ATTACHMENT B:
Developer Request Letter
(September 30, 2025)
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1 [SENT VIA E -MAIL]
July 2 5, 2025
Revised September 30, 2025
Ariel Bishop-Williams
Housing Services Administrator
City of Palm Springs
3200 East Tahquitz Canyon Way
Palm Springs, CA 92262
[email protected]
RE: 305 W. San Rafael Drive – Request for Financial Assistance
Dear Ms. Bishop-Williams,
Red Tail Multifamily Land Development and Affordable Housing Acces s (collectively, “Developer”) are developing the site located at 305 W. San Rafael Drive in the City of Palm Springs (“Property”). A pre- development application was submitted to the City Planning Department last month that proposes 82 units of low- income affordable housing (81 deed-restricted units plus a manager’s unit) (“Project”). The purpose of this letter is to request financial assistance from the City in order to make the Project financially possible.
Background
The Property is approximately 4.05 acres and has been historically vacant. Red Tail is currently under contract to purchase the Property from the owner and is scheduled to close at the end of 2025. Developer intends to apply for an allocation of tax-exempt bonds and federal tax credit s to finance the construction of th e Project. Our current proforma projects a financing gap of approximately $8,700,000 ($106,000 per unit) and requires additional funding sources to fill.
Projects requesting private activity bonds and federal tax credits are scored competitively. For a project to be competitive, public funds are necessary and further enhance the project’s likelihood of obtaining a bond and credit allocation as referenced in Section 1032 5(9)(A) of the California Tax Credit Allocation Committee (TCAC) regulations. Additionally, Palm Springs is within TCAC’s Inland Empire Region, wher ein only 8.3% of all available tax credit awards statewide are allocated per CTCAC regulation 10315(i). As such, we are requesting the City provide assistance through the means described below.
Request for City Assistance
Developer requests the City support the Project in the ways outlined below. Any final terms will be memorialized in an agreement and award letter to be issued upon City approval.
1. Contribute $5,000,000 ($61,000 per unit) to the Project that will be secured by a note and deed of trust and payable from the Project’s residual receipts . The term of the fee deferral note will be 55 years and will accrue simple interest at 3% annually. Repayment will commence once the Project is cash flow
positive and Developer will make proportionate payments towards all soft loans with 50% of the residual receipts available until the note(s) has been fully repaid.
2. Provide written notice confirming the 100% reduction of the Project’s eligible fee obligations pursuant to the Affordable and Multi-Family Housing Incentive Program established by City Resolution No. 24654;
3. Pursuant to Section 147(f) of the Internal Revenue Code, issue public notice, conduct a Tax Equity & Financial Responsibility Act (TEFRA) hearing, and approval of qualified private activity bonds under by an outside issuer.
Project Finances
Our pro-forma illustrating the financing sources is attached as Exhibit A. Please note that the amounts shown in the pro-forma are estimates and subject to change. We applied for eight (8) project-based vouchers in connection with the Riverside County Housing Authority RFP in August 2025 but were not selected. We intend to apply for the next voucher RFP which is expected to be released in Spring 2026 Developer also will defer at least 20% of the developer fee in order to decrease the funding gap.
Community Outreach
The project is located within the Desert Highland Gateway Estates neighborhood organization. We are in the process of reaching out to schedule an introductory meeting and are committed to consistent out reach and communication with the neighborhood during the development process.
Project Timeline
Developer is targeting a first round 4% tax credit submittal to the California Tax Credit Allocation Committee in 2026 and hopes to work with the City to secure the requests listed above. Assuming tax credit award, it is estimated that the Project would be required to commence construction by Q4 2026.
We are excited to work with the City to bring more affordable housing to the area and are appreciative of staff for considering this request. We look forward to discussing this proposal sometime soon. Please do not hesitate to reach out if there are any questions. Thank you.
Respectfully,
Ron Wu
Development Director
Red Tail Multifamily Land Development
Exhibit A
Project Pro Forma
PROJECT SUMMARY PALM SPRINGS AFFORDABLE
81 units plus 1 mgr. unit TE Bonds + 4% Credits
New Construction Non-Rural
Non-PW Family project QCT-Yes DDA-Yes
Amount Rate Amm. / Unit Amount Per Unit
Perm Bond Proceeds $10,723,236 6.00% 40 $130,771 Land Costs $1,435,000 $17,500 Tax Credit Proceeds 12,197,268 NA NA 148,747 Permits, Fees, & Studies 2,550,000 31,098 City Loan 5,000,000 3.00% 0 60,976 Direct Construction Costs 18,184,741 221,765 Gap 3,700,000 0.00% 0 45,122 Offsites 600,000 7,317
Deferred Developer Fee 1,353,104 6.00% NA 16,501 Contingency 1,439,237 17,552 Developer Fee 3,824,778 46,644
Indirect Construction Costs 1,319,969 16,097
Rent-Up Costs 200,000 2,439
Reserves 324,703 3,960
Financing Costs 3,095,181 37,746
$32,973,609 $402,117 $32,973,609 $402,117
Source Amount Date Notes Source Amount Per Unit
Perm Bond Proceeds $10,723,236 Jun-28 Convert Tax Credit Proceeds 1,829,590 $22,312 Tax Credit Proceeds 1,829,590 May-26 Close Construction Loan 25,642,024 $312,708 Tax Credit Proceeds 1,829,590 Jan-28 CofO Deferred Costs 5,501,995 $67,097 Tax Credit Proceeds 8,188,088 Jun-28 Convert
Tax Credit Proceeds 350,000 Sep-28 8609s
City Loan 5,000,000 Apr-28
Gap 3,700,000 Apr-28
Totals 32,973,609 $402,117
Bedrooms Quantity % of Units Avg. Rent
0 1 27 33% $1,111
2 29 36% $1,605
3 25 31% $1,827
4+
Calculation Quantity Bedrooms AMI Rent Util. Amount Per Unit MGR 1 2 0% $0 $0 Management 0 $0
TCAC 2 1 30% 629 0 Administration 0 0
TCAC 8 1 30% 629 0 Salaries & Benefits 500,000 6,098
TCAC 3 1 50% 1,049 0 Maintenance 0 0
TCAC 14 1 70% 1,469 0 Utilities 0 0
TCAC 3 2 30% 755 0 Insurance 0 0
TCAC 3 2 50% 1,258 0 Taxes 12,300 150
TCAC 23 2 70% 1,761 0 Services 45,840 559
TCAC 3 3 30% 873 0 Reserves 24,600 300
TCAC 3 3 50% 1,455 0 Fees 8,065 98
TCAC 19 3 70% 2,037 0 Totals $590,805 $7,205
CDLAC Tiebreaker 139.05% Const. Length 20
Site (acres) 0.00 CL Closing: 5/18/26
Debt Cov. Ratio 1.15 Est. Completion 1/1/28
Vacancy Factor 5.0% Const. Loan 25,642,024
Taxable Rate 6.50%
Tax Empt Rate 6.35%
Printed on 9/30/25 at 4:29 PM Version: 25.5.1 Updated by: Tyler White on 9/26/25 Expenses
Assumptions Assumptions
Source Pay in Schedule Construction Sources
Bedroom Mix/Average Rent
Rent Schedule Operating Expenses
Source Uses
Permanent Sources Permanent Uses
Red Tail Multifamily
USES, EXPENSES AND CREDITS PALM SPRINGS AFFORDABLE
81 units plus 1 mgr. unit TE Bonds + 4% Credits
New Construction Non-Rural
Non-PW Family project QCT-Yes DDA-Yes
Description Amount NC. Basis Acq. Basis Per Unit Amount Per Unit Acquisition Cost $1,400,000 $0 $0 $17,073 Operating Expenses $500,000 $6,098 Appraisals 15,000 0 0 183 Real Estate Taxes 12,300 150
Holding Costs 20,000 0 0 244 Social Services 45,840 559 Building Fees & Permits 350,000 350,000 0 4,268 Replacement Reserves 24,600 300 Impact Fees 700,000 700,000 0 8,537 Bond Issuer Fees 8,065 98 Architectural & Engineering 1,500,000 1,500,000 0 18,293 Offsite Construction (Undergrounding)600,000 600,000 0 7,317 Onsite Improvements 3,150,000 3,150,000 0 38,415
Solar 1,000,000 1,000,000 0 12,195
Residential Construction 12,120,000 12,120,000 0 147,805 General Conditions 927,850 927,850 0 11,315
Contractor's Overhead & Profit 800,903 800,903 0 9,767
Performance Bond 185,988 185,988 0 2,268
Construction Contingency 939,237 939,237 0 11,454
Developer Fee 3,824,778 3,824,778 0 46,644
Financial Advisory 300,000 300,000 0 3,659
Construction Manager 150,000 150,000 0 1,829
Builders Risk Insurance 464,969 464,969 0 5,670
Audit and Accounting 55,000 35,000 0 671
Legal Fees 335,000 75,000 0 4,085
Market Study 15,000 15,000 0 183
Project Contingency 500,000 250,000 0 6,098
Lease-up and Marketing 100,000 0 0 1,220
Capitalized Operating Reserve 324,703 0 0 3,960
Common Area Furnishings 100,000 100,000 0 1,220
Construction Period Interest 2,291,786 1,577,942 0 27,949 Construction Loan Fees 361,420 231,632 0 4,408
Permanent Loan Fees 107,232 0 0 1,308
TCAC Fees 73,448 0 0 896 Total $590,805 $7,205
CDLAC Fees 86,294 0 0 1,052
Bond Issuance Costs 115,000 0 0 1,402 Bond allocation 16,129,732 Title and Recording 60,000 25,000 0 732 Aggregate basis 30,723,299 = 52.50% Exceeding 50% test by 768,082
4% Federal Acq. Fed. State
Eligible Basis 29,323,299 0
Excluded 0 0
Unadjusted 29,323,299 0 0
Basis Limit
Boost 130% 100%
Adjusted 38,120,288 0
Applicable 100.0% 100.0% 100.0%
Qualified 38,120,288 0 0
Reduction 0 0 0
Adj. Qualified 38,120,288 0
Rate Factor 4.00% 4.00% 30.00%
Annual Credits 1,524,811 0
Federal Credits 15,248,110 State Credits 0
Credit Price 0.80 0.82
Proceeds 12,197,268 0
Totals $32,973,609 $29,323,299 $0 $402,117 Total $12,197,268 Printed on 9/30/25 at 4:29 PM Updated by: Tyler White on 9/26/25 50% Test
Version: 25.5.1
Tax Credit Calculation
65,158,486
Description
Development Uses Operating Expenses
Red Tail Multifamily
CASH FLOW YR 1-10 PALM SPRINGS AFFORDABLE
81 units plus 1 mgr. unit TE Bonds + 4% Credits
New Construction Non-Rural
Non-PW Family project QCT-Yes DDA-Yes
Year 1 2 3 4 5 6 7 8 9 10
Rental Income 1,466,813 1,503,483 1,541,070 1,579,597 1,619,087 1,659,564 1,701,053 1,743,579 1,787,169 1,831,848 Other Income 12,150 12,454 12,765 13,084 13,411 13,747 14,090 14,443 14,804 15,174 Vacancy Loss 73,948 75,797 77,692 79,634 81,625 83,666 85,757 87,901 90,099 92,351 Adjusted Gross Income 1,405,015 1,440,140 1,476,144 1,513,047 1,550,873 1,589,645 1,629,386 1,670,121 1,711,874 1,754,671 Standard Expenses 500,000 517,500 535,613 554,359 573,762 593,843 614,628 636,140 658,405 681,449 Property Taxes 12,300 12,546 12,797 13,053 13,314 13,580 13,852 14,129 14,411 14,700 Supportive Services 45,840 46,986 48,161 49,365 50,599 51,864 53,160 54,489 55,852 57,248 Non-Inflated Expenses 8,065 8,065 8,065 8,065 8,065 8,065 8,065 8,065 8,065 8,065 Replacement Reserves 24,600 24,600 24,600 24,600 24,600 24,600 24,600 24,600 24,600 24,600 Total Expenses 590,805 609,697 629,235 649,441 670,339 691,952 714,305 737,423 761,332 786,061 Perm Debt Service 708,009 708,009 708,009 708,009 708,009 708,009 708,009 708,009 708,009 708,009 Total Debt Service 708,009 708,009 708,009 708,009 708,009 708,009 708,009 708,009 708,009 708,009 Operating Reserve Balance 324,703 324,703 324,703 324,703 324,703 324,703 324,703 324,703 324,703 324,703 Operating Reserve Draws 0 0 0 0 0 0 0 0 0 0
Net Operating Income 814,210 830,443 846,909 863,606 880,534 897,693 915,082 932,698 950,542 968,610 Debt Service Coverage 1.15 1.17 1.20 1.22 1.24 1.27 1.29 1.32 1.34 1.37 Cash after Exp & DS 106,201 122,435 138,900 155,597 172,526 189,685 207,073 224,690 242,533 260,601 LP Fee Balance 0 0 0 0 0 0 0 0 0 0
LP Fee Due 5,000 5,150 5,305 5,464 5,628 5,796 5,970 6,149 6,334 6,524 LP Fee Paid 5,000 5,150 5,305 5,464 5,628 5,796 5,970 6,149 6,334 6,524 Cash Flow 101,201 117,285 133,596 150,134 166,898 183,888 201,103 218,540 236,199 254,077 MGP Fee Balance 0 0 0 0 0 0 0 0 0 0
MGP Fee Due 10,000 10,300 10,609 10,927 11,255 11,593 11,941 12,299 12,668 13,048 MGP Fee Paid 10,000 10,300 10,609 10,927 11,255 11,593 11,941 12,299 12,668 13,048 Cash Flow 91,201 106,985 122,987 139,206 155,643 172,296 189,162 206,242 223,531 241,030 Deferred Developer Fee 1,353,104 1,261,903 1,154,918 1,031,932 892,725 737,082 564,787 375,625 169,383 0 Dev. Fee Payments 91,201 106,985 122,987 139,206 155,643 172,296 189,162 206,242 169,383 0 Cash Flow 0 0 0 0 0 0 0 0 54,149 241,030
City Loan 0 0 0 0 0 0 0 0 0 0
Loan Balance 5,000,000 5,150,000 5,300,000 5,450,000 5,600,000 5,750,000 5,900,000 6,050,000 6,200,000 6,322,926 Interest Charge 150,000 150,000 150,000 150,000 150,000 150,000 150,000 150,000 150,000 150,000 Payments 0 0 0 0 0 0 0 0 27,074 120,515
Ending Balance 5,150,000 5,300,000 5,450,000 5,600,000 5,750,000 5,900,000 6,050,000 6,200,000 6,322,926 6,352,411 Cash Flow 0 0 0 0 0 0 0 0 27,074 120,515
AGP Fee Balance 0 10,000 20,300 30,909 41,836 53,091 64,684 76,625 88,923 74,517 AGP Fee Due 10,000 10,300 10,609 10,927 11,255 11,593 11,941 12,299 12,668 13,048 AGP Fee Paid 0 0 0 0 0 0 0 0 27,074 87,565
Cash Flow 0 0 0 0 0 0 0 0 0 32,950
Year 1 2 3 4 5 6 7 8 9 10
Printed on 9/30/25 at 4:29 PM Version: 25.5.1 Updated by: Tyler White on 9/26/25 Cash Flow
Red Tail Multifamily
CASH FLOW YR 11-20 PALM SPRINGS AFFORDABLE
81 units plus 1 mgr. unit TE Bonds + 4% Credits
New Construction Non-Rural
Non-PW Family project QCT-Yes DDA-Yes
Year 11 12 13 14 15 16 17 18 19 20
Rental Income 1,877,644 1,924,586 1,972,700 2,022,018 2,072,568 2,124,382 2,177,492 2,231,929 2,287,727 2,344,921 Other Income 15,553 15,942 16,340 16,749 17,168 17,597 18,037 18,488 18,950 19,424 Vacancy Loss 94,660 97,026 99,452 101,938 104,487 107,099 109,776 112,521 115,334 118,217 Adjusted Gross Income 1,798,538 1,843,501 1,889,589 1,936,828 1,985,249 2,034,880 2,085,752 2,137,896 2,191,343 2,246,127 Standard Expenses 705,299 729,985 755,534 781,978 809,347 837,674 866,993 897,338 928,745 961,251 Property Taxes 14,994 15,294 15,599 15,911 16,230 16,554 16,885 17,223 17,567 17,919 Supportive Services 58,679 60,146 61,650 63,191 64,771 66,390 68,050 69,751 71,495 73,282 Non-Inflated Expenses 8,065 8,065 8,065 8,065 8,065 8,065 8,065 8,065 8,065 8,065 Replacement Reserves 24,600 24,600 24,600 24,600 24,600 24,600 24,600 24,600 24,600 24,600 Total Expenses 811,637 838,089 865,448 893,745 923,012 953,283 984,593 1,016,977 1,050,472 1,085,116 Perm Debt Service 708,009 708,009 708,009 708,009 708,009 708,009 708,009 708,009 708,009 708,009 Total Debt Service 708,009 708,009 708,009 708,009 708,009 708,009 708,009 708,009 708,009 708,009 Operating Reserve Balance 324,703 324,703 324,703 324,703 324,703 324,703 324,703 324,703 324,703 324,703 Operating Reserve Draws 0 0 0 0 0 0 0 0 0 0
Net Operating Income 986,901 1,005,412 1,024,140 1,043,083 1,062,236 1,081,597 1,101,159 1,120,919 1,140,872 1,161,011 Debt Service Coverage 1.39 1.42 1.45 1.47 1.50 1.53 1.56 1.58 1.61 1.64 Cash after Exp & DS 278,892 297,403 316,132 335,075 354,228 373,588 393,151 412,911 432,863 453,002 LP Fee Balance 0 0 0 0 0 0 0 0 0 0
LP Fee Due 6,720 6,921 7,129 7,343 7,563 7,790 8,024 8,264 8,512 8,768 LP Fee Paid 6,720 6,921 7,129 7,343 7,563 7,790 8,024 8,264 8,512 8,768 Cash Flow 272,172 290,482 309,003 327,732 346,665 365,798 385,127 404,647 424,351 444,234 MGP Fee Balance 0 0 0 0 0 0 0 0 0 0
MGP Fee Due 13,439 13,842 14,258 14,685 15,126 15,580 16,047 16,528 17,024 17,535 MGP Fee Paid 13,439 13,842 14,258 14,685 15,126 15,580 16,047 16,528 17,024 17,535 Cash Flow 258,733 276,640 294,745 313,047 331,539 350,219 369,080 388,118 407,327 426,699 Deferred Developer Fee 0 0 0 0 0 0 0 0 0 0
Dev. Fee Payments 0 0 0 0 0 0 0 0 0 0
Cash Flow 258,733 276,640 294,745 313,047 331,539 350,219 15.37 M 388,118 407,327 426,699 City Loan 0 0 0 0 0 0 0 0 0 0
Loan Balance 6,352,411 6,373,044 6,384,724 6,387,352 6,380,829 6,365,059 6,339,950 0 0 0 Interest Charge 150,000 150,000 150,000 150,000 150,000 150,000 150,000 0 0 0 Payments 129,367 138,320 147,373 156,523 165,770 175,109 6,489,950 0 0 0 Ending Balance 6,373,044 6,384,724 6,387,352 6,380,829 6,365,059 6,339,950 0 0 0 0 Cash Flow 129,367 138,320 147,373 156,523 165,770 175,109 8,879,131 388,118 407,327 426,699 AGP Fee Balance 0 0 0 0 0 0 0 0 0 0
AGP Fee Due 13,439 13,842 14,258 14,685 15,126 15,580 16,047 16,528 17,024 17,535 AGP Fee Paid 13,439 13,842 14,258 14,685 15,126 15,580 16,047 16,528 17,024 17,535 Cash Flow 115,928 124,478 133,115 141,838 150,644 159,530 8,863,083 371,590 390,302 409,164 Year 11 12 13 14 15 16 17 18 19 20
Printed on 9/30/25 at 4:29 PM Version: 25.5.1 Updated by: Tyler White on 9/26/25 Cash Flow
Red Tail Multifamily