Supportable Investment
II. Total Development Cost See APPENDIX D - EXHIBIT VII - TABLE 1 $7,321,000

4.40%
$166,510,000
$193,744,000
Total Financial Impact ($27,234,000)
Property Acquisition Cost Reduction 60% of Estimated Current Acquisition Prices Developer Return 3.8% Based on Estimated Current Property Acquisition Costs % Rent Increase to Offset Impact 16.6% Market Rate Units 1 Based on the Developer Return estimated to be generated by the ZONING COMPLIANT: MARKET RATE SCENARIO.

Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF CC 20% Low Page 68 of 126

APPENDIX E

PRO FORMA ANALYSES

NEWPORT CENTER PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; App E Title Page 69 of 126

APPENDIX E - EXHIBIT I

PRO FORMA ANALYSIS

MARKET RATE SCENARIO
NEWPORT CENTER PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF Nwp Ctr Mkt Page 70 of 126

APPENDIX E - EXHIBIT I - TABLE 1

ESTIMATED DEVELOPMENT COSTS

MARKET RATE SCENARIO
NEWPORT CENTER PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Property Acquisition Costs
II. Direct Costs
On -Site Improvements/Landscaping
Parking
At -Grade Spaces
Above -Ground Spaces
Building Costs
Contractor/DC Contingency Allow
Total Direct Costs
1 261,360
Sf of Land
2 $5,000
261,360
Sf of Land
3 /Space
120
Spaces
480
Spaces
388,000
Sf of GBA
4 20%
Other Direct Costs
388,000
Sf of GBA
III. Indirect Costs
Architecture, Engineering & Consulting
Public Permits & Fees 6
Taxes, Insurance, Legal & Accounting
Marketing
Developer Fee
Soft Cost Contingency Allowance
Total Indirect Costs
IV. Financing Costs
Interest During Construction
Land
Construction
Loan Origination Fees
Total Financing Costs
V
1 2
3 4
s
6 7
6% Direct Costs
240 Units
2% Direct Costs
240 Units
5% Direct Costs
5% Other Indirect Costs
6 $78,408,000 Cost
7 $180,330,000 Cost
60% Loan to Cost
$300 /Sf of Land $78,408,000
$40
/Sf of Land
$10,454,000
$5,000
/Space
600,000
$25,000
/Space
12,000,000
$225
/Sf of GBA
87,300,000
22,071,000
$341
/Sf of GBA
$132,425,000
$7,946,000
$68,000 /Unit 16,320,000
2,649,000
$5,000 /Unit 1,200,000
6,621,000
1,737,000

3.6% Avg Rate $4,234,000

3.6% Avg Rate 4,869,000

1.5 Points 2,329,000
$36,473,000
$11,432,000
Total Construction Cost 240 Units $751,000 /Unit $180,330,000 Total Development Cost 240 Units $1,078,000 /Unit $258,738,000 Estimated in part based on a sales survey of properties available for residential development in Newport Beach.

Based on the estimated costs for similar uses.

The base requirement is for 2.0 spaces per unit plus 0.50 spaces per unit for guest parking.

Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance.

Based on the public permits and fees estimates and impact fee estimates provided in the August 2021 draft Housing Element.

Based on an 18 month construction period following receipt of entitlements, and a 100% average outstanding loan balance.

Based on an 18 month construction period following receipt of entitlements, and a 50% average outstanding loan balance.

Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF Nwp Ctr Mkt

Page 71 of 126 ends

APPENDIX E - EXHIBIT I - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME

MARKET RATE SCENARIO
NEWPORT CENTER PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Gross Income
A. Market Rate Units i
Studio Units
0 Units @
$0
/Unit/Month
$0
One -Bedroom Units
72 Units @
$4,652
/Unit/Month
4,019,000
Two -Bedroom Units
144
Units @
$6,569
/Unit/Month
11,352,000
Three -Bedroom Units
24 Units @
$7,002
/Unit/Month
2,017,000
B. Miscellaneous Income
240
Units @
$300
/Unit/Month
864,000
Total Gross Income
$18,252,000
Vacancy & Collection Allowance
5%
Gross Income
(913,000)
II. Effective Gross Income
$17,339,000
III. Operating Expenses
General Operating Expenses
240
Units @
$4,500
/Unit
$1,080,000
Property Taxes
240
Units @
$12,200
/Unit
2,925,000
Replacement Reserve Deposits
240
Units @
$150
/Unit
36,000
Total Operating Expenses
($4,041,000)
IV. I Stabilized Net Operating Income $13,298,000
1 Based in part on the rent survey presented in APPENDIX A - EXHIBIT III. The weighted average monthly rent equates to $4.98 per square foot of leasable area.

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File name: 2 17 22 NB Rent; PF Nwp Ctr Mkt Page 72 of 126

APPENDIX E - EXHIBIT I - TABLE 3

ESTIMATED STABILIZED RETURN ON INVESTMENT

MARKET RATE SCENARIO
NEWPORT CENTER PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Stabilized Net Operating Income See APPENDIX E - EXHIBIT I - TABLE 2 $13,298,000 II. Total Development Cost See APPENDIX E - EXHIBIT I - TABLE 1 $258,738,000 III. I Estimated Stabilized Return on Investment 5.1%
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File name: 2 17 22 NB Rent; PF Nwp Ctr Mkt Page 73 of 126

APPENDIX E - EXHIBIT II

PRO FORMA ANALYSIS
RECOMMENDED REQUIREMENT: 7% LOW INCOME UNITS
NEWPORT CENTER PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF Nwp Ctr Base Low Page 74 of 126

APPENDIX E - EXHIBIT II - TABLE 1

ESTIMATED DEVELOPMENT COSTS
RECOMMENDED REQUIREMENT: 7% LOW INCOME UNITS
NEWPORT CENTER PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Property Acquisition Costs
II. Direct Costs
On -Site Improvements/Landscaping
Parking
At -Grade Spaces
Above -Ground Spaces
Building Costs
Contractor/DC Contingency Allow
Total Direct Costs
1 261,360
Sf of Land
2 $5,000
261,360
Sf of Land
3 /Space
120
Spaces
480
Spaces
388,000
Sf of GBA
4 20%
Other Direct Costs
388,000
Sf of GBA
III. Indirect Costs
Architecture, Engineering & Consulting
Public Permits & Fees 6
Taxes, Insurance, Legal & Accounting
Marketing
Developer Fee
Soft Cost Contingency Allowance
Total Indirect Costs
IV. Financing Costs
Interest During Construction
Land
Construction
Loan Origination Fees
Total Financing Costs
V
6% Direct Costs
240 Units
2% Direct Costs
240 Units
5% Direct Costs
5% Other Indirect Costs
6 $77,618,200 Cost
7 $180,285,000 Cost
60% Loan to Cost
$300 /Sf of Land $78,408,000
$40
/Sf of Land
$10,454,000
$5,000
/Space
600,000
$25,000
/Space
12,000,000
$225
/Sf of GBA
87,300,000
22,071,000
$341
/Sf of GBA
$132,425,000
$7,946,000
$68,000 /Unit 16,320,000
2,649,000
$5,000 /Unit 1,200,000
6,621,000
1,737,000

3.6% Avg Rate $4,191,000

3.6% Avg Rate 4,868,000

1.5 Points 2,328,000
$36,473,000
$11,387,000
Total Construction Cost 240 Units $751,000 /Unit $180,285,000 Total Development Cost 240 Units $1,078,000 /Unit $258,693,000 1 Estimated in part based on a sales survey of properties available for residential development in Newport Beach. 2 Based on the estimated costs for similar uses.
3 The base requirement is for 2.0 spaces per unit plus 0.50 spaces per unit for guest parking. 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. s Based on the public permits and fees estimates and impact fee estimates provided in the August 2021 draft Housing Element. 6 Based on an 18 month construction period following receipt of entitlements, and a 100% average outstanding loan balance. 7 Based on an 18 month construction period following receipt of entitlements, and a 50% average outstanding loan balance.

Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF Nwp Ctr Base Low Page 75 of 126

APPENDIX E - EXHIBIT II - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
RECOMMENDED REQUIREMENT: 7% LOW INCOME UNITS
NEWPORT CENTER PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Gross Income
A. Market Rate Units i
Studio Units
0 Units @
$0
/Unit/Month
$0
One -Bedroom Units
67 Units @
$4,652
/Unit/Month
3,740,000
Two -Bedroom Units
134
Units @
$6,569
/Unit/Month
10,564,000
Three -Bedroom Units
22 Units @
$7,002
/Unit/Month
1,849,000
B. Low Income Units z
Studio Units
0 Units @
$1,054
/Unit/Month
0 One -Bedroom Units
5 Units @
$1,203
/Unit/Month
72,000
Two -Bedroom Units
10 Units @
$1,334
/Unit/Month
160,000
Three -Bedroom Units
2 Units @
$1,464
/Unit/Month
35,000
C. Miscellaneous Income
240
Units @
$300
/Unit/Month
864,000
Total Gross Income
$17,284,000
Vacancy & Collection Allowance
5%
Gross Income
(864,000)
II. Effective Gross Income
$16,420,000
III. Operating Expenses
General Operating Expenses
240
Units @
$4,500
/Unit
$1,080,000
Property Taxes
240
Units @
$11,500
/Unit
2,760,000
Replacement Reserve Deposits
240
Units @
$150
/Unit
36,000
Total Operating Expenses
240
Units @
$16,150
/Unit
($3,876,000)
IV. I Stabilized Net Operating Income $12,544,000
i Based in part on the rent survey presented in APPENDIX A - EXHIBIT III. The weighted average monthly rent equates to $4.98 per square foot of leasable area.
z Under Section 50053, the low income rent calculations are based on household income at 60% of AMI, with 30% of income allotted to housing related expenses. See APPENDIX B.

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File name: 2 17 22 NB Rent; PF Nwp Ctr Base Low Page 76 of 126

APPENDIX E - EXHIBIT II - TABLE 3

INCLUSIONARY HOUSING IMPACTS
RECOMMENDED REQUIREMENT: 7% LOW INCOME UNITS
NEWPORT CENTER PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX E - EXHIBIT II - TABLE 2 Threshold Return on Total Investment i
Total Supportable Investment
II. Total Development Cost See APPENDIX E - EXHIBIT II - TABLE 1 $12,544,000

5.14%
$244,067,000
$258,693,000
Total Financial Impact ($14,626,000)
Property Acquisition Cost Reduction 19% of Estimated Current Acquisition Prices Developer Return 4.8% Based on Estimated Current Property Acquisition Costs % Rent Increase to Offset Impact 5.9% Market Rate Units 1 Based on the Developer Return estimated to be generated by the ZONING COMPLIANT: MARKET RATE SCENARIO.

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File name: 2 17 22 NB Rent; PF Nwp Ctr Base Low Page 77 of 126

APPENDIX E - EXHIBIT III

PRO FORMA ANALYSIS

DENSITY BONUS SCENARIO
NEWPORT CENTER PROTOTYPE: 50% SECTION 65915 DENSITY BONUS

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
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File name: 2 17 22 NB Rent; PF Nwp Ctr DB Page 78 of 126

APPENDIX E - EXHIBIT III - TABLE 1

ESTIMATED DEVELOPMENT COSTS

DENSITY BONUS SCENARIO
NEWPORT CENTER PROTOTYPE: 50% SECTION 65915 DENSITY BONUS

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Property Acquisition Costs 1
261,360 Sf of Land
$300
/Sf of Land
$78,408,000
II. Direct Costs z
On -Site Improvements/Landscaping
261,360 Sf of Land
$40
/Sf of Land
$10,454,000
Parking 3
At -Grade Spaces
0 Spaces
$5,000
/Space
0 Above -Ground Spaces
612 Spaces
$25,000
/Space
15,300,000
Semi -Subterranean Spaces
0 Spaces
$35,000
/Space
0 Building Costs
582,000 Sf of GBA
$225
/Sf of GBA
130,950,000
Contractor/DC Contingency Allow 4
20% Other Direct Costs
31,341,000
Total Direct Costs
582,000 Sf of GBA
$323
/Sf of GBA
$188,045,000
III. Indirect Costs
Architecture, Engineering & Consulting
6% Direct Costs
$11,283,000
Public Permits & Fees s
360 Units
$68,000
/Unit
24,480,000
Taxes, Insurance, Legal & Accounting
2% Direct Costs
3,761,000
Marketing
360 Units
$5,000
/Unit
1,800,000
Developer Fee
5% Direct Costs
9,402,000
Soft Cost Contingency Allowance
5% Other Indirect Costs
2,536,000
Total Indirect Costs
$53,262,000
IV. Financing Costs
Interest During Construction
Land 6
$78,408,000 Cost

3.6%
Avg Rate
$4,234,000
Construction 7
$255,443,000 Cost

3.6%
Avg Rate
6,897,000
Loan Origination Fees
60% Loan to Cost

1.5 Points
3,005,000
Total Financing Costs
$14,136,000
V.

Total Construction Cost 360 Units $710,000 /Unit $255,443,000 Total Development Cost 360 Units $927,000 /Unit $333,851,000 1 Estimated in part based on a sales survey of properties available for residential development in Newport Beach. z Based on the estimated costs for similar uses.
3 Section 65915 (p) requires jurisdictions to allow projects to meet statutorily established parking standards. For marketability reasons, KMA set the parking standards at 1.0 space per Studio Units unit; 1.0 space per One -Bedroom Units unit; 2.0 spaces per Two -Bedroom Units unit; and 2.0 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. s Based on the public permits and fees estimates and impact fee estimates provided in the August 2021 draft Housing Element. 6 Based on an 18 month construction period following receipt of entitlements, and a 100% average outstanding loan balance. 7 Based on an 18 month construction period following receipt of entitlements, and a 50% average outstanding loan balance.

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File name: 2 17 22 NB Rent; PF Nwp Ctr DB Page 79 of 126

APPENDIX E - EXHIBIT III - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME

DENSITY BONUS SCENARIO
NEWPORT CENTER PROTOTYPE: 50% SECTION 65915 DENSITY BONUS

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Gross Income
A. Market Rate Units i
Studio Units
0 Units @
$0
/Unit/Month
$0
One -Bedroom Units
97 Units @
$4,652
/Unit/Month
5,415,000
Two -Bedroom Units
194
Units @
$6,569
/Unit/Month
15,294,000
Three -Bedroom Units
32 Units @
$7,002
/Unit/Month
2,689,000
B. Density Bonus Units z
Studio Units
0 Units @
$867
/Unit/Month
0 One -Bedroom Units
11 Units @
$990
/Unit/Month
131,000
Two -Bedroom Units
22 Units @
$1,094
/Unit/Month
289,000
Three -Bedroom Units
4 Units @
$1,197
/Unit/Month
57,000
C. Miscellaneous Income
360
Units @
$300
/Unit/Month
1,296,000
Total Gross Income
$25,171,000
Vacancy & Collection Allowance
5%
Gross Income
(1,259,000)
II. Effective Gross Income
$23,912,000
III. Operating Expenses
General Operating Expenses
360
Units @
$4,500
/Unit
$1,620,000
Property Taxes
360
Units @
$11,100
/Unit
4,010,000
Replacement Reserve Deposits
360
Units @
$150
/Unit
54,000
Total Operating Expenses
360
Units @
$15,789
/Unit
($5,684,000)
IV. I Stabilized Net Operating Income $18,228,000
i Based in part on the rent survey presented in APPENDIX A - EXHIBIT III. The weighted average monthly rent equates to $4.98 per square foot of leasable area.
z Under Section 65915 (f) (2), 15% of the Base Units are set aside for very -low income households. Section 65915 (c) (1) (B) (i) calculates very low income rents based on household income at 50% of AMI, with 30% of income allotted to housing related expenses. See APPENDIX B.

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APPENDIX E - EXHIBIT III - TABLE 3

INCLUSIONARY HOUSING IMPACTS

DENSITY BONUS SCENARIO
NEWPORT CENTER PROTOTYPE: 50% SECTION 65915 DENSITY BONUS

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX E - EXHIBIT III - TABLE 2 Threshold Return on Total Investment i
Total Supportable Investment
II. Total Development Cost See APPENDIX E - EXHIBIT III - TABLE 1 $18,228,000

5.14%
$354,661,000
$333,851,000
Total Financial Impact $20,810,000
Property Acquisition Cost Reduction 0% of Estimated Current Acquisition Prices Developer Return 5.46% Based on Estimated Current Property Acquisition Costs % Rent Increase to Offset Impact 0.0% Market Rate Units 1 Based on the Developer Return estimated to be generated by the ZONING COMPLIANT: MARKET RATE SCENARIO.

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APPENDIX E - EXHIBIT IV

PRO FORMA ANALYSIS
5% LOW INCOME SCENARIO
NEWPORT CENTER PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
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File name: 2 17 22 NB Rent; PF Nwp Ctr 5% Low Page 82 of 126

APPENDIX E - EXHIBIT IV - TABLE 1

ESTIMATED DEVELOPMENT COSTS
5% LOW INCOME SCENARIO
NEWPORT CENTER PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Property Acquisition Costs
II. Direct Costs
On -Site Improvements/Landscaping
Parking
At -Grade Spaces
Above -Ground Spaces
Building Costs
Contractor/DC Contingency Allow
Total Direct Costs
1 261,360
Sf of Land
2 $5,000
261,360
Sf of Land
3 /Space
120
Spaces
480
Spaces
388,000
Sf of GBA
4 20%
Other Direct Costs
388,000
Sf of GBA
III. Indirect Costs
Architecture, Engineering & Consulting
Public Permits & Fees 6
Taxes, Insurance, Legal & Accounting
Marketing
Developer Fee
Soft Cost Contingency Allowance
Total Indirect Costs
IV. Financing Costs
Interest During Construction
Land
Construction
Loan Origination Fees
Total Financing Costs
V
6% Direct Costs
240 Units
2% Direct Costs
240 Units
5% Direct Costs
5% Other Indirect Costs
6 $77,860,200 Cost
7 $180,298,000 Cost
60% Loan to Cost
$300 /Sf of Land $78,408,000
$40
/Sf of Land
$10,454,000
$5,000
/Space
600,000
$25,000
/Space
12,000,000
$225
/Sf of GBA
87,300,000
22,071,000
$341
/Sf of GBA
$132,425,000
$7,946,000
$68,000 /Unit 16,320,000
2,649,000
$5,000 /Unit 1,200,000
6,621,000
1,737,000

3.6% Avg Rate $4,204,000

3.6% Avg Rate 4,868,000

1.5 Points 2,328,000
$36,473,000
$11,400,000
Total Construction Cost 240 Units $751,000 /Unit $180,298,000 Total Development Cost 240 Units $1,078,000 /Unit $258,706,000 1 Estimated in part based on a sales survey of properties available for residential development in Newport Beach. 2 Based on the estimated costs for similar uses.
3 The base requirement is for 2.0 spaces per unit plus 0.50 spaces per unit for guest parking. 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. s Based on the public permits and fees estimates and impact fee estimates provided in the August 2021 draft Housing Element. 6 Based on an 18 month construction period following receipt of entitlements, and a 100% average outstanding loan balance. 7 Based on an 18 month construction period following receipt of entitlements, and a 50% average outstanding loan balance.

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File name: 2 17 22 NB Rent; PF Nwp Ctr 5% Low Page 83 of 126

APPENDIX E - EXHIBIT IV - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
5% LOW INCOME SCENARIO
NEWPORT CENTER PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Gross Income
A. Market Rate Units i
Studio Units
0 Units @
$0
/Unit/Month
$0
One -Bedroom Units
68 Units @
$4,652
/Unit/Month
3,796,000
Two -Bedroom Units
137
Units @
$6,569
/Unit/Month
10,800,000
Three -Bedroom Units
23 Units @
$7,002
/Unit/Month
1,933,000
B. Low Income Units z
Studio Units
0 Units @
$1,054
/Unit/Month
0 One -Bedroom Units
4 Units @
$1,203
/Unit/Month
58,000
Two -Bedroom Units
7 Units @
$1,334
/Unit/Month
112,000
Three -Bedroom Units
1 Unit @
$1,464
/Unit/Month
18,000
C. Miscellaneous Income
240
Units @
$300
/Unit/Month
864,000
Total Gross Income
$17,581,000
Vacancy & Collection Allowance
5%
Gross Income
(879,000)
II. Effective Gross Income
$16,702,000
III. Operating Expenses
General Operating Expenses
240
Units @
$4,500
/Unit
$1,080,000
Property Taxes
240
Units @
$11,700
/Unit
2,811,000
Replacement Reserve Deposits
240
Units @
$150
/Unit
36,000
Total Operating Expenses
240
Units @
$16,363
/Unit
($3,927,000)
IV. I Stabilized Net Operating Income $12,775,000
i Based in part on the rent survey presented in APPENDIX A - EXHIBIT III. The weighted average monthly rent equates to $4.98 per square foot of leasable area.
z Under Section 50053, the low income rent calculations are based on household income at 60% of AMI, with 30% of income allotted to housing related expenses. See APPENDIX B.

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APPENDIX E - EXHIBIT IV - TABLE 3

INCLUSIONARY HOUSING IMPACTS
5% LOW INCOME SCENARIO
NEWPORT CENTER PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX E - EXHIBIT IV - TABLE 2 Threshold Return on Total Investment i
Total Supportable Investment
II. Total Development Cost See APPENDIX E - EXHIBIT IV - TABLE 1 $12,775,000

5.14%
$248,562,000
$258,706,000
Total Financial Impact ($10,144,000)
Property Acquisition Cost Reduction 13% of Estimated Current Acquisition Prices Developer Return 4.9% Based on Estimated Current Property Acquisition Costs % Rent Increase to Offset Impact 4.0% Market Rate Units 1 Based on the Developer Return estimated to be generated by the ZONING COMPLIANT: MARKET RATE SCENARIO.

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APPENDIX E - EXHIBIT V

PRO FORMA ANALYSIS
10% LOW INCOME SCENARIO
NEWPORT CENTER PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
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File name: 2 17 22 NB Rent; PF Nwp Ctr 10% Low Page 86 of 126

APPENDIX E - EXHIBIT V - TABLE 1

ESTIMATED DEVELOPMENT COSTS
10% LOW INCOME SCENARIO
NEWPORT CENTER PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Property Acquisition Costs
II. Direct Costs
On -Site Improvements/Landscaping
Parking
At -Grade Spaces
Above -Ground Spaces
Building Costs
Contractor/DC Contingency Allow
Total Direct Costs
1 261,360
Sf of Land
2 $5,000
261,360
Sf of Land
3 /Space
120
Spaces
480
Spaces
388,000
Sf of GBA
4 20%
Other Direct Costs
388,000
Sf of GBA
III. Indirect Costs
Architecture, Engineering & Consulting
Public Permits & Fees 6
Taxes, Insurance, Legal & Accounting
Marketing
Developer Fee
Soft Cost Contingency Allowance
Total Indirect Costs
IV. Financing Costs
Interest During Construction
Land
Construction
Loan Origination Fees
Total Financing Costs
V
6% Direct Costs
240 Units
2% Direct Costs
240 Units
5% Direct Costs
5% Other Indirect Costs
6 $77,294,500 Cost
7 $180,267,000 Cost
60% Loan to Cost
$300 /Sf of Land $78,408,000
$40
/Sf of Land
$10,454,000
$5,000
/Space
600,000
$25,000
/Space
12,000,000
$225
/Sf of GBA
87,300,000
22,071,000
$341
/Sf of GBA
$132,425,000
$7,946,000
$68,000 /Unit 16,320,000
2,649,000
$5,000 /Unit 1,200,000
6,621,000
1,737,000

3.6% Avg Rate $4,174,000

3.6% Avg Rate 4,867,000

1.5 Points 2,328,000
$36,473,000
$11,369,000
Total Construction Cost 240 Units $751,000 /Unit $180,267,000 Total Development Cost 240 Units $1,078,000 /Unit $258,675,000 1 Estimated in part based on a sales survey of properties available for residential development in Newport Beach. 2 Based on the estimated costs for similar uses.
3 The base requirement is for 2.0 spaces per unit plus 0.50 spaces per unit for guest parking. 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. s Based on the public permits and fees estimates and impact fee estimates provided in the August 2021 draft Housing Element. 6 Based on an 18 month construction period following receipt of entitlements, and a 100% average outstanding loan balance. 7 Based on an 18 month construction period following receipt of entitlements, and a 50% average outstanding loan balance.

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File name: 2 17 22 NB Rent; PF Nwp Ctr 10% Low Page 87 of 126

APPENDIX E - EXHIBIT V - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
10% LOW INCOME SCENARIO
NEWPORT CENTER PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Gross Income
A. Market Rate Units i
Studio Units
0 Units @
$0
/Unit/Month
$0
One -Bedroom Units
65 Units @
$4,652
/Unit/Month
3,629,000
Two -Bedroom Units
129
Units @
$6,569
/Unit/Month
10,169,000
Three -Bedroom Units
22 Units @
$7,002
/Unit/Month
1,849,000
B. Low Income Units z
Studio Units
0 Units @
$1,054
/Unit/Month
0 One -Bedroom Units
7 Units @
$1,203
/Unit/Month
101,000
Two -Bedroom Units
15 Units @
$1,334
/Unit/Month
240,000
Three -Bedroom Units
2 Units @
$1,464
/Unit/Month
35,000
C. Miscellaneous Income
240
Units @
$300
/Unit/Month
864,000
Total Gross Income
$16,887,000
Vacancy & Collection Allowance
5%
Gross Income
(844,000)
II. Effective Gross Income
$16,043,000
III. Operating Expenses
General Operating Expenses
240
Units @
$4,500
/Unit
$1,080,000
Property Taxes
240
Units @
$11,200
/Unit
2,692,000
Replacement Reserve Deposits
240
Units @
$150
/Unit
36,000
Total Operating Expenses
240
Units @
$15,867
/Unit
($3,808,000)
IV. I Stabilized Net Operating Income $12,235,000
i Based in part on the rent survey presented in APPENDIX A - EXHIBIT III. The weighted average monthly rent equates to $4.98 per square foot of leasable area.
z Under Section 50053, the low income rent calculations are based on household income at 60% of AMI, with 30% of income allotted to housing related expenses. See APPENDIX B.

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APPENDIX E - EXHIBIT V - TABLE 3

INCLUSIONARY HOUSING IMPACTS
10% LOW INCOME SCENARIO
NEWPORT CENTER PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX E - EXHIBIT V - TABLE 2 Threshold Return on Total Investment i
Total Supportable Investment
II. Total Development Cost See APPENDIX E - EXHIBIT V - TABLE 1 $12,235,000

5.14%
$238,055,000
$258,675,000
Total Financial Impact ($20,620,000)
Property Acquisition Cost Reduction 26% of Estimated Current Acquisition Prices Developer Return 4.7% Based on Estimated Current Property Acquisition Costs % Rent Increase to Offset Impact 8.6% Market Rate Units 1 Based on the Developer Return estimated to be generated by the ZONING COMPLIANT: MARKET RATE SCENARIO.

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APPENDIX E - EXHIBIT VI

PRO FORMA ANALYSIS
15% LOW INCOME SCENARIO
NEWPORT CENTER PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF Nwp Ctr 15% Low Page 90 of 126

APPENDIX E - EXHIBIT VI - TABLE 1

ESTIMATED DEVELOPMENT COSTS
15% LOW INCOME SCENARIO
NEWPORT CENTER PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Property Acquisition Costs
II. Direct Costs
On -Site Improvements/Landscaping
Parking
At -Grade Spaces
Above -Ground Spaces
Building Costs
Contractor/DC Contingency Allow
Total Direct Costs
1 261,360
Sf of Land
2 $5,000
261,360
Sf of Land
3 /Space
120
Spaces
480
Spaces
388,000
Sf of GBA
4 20%
Other Direct Costs
388,000
Sf of GBA
III. Indirect Costs
Architecture, Engineering & Consulting
Public Permits & Fees 6
Taxes, Insurance, Legal & Accounting
Marketing
Developer Fee
Soft Cost Contingency Allowance
Total Indirect Costs
IV. Financing Costs
Interest During Construction
Land
Construction
Loan Origination Fees
Total Financing Costs
V
6% Direct Costs
240 Units
2% Direct Costs
240 Units
5% Direct Costs
5% Other Indirect Costs
6 $76,746,600 Cost
7 $180,237,000 Cost
60% Loan to Cost
$300 /Sf of Land $78,408,000
$40
/Sf of Land
$10,454,000
$5,000
/Space
600,000
$25,000
/Space
12,000,000
$225
/Sf of GBA
87,300,000
22,071,000
$341
/Sf of GBA
$132,425,000
$7,946,000
$68,000 /Unit 16,320,000
2,649,000
$5,000 /Unit 1,200,000
6,621,000
1,737,000

3.6% Avg Rate $4,144,000

3.6% Avg Rate 4,866,000

1.5 Points 2,328,000
$36,473,000
$11,338,000
Total Construction Cost 240 Units $751,000 /Unit $180,236,000 Total Development Cost 240 Units $1,078,000 /Unit $258,644,000 1 Estimated in part based on a sales survey of properties available for residential development in Newport Beach. 2 Based on the estimated costs for similar uses.
3 The base requirement is for 2.0 spaces per unit plus 0.50 spaces per unit for guest parking. 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. s Based on the public permits and fees estimates and impact fee estimates provided in the August 2021 draft Housing Element. 6 Based on an 18 month construction period following receipt of entitlements, and a 100% average outstanding loan balance. 7 Based on an 18 month construction period following receipt of entitlements, and a 50% average outstanding loan balance.

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File name: 2 17 22 NB Rent; PF Nwp Ctr 15% Low Page 91 of 126

APPENDIX E - EXHIBIT VI - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
15% LOW INCOME SCENARIO
NEWPORT CENTER PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Gross Income
A. Market Rate Units i
Studio Units
0 Units @
$0
/Unit/Month
$0
One -Bedroom Units
61 Units @
$4,652
/Unit/Month
3,405,000
Two -Bedroom Units
122
Units @
$6,569
/Unit/Month
9,618,000
Three -Bedroom Units
21 Units @
$7,002
/Unit/Month
1,765,000
B. Low Income Units z
Studio Units
0 Units @
$1,054
/Unit/Month
0 One -Bedroom Units
11 Units @
$1,203
/Unit/Month
159,000
Two -Bedroom Units
22 Units @
$1,334
/Unit/Month
352,000
Three -Bedroom Units
3 Units @
$1,464
/Unit/Month
53,000
C. Miscellaneous Income
240
Units @
$300
/Unit/Month
864,000
Total Gross Income
$16,216,000
Vacancy & Collection Allowance
5%
Gross Income
(811,000)
II. Effective Gross Income
$15,405,000
III. Operating Expenses
General Operating Expenses
240
Units @
$4,500
/Unit
$1,080,000
Property Taxes
240
Units @
$10,700
/Unit
2,577,000
Replacement Reserve Deposits
240
Units @
$150
/Unit
36,000
Total Operating Expenses
240
Units @
$15,388
/Unit
($3,693,000)
IV. I Stabilized Net Operating Income $11,712,000
i Based in part on the rent survey presented in APPENDIX A - EXHIBIT III. The weighted average monthly rent equates to $4.98 per square foot of leasable area.
z Under Section 50053, the low income rent calculations are based on household income at 60% of AMI, with 30% of income allotted to housing related expenses. See APPENDIX B.

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File name: 2 17 22 NB Rent; PF Nwp Ctr 15% Low Page 92 of 126

APPENDIX E - EXHIBIT VI - TABLE 3

INCLUSIONARY HOUSING IMPACTS
15% LOW INCOME SCENARIO
NEWPORT CENTER PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX E - EXHIBIT VI - TABLE 2 Threshold Return on Total Investment i
Total Supportable Investment
II. Total Development Cost See APPENDIX E - EXHIBIT VI - TABLE 1 $11,712,000

5.14%
$227,879,000
$258,644,000
Total Financial Impact ($30,765,000)
Property Acquisition Cost Reduction 39% of Estimated Current Acquisition Prices Developer Return 4.5% Based on Estimated Current Property Acquisition Costs % Rent Increase to Offset Impact 13.6% Market Rate Units 1 Based on the Developer Return estimated to be generated by the ZONING COMPLIANT: MARKET RATE SCENARIO.

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File name: 2 17 22 NB Rent; PF Nwp Ctr 15% Low Page 93 of 126

APPENDIX E - EXHIBIT VII

PRO FORMA ANALYSIS
20% LOW INCOME SCENARIO
NEWPORT CENTER PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF Nwp Ctr 20% Low Page 94 of 126

APPENDIX E - EXHIBIT VII - TABLE 1

ESTIMATED DEVELOPMENT COSTS
20% LOW INCOME SCENARIO
NEWPORT CENTER PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Property Acquisition Costs
II. Direct Costs
On -Site Improvements/Landscaping
Parking
At -Grade Spaces
Above -Ground Spaces
Building Costs
Contractor/DC Contingency Allow
Total Direct Costs
1 261,360
Sf of Land
2 $5,000
261,360
Sf of Land
3 /Space
120
Spaces
480
Spaces
388,000
Sf of GBA
4 20%
Other Direct Costs
388,000
Sf of GBA
III. Indirect Costs
Architecture, Engineering & Consulting
Public Permits & Fees 6
Taxes, Insurance, Legal & Accounting
Marketing
Developer Fee
Soft Cost Contingency Allowance
Total Indirect Costs
IV. Financing Costs
Interest During Construction
Land
Construction
Loan Origination Fees
Total Financing Costs
V
6% Direct Costs
240 Units
2% Direct Costs
240 Units
5% Direct Costs
5% Other Indirect Costs
6 $76,177,800 Cost
7 $180,206,000 Cost
60% Loan to Cost
$300 /Sf of Land $78,408,000
$40
/Sf of Land
$10,454,000
$5,000
/Space
600,000
$25,000
/Space
12,000,000
$225
/Sf of GBA
87,300,000
22,071,000
$341
/Sf of GBA
$132,425,000
$7,946,000
$68,000 /Unit 16,320,000
2,649,000
$5,000 /Unit 1,200,000
6,621,000
1,737,000

3.6% Avg Rate $4,114,000

3.6% Avg Rate 4,866,000

1.5 Points 2,328,000
$36,473,000
$11,308,000
Total Construction Cost 240 Units $751,000 /Unit $180,206,000 Total Development Cost 240 Units $1,078,000 /Unit $258,614,000 1 Estimated in part based on a sales survey of properties available for residential development in Newport Beach. 2 Based on the estimated costs for similar uses.
3 The base requirement is for 2.0 spaces per unit plus 0.50 spaces per unit for guest parking. 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. s Based on the public permits and fees estimates and impact fee estimates provided in the August 2021 draft Housing Element. 6 Based on an 18 month construction period following receipt of entitlements, and a 100% average outstanding loan balance. 7 Based on an 18 month construction period following receipt of entitlements, and a 50% average outstanding loan balance.

Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF Nwp Ctr 20% Low Page 95 of 126

APPENDIX E - EXHIBIT VII - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
20% LOW INCOME SCENARIO
NEWPORT CENTER PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Gross Income
A. Market Rate Units i
Studio Units
0 Units @
$0
/Unit/Month
$0
One -Bedroom Units
58 Units @
$4,652
/Unit/Month
3,238,000
Two -Bedroom Units
115
Units @
$6,569
/Unit/Month
9,066,000
Three -Bedroom Units
19 Units @
$7,002
/Unit/Month
1,596,000
B. Low Income Units z
Studio Units
0 Units @
$1,054
/Unit/Month
0 One -Bedroom Units
14 Units @
$1,203
/Unit/Month
202,000
Two -Bedroom Units
29 Units @
$1,334
/Unit/Month
464,000
Three -Bedroom Units
5 Units @
$1,464
/Unit/Month
88,000
C. Miscellaneous Income
240
Units @
$300
/Unit/Month
864,000
Total Gross Income
$15,518,000
Vacancy & Collection Allowance
5%
Gross Income
(776,000)
II. Effective Gross Income
$14,742,000
III. Operating Expenses
General Operating Expenses
240
Units @
$4,500
/Unit
$1,080,000
Property Taxes
240
Units @
$10,200
/Unit
2,457,000
Replacement Reserve Deposits
240
Units @
$150
/Unit
36,000
Total Operating Expenses
240
Units @
$14,888
/Unit
($3,573,000)
IV. I Stabilized Net Operating Income $11,169,000
i Based in part on the rent survey presented in APPENDIX A - EXHIBIT III. The weighted average monthly rent equates to $4.98 per square foot of leasable area.
z Under Section 50053, the low income rent calculations are based on household income at 60% of AMI, with 30% of income allotted to housing related expenses. See APPENDIX B.

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File name: 2 17 22 NB Rent; PF Nwp Ctr 20% Low Page 96 of 126

APPENDIX E - EXHIBIT VII - TABLE 3

INCLUSIONARY HOUSING IMPACTS
20% LOW INCOME SCENARIO
NEWPORT CENTER PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX E - EXHIBIT VII - TABLE 2 Threshold Return on Total Investment i
Total Supportable Investment
II. Total Development Cost See APPENDIX E - EXHIBIT VII - TABLE 1 $11,169,000

5.14%
$217,314,000
$258,614,000
Total Financial Impact ($41,300,000)
Property Acquisition Cost Reduction 53% of Estimated Current Acquisition Prices Developer Return 4.3% Based on Estimated Current Property Acquisition Costs % Rent Increase to Offset Impact 19.4% Market Rate Units 1 Based on the Developer Return estimated to be generated by the ZONING COMPLIANT: MARKET RATE SCENARIO.

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File name: 2 17 22 NB Rent; PF Nwp Ctr 20% Low Page 97 of 126

APPENDIX F

PRO FORMA ANALYSES

WEST NEWPORT MESA & BANNING RANCH PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; App F Title Page 98 of 126

APPENDIX F - EXHIBIT I

PRO FORMA ANALYSIS

MARKET RATE SCENARIO
WEST NEWPORT MESA & BANNING RANCH PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF WNM Mkt Page 99 of 126

APPENDIX F - EXHIBIT I - TABLE 1

ESTIMATED DEVELOPMENT COSTS

MARKET RATE SCENARIO
WEST NEWPORT MESA & BANNING RANCH PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Property Acquisition Costs
II. Direct Costs
On -Site Improvements/Landscaping
Parking
At -Grade Spaces
Above -Ground Spaces
Building Costs
Contractor/DC Contingency Allow
Total Direct Costs
1 108,900
Sf of Land
2 $5,000
108,900
Sf of Land
3 /Space
42 Spaces
166
Spaces
108,200
Sf of GBA
4 20%
Other Direct Costs
108,200
Sf of GBA
III. Indirect Costs
Architecture, Engineering & Consulting
Public Permits & Fees 6
Taxes, Insurance, Legal & Accounting
Marketing
Developer Fee
Soft Cost Contingency Allowance
Total Indirect Costs
IV. Financing Costs
Interest During Construction
Land 6
Construction 7
Loan Origination Fees
Total Financing Costs
V
1 2
3 4
s
6 7
6% Direct Costs
83 Units
2% Direct Costs
83 Units
5% Direct Costs
5% Other Indirect Costs
$16,335,000 Cost
$42,588,000 Cost
60% Loan to Cost
$150 /Sf of Land $16,335,000
$30
/Sf of Land
$3,267,000
$5,000
/Space
210,000
$25,000
/Space
4,150,000
$160
/Sf of GBA
17,312,000
4,988,000
$277
/Sf of GBA
$29,927,000
$1,796,000
$68,000 /Unit 5,644,000
599,000
$1,000 /Unit 83,000
1,496,000
481,000

3.6% Avg Rate $882,000

3.6% Avg Rate 1,150,000

1.5 Points 530,000
$10,099,000
$2,562,000
Total Construction Cost 83 Units $513,000 /Unit $42,588,000 Total Development Cost 83 Units $710,000 /Unit $58,923,000 Estimated in part based on a sales survey of properties available for residential development in Newport Beach.

Based on the estimated costs for similar uses.

The base requirement is for 2.0 spaces per unit plus 0.50 spaces per unit for guest parking.

Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance.

Based on the public permits and fees estimates and impact fee estimates provided in the August 2021 draft Housing Element.

Based on an 18 month construction period following receipt of entitlements, and a 100% average outstanding loan balance.

Based on an 18 month construction period following receipt of entitlements, and a 50% average outstanding loan balance.

Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF WNM Mkt

Page 100 of 126 ends

APPENDIX F - EXHIBIT I - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME

MARKET RATE SCENARIO
WEST NEWPORT MESA & BANNING RANCH PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Gross Income
A. Market Rate Units i
Studio Units
8 Units @
$2,665
/Unit/Month
$256,000
One -Bedroom Units
42 Units @
$3,745
/Unit/Month
1,888,000
Two -Bedroom Units
33 Units @
$4,002
/Unit/Month
1,585,000
Three -Bedroom Units
0 Units @
$0
/Unit/Month
0 B. Miscellaneous Income
83 Units @
$75
/Unit/Month
75,000
Total Gross Income
$3,804,000
Vacancy & Collection Allowance
5%
Gross Income
(190,000)
II. Effective Gross Income
$3,614,000
III. Operating Expenses
General Operating Expenses
83 Units @
$4,500
/Unit
$374,000
Property Taxes
83 Units @
$7,000
/Unit
582,000
Replacement Reserve Deposits
83 Units @
$150
/Unit
12,000
Total Operating Expenses
($968,000)
IV. I Stabilized Net Operating Income $2,646,000
1 Based in part on the rent survey presented in APPENDIX A - EXHIBIT IV. The weighted average monthly rent equates to $3.83 per square foot of leasable area.

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File name: 2 17 22 NB Rent; PF WNM Mkt Page 101 of 126

APPENDIX F - EXHIBIT I - TABLE 3

ESTIMATED STABILIZED RETURN ON INVESTMENT

MARKET RATE SCENARIO
WEST NEWPORT MESA & BANNING RANCH PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Stabilized Net Operating Income See APPENDIX F - EXHIBIT I - TABLE 2 $2,646,000 II. Total Development Cost See APPENDIX F - EXHIBIT I - TABLE 1 $58,923,000 III. I Estimated Stabilized Return on Investment 4.5%
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File name: 2 17 22 NB Rent; PF WNM Mkt Page 102 of 126

APPENDIX F - EXHIBIT II

PRO FORMA ANALYSIS
RECOMMENDED REQUIREMENT: 7% LOW INCOME UNITS
WEST NEWPORT MESA & BANNING RANCH PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF WNM Base Low Page 103 of 126

APPENDIX F - EXHIBIT II - TABLE 1

ESTIMATED DEVELOPMENT COSTS
RECOMMENDED REQUIREMENT: 7% LOW INCOME UNITS
WEST NEWPORT MESA & BANNING RANCH PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Property Acquisition Costs
II. Direct Costs
On -Site Improvements/Landscaping
Parking
At -Grade Spaces
Above -Ground Spaces
Building Costs
Contractor/DC Contingency Allow
Total Direct Costs
1 108,900
Sf of Land
2 $5,000
108,900
Sf of Land
3 /Space
42 Spaces
166
Spaces
108,200
Sf of GBA
4 20%
Other Direct Costs
108,200
Sf of GBA
III. Indirect Costs
Architecture, Engineering & Consulting
Public Permits & Fees 6
Taxes, Insurance, Legal & Accounting
Marketing
Developer Fee
Soft Cost Contingency Allowance
Total Indirect Costs
IV. Financing Costs
Interest During Construction
Land 6
Construction 7
Loan Origination Fees
Total Financing Costs
V
6% Direct Costs
83 Units
2% Direct Costs
83 Units
5% Direct Costs
5% Other Indirect Costs
$16,171,900 Cost
$42,579,000 Cost
60% Loan to Cost
$150 /Sf of Land $16,335,000
$30
/Sf of Land
$3,267,000
$5,000
/Space
210,000
$25,000
/Space
4,150,000
$160
/Sf of GBA
17,312,000
4,988,000
$277
/Sf of GBA
$29,927,000
$1,796,000
$68,000 /Unit 5,644,000
599,000
$1,000 /Unit 83,000
1,496,000
481,000

3.6% Avg Rate $873,000

3.6% Avg Rate 1,150,000

1.5 Points 530,000
$10,099,000
$2,553,000
Total Construction Cost 83 Units $513,000 /Unit $42,579,000 Total Development Cost 83 Units $710,000 /Unit $58,914,000 1 Estimated in part based on a sales survey of properties available for residential development in Newport Beach. 2 Based on the estimated costs for similar uses.
3 The base requirement is for 2.0 spaces per unit plus 0.50 spaces per unit for guest parking. 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. s Based on the public permits and fees estimates and impact fee estimates provided in the August 2021 draft Housing Element. 6 Based on an 18 month construction period following receipt of entitlements, and a 100% average outstanding loan balance. 7 Based on an 18 month construction period following receipt of entitlements, and a 50% average outstanding loan balance.

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File name: 2 17 22 NB Rent; PF WNM Base Low Page 104 of 126

APPENDIX F - EXHIBIT II - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
RECOMMENDED REQUIREMENT: 7% LOW INCOME UNITS
WEST NEWPORT MESA & BANNING RANCH PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Gross Income
A. Market Rate Units i
Studio Units
7 Units @
$2,665
/Unit/Month
$224,000
One -Bedroom Units
39 Units @
$3,745
/Unit/Month
1,753,000
Two -Bedroom Units
31 Units @
$4,002
/Unit/Month
1,489,000
Three -Bedroom Units
0 Units @
$0
/Unit/Month
0 B. Low Income Units z
Studio Units
1 Unit @
$1,054
/Unit/Month
13,000
One -Bedroom Units
3 Units @
$1,203
/Unit/Month
43,000
Two -Bedroom Units
2 Units @
$1,334
/Unit/Month
32,000
Three -Bedroom Units
0 Units @
$1,464
/Unit/Month
0 C. Miscellaneous Income
83 Units @
$75
/Unit/Month
75,000
Total Gross Income
$3,629,000
Vacancy & Collection Allowance
5%
Gross Income
(181,000)
II. Effective Gross Income
$3,448,000
III. Operating Expenses
General Operating Expenses
83 Units @
$4,500
/Unit
$374,000
Property Taxes
83 Units @
$6,700
/Unit
552,000
Replacement Reserve Deposits
83 Units @
$150
/Unit
12,000
Total Operating Expenses
83 Units @
$11,301
/Unit
($938,000)
IV. I Stabilized Net Operating Income $2,510,000
i Based in part on the rent survey presented in APPENDIX A - EXHIBIT IV. The weighted average monthly rent equates to $3.82 per square foot of leasable area.
z Under Section 50053, the low income rent calculations are based on household income at 60% of AMI, with 30% of income allotted to housing related expenses. See APPENDIX B.

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File name: 2 17 22 NB Rent; PF WNM Base Low Page 105 of 126

APPENDIX F - EXHIBIT II - TABLE 3

INCLUSIONARY HOUSING IMPACTS
RECOMMENDED REQUIREMENT: 7% LOW INCOME UNITS
WEST NEWPORT MESA & BANNING RANCH PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX F - EXHIBIT II - TABLE 2 Threshold Return on Total Investment i
Total Supportable Investment
II. Total Development Cost See APPENDIX F - EXHIBIT II - TABLE 1 $2,510,000

4.49%
$55,894,000
$58,914,000
Total Financial Impact ($3,020,000)
Property Acquisition Cost Reduction 18% of Estimated Current Acquisition Prices Developer Return 4.3% Based on Estimated Current Property Acquisition Costs % Rent Increase to Offset Impact 5.2% Market Rate Units 1 Based on the Developer Return estimated to be generated by the ZONING COMPLIANT: MARKET RATE SCENARIO.

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APPENDIX F - EXHIBIT III

PRO FORMA ANALYSIS

DENSITY BONUS SCENARIO
r NEWPORT MESA & BANNING RANCH PROTOTYPE: 50% SECTION 65915 DENSITY BC

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
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File name: 2 17 22 NB Rent; PF WNM DB Page 107 of 126

APPENDIX F - EXHIBIT III - TABLE 1

ESTIMATED DEVELOPMENT COSTS

DENSITY BONUS SCENARIO
WEST NEWPORT MESA & BANNING RANCH PROTOTYPE: 50% SECTION 65915 DENSITY BONUS

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Property Acquisition Costs 1
108,900 Sf of Land
$150
/Sf of Land
$16,335,000
II. Direct Costs z
On -Site Improvements/Landscaping
108,900 Sf of Land
$30
/Sf of Land
$3,267,000
Parking 3
At -Grade Spaces
0 Spaces
$5,000
/Space
0 Above -Ground Spaces
175 Spaces
$25,000
/Space
4,375,000
Semi -Subterranean Spaces
0 Spaces
$35,000
/Space
0 Building Costs
162,733 Sf of GBA
$160
/Sf of GBA
26,037,000
Contractor/DC Contingency Allow 4
20% Other Direct Costs
6,736,000
Total Direct Costs
162,733 Sf of GBA
$248
/Sf of GBA
$40,415,000
III. Indirect Costs
Architecture, Engineering & Consulting
6% Direct Costs
$2,425,000
Public Permits & Fees s
125 Units
$68,000
/Unit
8,500,000
Taxes, Insurance, Legal & Accounting
2% Direct Costs
808,000
Marketing
125 Units
$1,000
/Unit
125,000
Developer Fee
5% Direct Costs
2,021,000
Soft Cost Contingency Allowance
5% Other Indirect Costs
694,000
Total Indirect Costs
$14,573,000
IV. Financing Costs
Interest During Construction
Land 6
$16,335,000 Cost

3.6%
Avg Rate
$882,000
Construction 7
$58,109,000 Cost

3.6%
Avg Rate
1,569,000
Loan Origination Fees
60% Loan to Cost

1.5 Points
670,000
Total Financing Costs
$3,121,000
V.

Total Construction Cost 125 Units $465,000 /Unit $58,109,000 Total Development Cost 125 Units $596,000 /Unit $74,444,000 1 Estimated in part based on a sales survey of properties available for residential development in Newport Beach. z Based on the estimated costs for similar uses.
3 Section 65915 (p) requires jurisdictions to allow projects to meet statutorily established parking standards. For marketability reasons, KMA set the parking standards at 1.0 space per Studio Units unit; 1.0 space per One -Bedroom Units unit; 2.0 spaces per Two -Bedroom Units unit; and 2.0 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. s Based on the public permits and fees estimates and impact fee estimates provided in the August 2021 draft Housing Element. 6 Based on an 18 month construction period following receipt of entitlements, and a 100% average outstanding loan balance.

Based on an 18 month construction period following receipt of entitlements, and a 50% average outstanding loan balance.

Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF WNM DB Page 108 of 126

APPENDIX F - EXHIBIT III - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME

DENSITY BONUS SCENARIO
WEST NEWPORT MESA & BANNING RANCH PROTOTYPE: 50% SECTION 65915 DENSITY BONUS

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Gross Income
A. Market Rate Units i
Studio Units
12 Units @
$2,665
/Unit/Month
$384,000
One -Bedroom Units
55 Units @
$3,745
/Unit/Month
2,472,000
Two -Bedroom Units
45 Units @
$4,002
/Unit/Month
2,161,000
Three -Bedroom Units
0 Units @
$0
/Unit/Month
0 B. Density Bonus Units z
Studio Units
1 Unit @
$867
/Unit/Month
10,000
One -Bedroom Units
7 Units @
$990
/Unit/Month
83,000
Two -Bedroom Units
5 Units @
$1,094
/Unit/Month
66,000
Three -Bedroom Units
0 Units @
$1,197
/Unit/Month
0 C. Miscellaneous Income
125
Units @
$75
/Unit/Month
113,000
Total Gross Income
$5,289,000
Vacancy & Collection Allowance
5%
Gross Income
(264,000)
II. Effective Gross Income
$5,025,000
III. Operating Expenses
General Operating Expenses
125
Units @
$4,500
/Unit
$563,000
Property Taxes
125
Units @
$6,400
/Unit
801,000
Replacement Reserve Deposits
125
Units @
$150
/Unit
19,000
Total Operating Expenses
125
Units @
$11,064
/Unit
($1,383,000)
IV. I Stabilized Net Operating Income $3,642,000
i Based in part on the rent survey presented in APPENDIX A - EXHIBIT II. The weighted average monthly rent equates to $3.82 per square foot of leasable area.
z Under Section 65915 (f) (2), 15% of the Base Units are set aside for very -low income households. Section 65915 (c) (1) (B) (i) calculates very low income rents based on household income at 50% of AMI, with 30% of income allotted to housing related expenses. See APPENDIX B.

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File name: 2 17 22 NB Rent; PF WNM DB Page 109 of 126

APPENDIX F - EXHIBIT III - TABLE 3

INCLUSIONARY HOUSING IMPACTS

DENSITY BONUS SCENARIO
WEST NEWPORT MESA & BANNING RANCH PROTOTYPE: 50% SECTION 65915 DENSITY BONUS

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX F - EXHIBIT III - TABLE 2 Threshold Return on Total Investment i
Total Supportable Investment
II. Total Development Cost See APPENDIX F - EXHIBIT III - TABLE 1 $3,642,000

4.49%
$81,103,000
$74,444,000
Total Financial Impact $6,659,000
Property Acquisition Cost Reduction 0% of Estimated Current Acquisition Prices Developer Return 4.89% Based on Estimated Current Property Acquisition Costs % Rent Increase to Offset Impact 0.0% Market Rate Units 1 Based on the Developer Return estimated to be generated by the ZONING COMPLIANT: MARKET RATE SCENARIO.

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File name: 2 17 22 NB Rent; PF WNM DB Page 110 of 126

APPENDIX F - EXHIBIT IV

PRO FORMA ANALYSIS
5% LOW INCOME SCENARIO
WEST NEWPORT MESA & BANNING RANCH PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF WNM 5% Low Page 111 of 126

APPENDIX F - EXHIBIT IV - TABLE 1

ESTIMATED DEVELOPMENT COSTS
5% LOW INCOME SCENARIO
WEST NEWPORT MESA & BANNING RANCH PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Property Acquisition Costs
II. Direct Costs
On -Site Improvements/Landscaping
Parking
At -Grade Spaces
Above -Ground Spaces
Building Costs
Contractor/DC Contingency Allow
Total Direct Costs
1 108,900
Sf of Land
2 $5,000
108,900
Sf of Land
3 /Space
42 Spaces
166
Spaces
108,200
Sf of GBA
4 20%
Other Direct Costs
108,200
Sf of GBA
III. Indirect Costs
Architecture, Engineering & Consulting
Public Permits & Fees 6
Taxes, Insurance, Legal & Accounting
Marketing
Developer Fee
Soft Cost Contingency Allowance
Total Indirect Costs
IV. Financing Costs
Interest During Construction
Land 6
Construction 7
Loan Origination Fees
Total Financing Costs
V
6% Direct Costs
83 Units
2% Direct Costs
83 Units
5% Direct Costs
5% Other Indirect Costs
$16,217,500 Cost
$42,582,000 Cost
60% Loan to Cost
$150 /Sf of Land $16,335,000
$30
/Sf of Land
$3,267,000
$5,000
/Space
210,000
$25,000
/Space
4,150,000
$160
/Sf of GBA
17,312,000
4,988,000
$277
/Sf of GBA
$29,927,000
$1,796,000
$68,000 /Unit 5,644,000
599,000
$1,000 /Unit 83,000
1,496,000
481,000

3.6% Avg Rate $876,000

3.6% Avg Rate 1,150,000

1.5 Points 530,000
$10,099,000
$2,556,000
Total Construction Cost 83 Units $513,000 /Unit $42,582,000 Total Development Cost 83 Units $710,000 /Unit $58,917,000 1 Estimated in part based on a sales survey of properties available for residential development in Newport Beach. 2 Based on the estimated costs for similar uses.
3 The base requirement is for 2.0 spaces per unit plus 0.50 spaces per unit for guest parking. 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. s Based on the public permits and fees estimates and impact fee estimates provided in the August 2021 draft Housing Element. 6 Based on an 18 month construction period following receipt of entitlements, and a 100% average outstanding loan balance. 7 Based on an 18 month construction period following receipt of entitlements, and a 50% average outstanding loan balance.

Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF WNM 5% Low Page 112 of 126

APPENDIX F - EXHIBIT IV - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
5% LOW INCOME SCENARIO
WEST NEWPORT MESA & BANNING RANCH PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Gross Income
A. Market Rate Units i
Studio Units
8 Units @
$2,665
/Unit/Month
$256,000
One -Bedroom Units
40 Units @
$3,745
/Unit/Month
1,798,000
Two -Bedroom Units
31 Units @
$4,002
/Unit/Month
1,489,000
Three -Bedroom Units
0 Units @
$0
/Unit/Month
0 B. Low Income Units z
Studio Units
0 Units @
$1,054
/Unit/Month
0 One -Bedroom Units
2 Units @
$1,203
/Unit/Month
29,000
Two -Bedroom Units
2 Units @
$1,334
/Unit/Month
32,000
Three -Bedroom Units
0 Units @
$1,464
/Unit/Month
0 C. Miscellaneous Income
83 Units @
$75
/Unit/Month
75,000
Total Gross Income
$3,679,000
Vacancy & Collection Allowance
5%
Gross Income
(184,000)
II. Effective Gross Income
$3,495,000
III. Operating Expenses
General Operating Expenses
83 Units @
$4,500
/Unit
$374,000
Property Taxes
83 Units @
$6,800
/Unit
561,000
Replacement Reserve Deposits
83 Units @
$150
/Unit
12,000
Total Operating Expenses
83 Units @
$11,410
/Unit
($947,000)
IV. I Stabilized Net Operating Income $2,548,000
i Based in part on the rent survey presented in APPENDIX A - EXHIBIT IV. The weighted average monthly rent equates to $3.83 per square foot of leasable area.
z Under Section 50053, the low income rent calculations are based on household income at 60% of AMI, with 30% of income allotted to housing related expenses. See APPENDIX B.

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File name: 2 17 22 NB Rent; PF WNM 5% Low Page 113 of 126

APPENDIX F - EXHIBIT IV - TABLE 3

INCLUSIONARY HOUSING IMPACTS
5% LOW INCOME SCENARIO
WEST NEWPORT MESA & BANNING RANCH PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX F - EXHIBIT IV - TABLE 2 Threshold Return on Total Investment i
Total Supportable Investment
II. Total Development Cost See APPENDIX F - EXHIBIT IV - TABLE 1 $2,548,000

4.49%
$56,741,000
$58,917,000
Total Financial Impact ($2,176,000)
Property Acquisition Cost Reduction 13% of Estimated Current Acquisition Prices Developer Return 4.3% Based on Estimated Current Property Acquisition Costs % Rent Increase to Offset Impact 3.7% Market Rate Units 1 Based on the Developer Return estimated to be generated by the ZONING COMPLIANT: MARKET RATE SCENARIO.

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File name: 2 17 22 NB Rent; PF WNM 5% Low Page 114 of 126

APPENDIX F - EXHIBIT V

PRO FORMA ANALYSIS
10% LOW INCOME SCENARIO
WEST NEWPORT MESA & BANNING RANCH PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF WNM 10% Low Page 115 of 126

APPENDIX F - EXHIBIT V - TABLE 1

ESTIMATED DEVELOPMENT COSTS
10% LOW INCOME SCENARIO
WEST NEWPORT MESA & BANNING RANCH PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Property Acquisition Costs
II. Direct Costs
On -Site Improvements/Landscaping
Parking
At -Grade Spaces
Above -Ground Spaces
Building Costs
Contractor/DC Contingency Allow
Total Direct Costs
1 108,900
Sf of Land
2 $5,000
108,900
Sf of Land
3 /Space
42 Spaces
166
Spaces
108,200
Sf of GBA
4 20%
Other Direct Costs
108,200
Sf of GBA
III. Indirect Costs
Architecture, Engineering & Consulting
Public Permits & Fees 6
Taxes, Insurance, Legal & Accounting
Marketing
Developer Fee
Soft Cost Contingency Allowance
Total Indirect Costs
IV. Financing Costs
Interest During Construction
Land 6
Construction 7
Loan Origination Fees
Total Financing Costs
V
6% Direct Costs
83 Units
2% Direct Costs
83 Units
5% Direct Costs
5% Other Indirect Costs
$16,113,200 Cost
$42,576,000 Cost
60% Loan to Cost
$150 /Sf of Land $16,335,000
$30
/Sf of Land
$3,267,000
$5,000
/Space
210,000
$25,000
/Space
4,150,000
$160
/Sf of GBA
17,312,000
4,988,000
$277
/Sf of GBA
$29,927,000
$1,796,000
$68,000 /Unit 5,644,000
599,000
$1,000 /Unit 83,000
1,496,000
481,000

3.6% Avg Rate $870,000

3.6% Avg Rate 1,150,000

1.5 Points 530,000
$10,099,000
$2,550,000
Total Construction Cost 83 Units $513,000 /Unit $42,576,000 Total Development Cost 83 Units $710,000 /Unit $58,911,000 1 Estimated in part based on a sales survey of properties available for residential development in Newport Beach. 2 Based on the estimated costs for similar uses.
3 The base requirement is for 2.0 spaces per unit plus 0.50 spaces per unit for guest parking. 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. s Based on the public permits and fees estimates and impact fee estimates provided in the August 2021 draft Housing Element. 6 Based on an 18 month construction period following receipt of entitlements, and a 100% average outstanding loan balance. 7 Based on an 18 month construction period following receipt of entitlements, and a 50% average outstanding loan balance.

Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF WNM 10% Low Page 116 of 126

APPENDIX F - EXHIBIT V - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
10% LOW INCOME SCENARIO
WEST NEWPORT MESA & BANNING RANCH PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Gross Income
A. Market Rate Units i
Studio Units
7 Units @
$2,665
/Unit/Month
$224,000
One -Bedroom Units
38 Units @
$3,745
/Unit/Month
1,708,000
Two -Bedroom Units
30 Units @
$4,002
/Unit/Month
1,441,000
Three -Bedroom Units
0 Units @
$0
/Unit/Month
0 B. Low Income Units z
Studio Units
1 Unit @
$1,054
/Unit/Month
13,000
One -Bedroom Units
4 Units @
$1,203
/Unit/Month
58,000
Two -Bedroom Units
3 Units @
$1,334
/Unit/Month
48,000
Three -Bedroom Units
0 Units @
$1,464
/Unit/Month
0 C. Miscellaneous Income
83 Units @
$75
/Unit/Month
75,000
Total Gross Income
$3,567,000
Vacancy & Collection Allowance
5%
Gross Income
(178,000)
II. Effective Gross Income
$3,389,000
III. Operating Expenses
General Operating Expenses
83 Units @
$4,500
/Unit
$374,000
Property Taxes
83 Units @
$6,500
/Unit
542,000
Replacement Reserve Deposits
83 Units @
$150
/Unit
12,000
Total Operating Expenses
83 Units @
$11,181
/Unit
($928,000)
IV. I Stabilized Net Operating Income $2,461,000
i Based in part on the rent survey presented in APPENDIX A - EXHIBIT IV. The weighted average monthly rent equates to $3.83 per square foot of leasable area.
z Under Section 50053, the low income rent calculations are based on household income at 60% of AMI, with 30% of income allotted to housing related expenses. See APPENDIX B.

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File name: 2 17 22 NB Rent; PF WNM 10% Low Page 117 of 126

APPENDIX F - EXHIBIT V - TABLE 3

INCLUSIONARY HOUSING IMPACTS
10% LOW INCOME SCENARIO
WEST NEWPORT MESA & BANNING RANCH PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX F - EXHIBIT V - TABLE 2 Threshold Return on Total Investment i
Total Supportable Investment
II. Total Development Cost See APPENDIX F - EXHIBIT V - TABLE 1 $2,461,000

4.49%
$54,803,000
$58,911,000
Total Financial Impact ($4,108,000)
Property Acquisition Cost Reduction 25% of Estimated Current Acquisition Prices Developer Return 4.2% Based on Estimated Current Property Acquisition Costs % Rent Increase to Offset Impact 7.2% Market Rate Units 1 Based on the Developer Return estimated to be generated by the ZONING COMPLIANT: MARKET RATE SCENARIO.

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File name: 2 17 22 NB Rent; PF WNM 10% Low Page 118 of 126

APPENDIX F - EXHIBIT VI

PRO FORMA ANALYSIS
15% LOW INCOME SCENARIO
WEST NEWPORT MESA & BANNING RANCH PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF WNM 15% Low Page 119 of 126

APPENDIX F - EXHIBIT VI - TABLE 1

ESTIMATED DEVELOPMENT COSTS
15% LOW INCOME SCENARIO
WEST NEWPORT MESA & BANNING RANCH PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Property Acquisition Costs
II. Direct Costs
On -Site Improvements/Landscaping
Parking
At -Grade Spaces
Above -Ground Spaces
Building Costs
Contractor/DC Contingency Allow
Total Direct Costs
1 108,900
Sf of Land
2 $5,000
108,900
Sf of Land
3 /Space
42 Spaces
166
Spaces
108,200
Sf of GBA
4 20%
Other Direct Costs
108,200
Sf of GBA
III. Indirect Costs
Architecture, Engineering & Consulting
Public Permits & Fees 6
Taxes, Insurance, Legal & Accounting
Marketing
Developer Fee
Soft Cost Contingency Allowance
Total Indirect Costs
IV. Financing Costs
Interest During Construction
Land 6
Construction 7
Loan Origination Fees
Total Financing Costs
V
6% Direct Costs
83 Units
2% Direct Costs
83 Units
5% Direct Costs
5% Other Indirect Costs
$15,997,000 Cost
$42,569,000 Cost
60% Loan to Cost
$150 /Sf of Land $16,335,000
$30
/Sf of Land
$3,267,000
$5,000
/Space
210,000
$25,000
/Space
4,150,000
$160
/Sf of GBA
17,312,000
4,988,000
$277
/Sf of GBA
$29,927,000
$1,796,000
$68,000 /Unit 5,644,000
599,000
$1,000 /Unit 83,000
1,496,000
481,000

3.6% Avg Rate $864,000

3.6% Avg Rate 1,149,000

1.5 Points 530,000
$10,099,000
$2,543,000
Total Construction Cost 83 Units $513,000 /Unit $42,569,000 Total Development Cost 83 Units $710,000 /Unit $58,904,000 1 Estimated in part based on a sales survey of properties available for residential development in Newport Beach. 2 Based on the estimated costs for similar uses.
3 The base requirement is for 2.0 spaces per unit plus 0.50 spaces per unit for guest parking. 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. s Based on the public permits and fees estimates and impact fee estimates provided in the August 2021 draft Housing Element. 6 Based on an 18 month construction period following receipt of entitlements, and a 100% average outstanding loan balance. 7 Based on an 18 month construction period following receipt of entitlements, and a 50% average outstanding loan balance.

Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF WNM 15% Low Page 120 of 126

APPENDIX F - EXHIBIT VI - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
15% LOW INCOME SCENARIO
WEST NEWPORT MESA & BANNING RANCH PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Gross Income
A. Market Rate Units i
Studio Units
7 Units @
$2,665
/Unit/Month
$224,000
One -Bedroom Units
36 Units @
$3,745
/Unit/Month
1,618,000
Two -Bedroom Units
28 Units @
$4,002
/Unit/Month
1,345,000
Three -Bedroom Units
0 Units @
$0
/Unit/Month
0 B. Low Income Units z
Studio Units
1 Unit @
$1,054
/Unit/Month
13,000
One -Bedroom Units
6 Units @
$1,203
/Unit/Month
87,000
Two -Bedroom Units
5 Units @
$1,334
/Unit/Month
80,000
Three -Bedroom Units
0 Units @
$1,464
/Unit/Month
0 C. Miscellaneous Income
83 Units @
$75
/Unit/Month
75,000
Total Gross Income
$3,442,000
Vacancy & Collection Allowance
5%
Gross Income
(172,000)
II. Effective Gross Income
$3,270,000
III. Operating Expenses
General Operating Expenses
83 Units @
$4,500
/Unit
$374,000
Property Taxes
83 Units @
$6,300
/Unit
520,000
Replacement Reserve Deposits
83 Units @
$150
/Unit
12,000
Total Operating Expenses
83 Units @
$10,916
/Unit
($906,000)
IV. I Stabilized Net Operating Income $2,364,000
i Based in part on the rent survey presented in APPENDIX A - EXHIBIT IV. The weighted average monthly rent equates to $3.83 per square foot of leasable area.
z Under Section 50053, the low income rent calculations are based on household income at 60% of AMI, with 30% of income allotted to housing related expenses. See APPENDIX B.

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File name: 2 17 22 NB Rent; PF WNM 15% Low Page 121 of 126

APPENDIX F - EXHIBIT VI - TABLE 3

INCLUSIONARY HOUSING IMPACTS
15% LOW INCOME SCENARIO
WEST NEWPORT MESA & BANNING RANCH PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX F - EXHIBIT VI - TABLE 2 Threshold Return on Total Investment i
Total Supportable Investment
II. Total Development Cost See APPENDIX F - EXHIBIT VI - TABLE 1 $2,364,000

4.49%
$52,643,000
$58,904,000
Total Financial Impact ($6,261,000)
Property Acquisition Cost Reduction 38% of Estimated Current Acquisition Prices Developer Return 4.0% Based on Estimated Current Property Acquisition Costs % Rent Increase to Offset Impact 11.7% Market Rate Units 1 Based on the Developer Return estimated to be generated by the ZONING COMPLIANT: MARKET RATE SCENARIO.

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File name: 2 17 22 NB Rent; PF WNM 15% Low Page 122 of 126

APPENDIX F - EXHIBIT VII

PRO FORMA ANALYSIS
20% LOW INCOME SCENARIO
WEST NEWPORT MESA & BANNING RANCH PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF WNM 20% Low Page 123 of 126

APPENDIX F - EXHIBIT VII - TABLE 1

ESTIMATED DEVELOPMENT COSTS
20% LOW INCOME SCENARIO
WEST NEWPORT MESA & BANNING RANCH PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Property Acquisition Costs
II. Direct Costs
On -Site Improvements/Landscaping
Parking
At -Grade Spaces
Above -Ground Spaces
Building Costs
Contractor/DC Contingency Allow
Total Direct Costs
1 108,900
Sf of Land
2 $5,000
108,900
Sf of Land
3 /Space
42 Spaces
166
Spaces
108,200
Sf of GBA
4 20%
Other Direct Costs
108,200
Sf of GBA
III. Indirect Costs
Architecture, Engineering & Consulting
Public Permits & Fees 6
Taxes, Insurance, Legal & Accounting
Marketing
Developer Fee
Soft Cost Contingency Allowance
Total Indirect Costs
IV. Financing Costs
Interest During Construction
Land 6
Construction 7
Loan Origination Fees
Total Financing Costs
V
6% Direct Costs
83 Units
2% Direct Costs
83 Units
5% Direct Costs
5% Other Indirect Costs
$15,861,500 Cost
$42,562,000 Cost
60% Loan to Cost
$150 /Sf of Land $16,335,000
$30
/Sf of Land
$3,267,000
$5,000
/Space
210,000
$25,000
/Space
4,150,000
$160
/Sf of GBA
17,312,000
4,988,000
$277
/Sf of GBA
$29,927,000
$1,796,000
$68,000 /Unit 5,644,000
599,000
$1,000 /Unit 83,000
1,496,000
481,000

3.6% Avg Rate $857,000

3.6% Avg Rate 1,149,000

1.5 Points 530,000
$10,099,000
$2,536,000
Total Construction Cost 83 Units $513,000 /Unit $42,562,000 Total Development Cost 83 Units $710,000 /Unit $58,897,000 1 Estimated in part based on a sales survey of properties available for residential development in Newport Beach. 2 Based on the estimated costs for similar uses.
3 The base requirement is for 2.0 spaces per unit plus 0.50 spaces per unit for guest parking. 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. s Based on the public permits and fees estimates and impact fee estimates provided in the August 2021 draft Housing Element. 6 Based on an 18 month construction period following receipt of entitlements, and a 100% average outstanding loan balance. 7 Based on an 18 month construction period following receipt of entitlements, and a 50% average outstanding loan balance.

Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; PF WNM 20% Low Page 124 of 126

APPENDIX F - EXHIBIT VII - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
20% LOW INCOME SCENARIO
WEST NEWPORT MESA & BANNING RANCH PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Gross Income
A. Market Rate Units i
Studio Units
6 Units @
$2,665
/Unit/Month
$192,000
One -Bedroom Units
34 Units @
$3,745
/Unit/Month
1,528,000
Two -Bedroom Units
26 Units @
$4,002
/Unit/Month
1,249,000
Three -Bedroom Units
0 Units @
$0
/Unit/Month
0 B. Low Income Units z
Studio Units
2 Units @
$1,054
/Unit/Month
25,000
One -Bedroom Units
8 Units @
$1,203
/Unit/Month
116,000
Two -Bedroom Units
7 Units @
$1,334
/Unit/Month
112,000
Three -Bedroom Units
0 Units @
$1,464
/Unit/Month
0 C. Miscellaneous Income
83 Units @
$75
/Unit/Month
75,000
Total Gross Income
$3,297,000
Vacancy & Collection Allowance
5%
Gross Income
(165,000)
II. Effective Gross Income
$3,132,000
III. Operating Expenses
General Operating Expenses
83 Units @
$4,500
/Unit
$374,000
Property Taxes
83 Units @
$6,000
/Unit
495,000
Replacement Reserve Deposits
83 Units @
$150
/Unit
12,000
Total Operating Expenses
83 Units @
$10,614
/Unit
($881,000)
IV. I Stabilized Net Operating Income $2,251,000
i Based in part on the rent survey presented in APPENDIX A - EXHIBIT IV. The weighted average monthly rent equates to $3.83 per square foot of leasable area.
z Under Section 50053, the low income rent calculations are based on household income at 60% of AMI, with 30% of income allotted to housing related expenses. See APPENDIX B.

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File name: 2 17 22 NB Rent; PF WNM 20% Low Page 125 of 126

APPENDIX F - EXHIBIT VII - TABLE 3

INCLUSIONARY HOUSING IMPACTS
20% LOW INCOME SCENARIO
WEST NEWPORT MESA & BANNING RANCH PROTOTYPE: ZONING COMPLIANT

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX F - EXHIBIT VII - TABLE 2 Threshold Return on Total Investment i
Total Supportable Investment
II. Total Development Cost See APPENDIX F - EXHIBIT VII - TABLE 1 $2,251,000

4.49%
$50,127,000
$58,897,000
Total Financial Impact ($8,770,000)
Property Acquisition Cost Reduction 54% of Estimated Current Acquisition Prices Developer Return 3.8% Based on Estimated Current Property Acquisition Costs % Rent Increase to Offset Impact 17.6% Market Rate Units 1 Based on the Developer Return estimated to be generated by the ZONING COMPLIANT: MARKET RATE SCENARIO.

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File name: 2 17 22 NB Rent; PF WNM 20% Low Page 126 of 126

ATTACHMENT 5

IN -LIEU FEE CALCULATIONS
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Own; ATT 5 TITLE Page 1 of 5

APPENDIX A

IN -LIEU FEE CALCULATIONS

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File Name: 2 17 22 NB Own; App A ILF Page 2 of 5

APPENDIX A

IN -LIEU FEE CALCULATIONS

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
1 The market rate sales prices are drawn from the pro forma analyses. z See APPENDIX B - EXHIBIT I, APPENDIX B - EXHIBIT II, and APPENDIX B - EXHIBIT III. 3 Based on the unit mix distribution applied in the pro forma analyses. 4 Based on the weighted average difference between the market rate prices and the Affordable Sales Prices.

Prepared by: Keyser Marston Associates, Inc.

File Name: 2 17 22 NB Own; ILF Page 3 of 5
West Newport Mesa
Coyote Canyon
Dover Westcliff
& Banning Ranch
Prototype
Prototype
Prototype
I. Sales Price Difference
A. Two -Bedroom Units
Market Rate Sales Price
1 $953,200
Affordable Sales Price
z
381,200
Difference
$572,000
B. Three -Bedroom Units
Market Rate Sales Price
1 $1,320,100
$1,517,900
$1,227,700
Affordable Sales Price
z
356,600
316,000
375,700
Difference
$963,500
$1,201,900
$852,000
C. Four -Bedroom Units
Market Rate Sales Price
1 $1,742,500
$1,373,200
Affordable Sales Price
z
303,500
379,300
Difference
$1,439,000
$993,900
II. Distribution of Total Units
3 Two -Bedroom Units
50%
Three -Bedroom Units
50%
60%
35%
Four -Bedroom Units
40%
65%
III. Assumptions
Total Units
90 30
120
Total Saleable Area
144,000
64,800
251,400
Weighted Avg Unit Size (Sf)
1,600
2,160
21100
Inclusionary Housing Percentage
8%
8%
8%
Inclusionary Units
7 2
9 Affordability Gap Per Inclusionary
Unit 4
$767,800
$1,296,700
$944,200
IV. In -Lieu Fee
Total In -Lieu Fee
$5,374,600
$2,593,400
$8,497,800
Per Total Unit in the Project
$59,720
$86,450
$70,820
Per Sf of Total Saleable Area
$37.30
$40.00
$33.80
1 The market rate sales prices are drawn from the pro forma analyses. z See APPENDIX B - EXHIBIT I, APPENDIX B - EXHIBIT II, and APPENDIX B - EXHIBIT III. 3 Based on the unit mix distribution applied in the pro forma analyses. 4 Based on the weighted average difference between the market rate prices and the Affordable Sales Prices.

Prepared by: Keyser Marston Associates, Inc.

File Name: 2 17 22 NB Own; ILF Page 3 of 5

APPENDIX B

IN -LIEU FEE CALCULATIONS

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 2 17 22 NB Rent; App B ILF Titles Page 4 of 5

APPENDIX B

IN -LIEU FEE CALCULATIONS

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

NEWPORT BEACH, CALIFORNIA
1 The market rents are drawn from the pro forma analyses. The Affordable Rents are based on the H&SC Section 50053 calculation methodology. (See APPENDIX B).
z Based on the unit mix distribution applied in the pro forma analyses. 3 Based on the rent differential capitalized at a 5.0% rate to establish the value, and a 1.10% property tax rate. 4 Based on the Inclusionary Housing percentage obligation supported by the pro forma analyses. s Based on the Annual Rent Difference Per Inclusionary Unit capitalized at the Threshold Return on Total Investment.

Prepared by: Keyser Marston Associates
File name: 2 17 22 NB Rent; ILF Page 5 of 5
West Newport
Airport Area
Coyote Canyon
Newport Center
Mesa & Banning
Prototype
Prototype
Prototype
Ranch Prototype
I. Rent Difference 1
A. Studio Units
Market Rate Units
$2,780
$0
$0
$2,665
Inclusionary Units
1,054
0 0
1,054
Difference
$1,726
$0
$0
$1,611
B. One -Bedroom Units
Market Rate Units
$3,511
$3,349
$4,652
$3,745
Inclusionary Units
1,203
1,203
1,203
1,203
Difference
$2,308
$ 2,145
$3,449
$2,542
C. Two -Bedroom Units
Market Rate Units
$4,019
$3,593
$6,569
$4,002
Inclusionary Units
1,334
1,334
1,334
1,334
Difference
$2,686
$2,259
$5,236
$2,668
D. Three -Bedroom Units
Market Rate Units
$0
$4,421
$7,002
$0
Inclusionary Units
0 1,464
1,464
0 Difference
$0
$2,957
$5,539
$0
II. Distribution of Total Units z
Studio Units
S%
0%
0%
10%
One -Bedroom Units
47%
35%
30%
50%
Two -Bedroom Units
48%
SS%
60%
40%
Three -Bedroom Units
0%
10%
10%
0%
III. Annual Rent Difference Per Inclusionary Unit
$29,521
$27,469
$56,758
$29,993
Less: Property Tax Difference 3
(6,490)
(6,040)
(12,490)
(6,600)
Net Annual Rent Difference Per Inclusionary Unit
$23,031
$21,429
$44,268
$23,393
IV. Assumptions
Total Units
450
280
240
83 Total Leasable Area
430,650
266,000
291,000
81,150
Weighted Average Unit Size (Sf)
957
950
1,213
978
Inclusionary Housing Percentage 4
7%
7%
7%
7%
Inclusionary Units
32 20
17 6
Affordability Gap Per Inclusionary Unit s
$516,000
$487,000
$861,000
$521,000
V. In -Lieu Fee
Total In -Lieu Fee
$16,512,000
$9,740,000
$14,637,000
$3,126,000
Per Total Unit in the Project
$36,690
$34,790
$60,990
$37,660
Per Square Foot of Total Leasable Area
$38.30
$36.60
$50.30
$38.50
1 The market rents are drawn from the pro forma analyses. The Affordable Rents are based on the H&SC Section 50053 calculation methodology. (See APPENDIX B).
z Based on the unit mix distribution applied in the pro forma analyses. 3 Based on the rent differential capitalized at a 5.0% rate to establish the value, and a 1.10% property tax rate. 4 Based on the Inclusionary Housing percentage obligation supported by the pro forma analyses. s Based on the Annual Rent Difference Per Inclusionary Unit capitalized at the Threshold Return on Total Investment.

Prepared by: Keyser Marston Associates
File name: 2 17 22 NB Rent; ILF Page 5 of 5

It ATTACHMENT B
11 BUILDING I N DUSTRY OF SOUTH ERN CALIFORNIA, INC.

BIR ORANGE COUNTY CHAPTER
March 22, 2022 EXECUTIVE COMMITTEE
Dear Mayor and Council,

PRESIDENT
Mayor Kevin Muldoon

ERIC NELSON
City of Newport Beach

TRUMARK HOMES
100 Civic Center Drive
Newport Beach, CA 92660
ht VICE PRESIDENT
crisis created by lack of supply. This is a problem that wasn't created overnight, and it cannot

BROOKE DOI
be solved with fees made exclusively for housing producers. Comprehensive solutions are

SHEA HOMES
Dear Mayor and Council,

TREASURER

JAMES O'MALLEY
On behalf of the Building Industry Association of Southern California - Orange County

SHOPOFF REALTY INVESTMENTS
Chapter, I write to express our concerns with the Inclusionary Housing: Financial Evaluation, as completed by Keyser Marston Associates (KMA). California is in the midst of a housing

SECRETARY
crisis created by lack of supply. This is a problem that wasn't created overnight, and it cannot

MEGAN ELTRINGHAM

THE NEW HOME COMPANY
be solved with fees made exclusively for housing producers. Comprehensive solutions are necessary.

TRADE CONTRACTOR VP

ALAN BOUDREAU
To that end, the City of Newport Beach has demonstrated successful production of affordable

BOUDREAU PIPELINE
housing during RHNA's 5' Cycle without the need for an inclusionary policy. In its 2021 Housing Permit Report Card, the OC Register scored Newport Beach as an overall B+ with

ASSOCIATE MEMBER VP
A's in both Very Low Income and Low Income housing production. Based on these facts, it

MARK HIMMELSTEIN
is clear that Newport Beach's existing approach has been successful in creating affordable

NEWMEYER & DILLION, LLP
homes, especially for those households most in need.

MEMBER AT LARGE
It is also critically important to note that a departure from past success, in line with KMA

PETER VANEK

INTREGALCOMMUNITIES
suggestions, will result in significant new densities for Newport Beach. The recommended 15% Very Low Income inclusionary requirement for large rental projects is predicated on all such projects being awarded a 50% density bonus and multiple exemptions from local

IMMEDIATE PAST PRESIDENT

SUNTI KUMJIM
development/zoning standards, including parking. Given the city's past successes in

MBK RENTAL LIVING
producing lower income housing, it seems premature to adopt an inclusionary housing

VICE PRESIDENT, OC CHAPTER
ordinance at this time, especially one that increases large project density by 50%.

ADAM WOOD
BIAOC
In light of the aforementioned, we propose the City defer consideration of inclusionary zoning to, at a minimum, be considered in conjunction with new zoning drafted to implement the recently adopted Housing Element and sufficient time has transpired to determine whether the City's tried and true affordable housing approach is no longer sufficient to address the City's RHNA.

Sincerely,
Adam Wood
Vice President
BIA/SC — Orange County Chapter
17192 MURPHY AVE #14445, IRVINE, CA 92623
949-553-9500 I BIAOC.COM
SS3-4

Newport Beach City CouncilMarch 22, 2022

Newport Beach City Council
March 22, 2022