1 To: Claire Raybould, Current Planning Manager, City of Palo Alto From: Rick Jacobus, Street Level Advisors Date: October 8, 2025 Re: Matadero Creek Affordable Housing – Financial Feasibility Analysis Summary of Findings Street Level Advisors conducted a financial feasibility analysis to understand the potential for 100% affordable housing developments on a 1-acre portion of the 340 Portage Avenue site. We developed three detailed project proformas for building prototypes that correspond with the three scenarios developed by Van Meter, Williams, Pollack including 5, 6, and 7 story heights with varying amounts of parking. For each of the three scenarios we evaluated the likely range of development costs based on a review of the costs of comparable affordable projects in the region and developed realistic financing scenarios . Affordable housing financing is very competitive: there are far more projects seeking funds than there are funds available. Generally, a 100% affordable housing project will need to compete successfully for federal Low-Income Housing Tax Credits and critical gap funding from the State of California. Therefore, we evaluated the site and each of the three scenarios against the scoring criteria used in the most recent rounds of these key funding sources. We found that an affordable housing development of any of the three scenarios at this location would have been competitive for state funding in recent years. Because the available State funds may be more limited in the coming years and because the scoring systems used to allocate these funds change, it may nonetheless take time for the selected development team to assemble the necessary funding. But our analysis suggests that this is a competitive location for affordable housing.
2 Table 1: Financing Scenario Summary
One key question we considered was the necessary level of gap funding from the City of Palo Alto. Local funding is critical to feasibility for two reasons. First, every affordable housing project struggles to assemble the funding needed from a limited number of sources so local funding is often the only way to close the gap. Second, the state funding sources often use the level of local funding as a tie-breaker when they determine which projects to fund. Projects with stronger local investment are more likely to secure state funding. We assumed that in all of the three scenarios the development would receive the land at essentially no cost and would receive development impact fee waivers that Palo Alto provides for all affordable housing projects. Both of these would be treated as local contributions under state program rules. We also considered the extent to which an additional cash investment from the City’s Affordable Housing Fund would improve the competitiveness of the project. and concluded that the City would need to commit at least $5 million, in addition to the land, in order for the project to reach the level of local subsidy that was typical of the winning projects in the most recent state SuperNOFA. Higher levels of funding, up to $10 million would strengthen the project’s competitiveness and likely shorten the timeline for development of the site noticeably.
3 Why We Did This Analysis As the City prepares to issue a Request for Proposals (RFP) for the Matadero Creek Affordable Housing site, we want to understand the range of projects that developers might propose. Different building sizes and layouts can change both the number of homes delivered and the amount of subsidy required to make the project feasible. Because the funding landscape for affordable housing is constantly changing, we can’t exactly project what the most effective funding strategy will be, even a few years from now. But we can ensure that the site and potential projects would have been competitive for funding under the conditions available in recent years. Ultimately, the City will select a development partner with a strong track record lining up the many sources of funding needed to make these projects possible and that partner will determine the most promising funding strategy available at that time. Developer Feedback Between late April and early May 2025, we conducted five in-depth interviews with organizations representing a broad cross-section of the affordable housing developers and affordable housing finance experts. Each interview lasted roughly one hour and followed a consistent discussion guide covering site design, financing, affordability strategy, and RFP structure. The purpose was not to solicit proposals but to understand how experienced developers view the site’s opportunities and challenges, and what process design would make the project most attractive and feasible. Design and Site Considerations: Developers were largely aligned on design principles. There was little appetite for buildings taller than 7 stories, both because of cost escalation and construction complexity. Most agreed that one level of podium parking is the upper limit of what remains feasible. Beyond that, costs rise sharply without improving financing potential. Developers also encouraged the City to identify a long-term operating plan for community-serving spaces to ensure their financial sustainability. Several respondents noted that orienting units and shared spaces toward the park would help activate the public edge and strengthen the relationship between housing and open space. Parking: Developers agreed that parking ratios are a key feasibility driver. Most suggested between 0.5 and 0.75 spaces per unit, depending on unit mix and transit access. There was broad consensus that mechanical stackers are disfavored, citing maintenance costs and operational reliability – though several developers might consider using them if necessary. Target Populations and Unit Mix: Developers urged the City to clarify target populations early. If the City intends to include supportive housing or veteran units, they suggested doing so only if funding or service commitments are already identified. They also advised allowing flexibility in unit mix so developers can 4 align designs with evolving funding opportunities, market conditions, and management strategies. Rigid requirements can make projects less competitive in state funding rounds. Financing Strategy and Funding Sources: All interviewees recognized that 340 Portage will require layered financing, with state programs playing a central role. Most agreed that the project would rely on 4% Low-Income Housing Tax Credits rather than 9% credits, given the competitive limits of the regional allocation pool. One developer floated the idea of splitting the site into two smaller 9% projects, but most favored a single 4%-credit project paired with MHP funding as the most practical structure. Leveraging State Programs: Developers highlighted the opportunity to maximize MHP and AHSC scoring through the site’s high-resource location, transit proximity, and City land contribution. They recommended that the City document Surplus Lands Act compliance early, since formal designation as “exempt surplus land” earns critical MHP points. Several developers noted that AHSC (Affordable Housing and Sustainable Communities) funds could be attainable if the City partners with a transit agency (VTA or Caltrain) to include a modest mobility improvement, such as a new bike connection or crosswalk enhancement near the site. Need for Local Match Funding: Interviewees pointed out that state programs reward local match commitments. While the land contribution counts, adding $100,000–$200,000 per unit in City housing trust funds could strengthen competitiveness. To be recognized, such funds must be committed prior to application submission. Overall, developers expressed strong interest in an affordable housing project at this site, but emphasized the importance of clarity, predictability, and simplicity. They view the project as financially feasible under a 4% LIHTC + MHP model, assuming clear direction on parking, affordability targets, and local participation. Developers also noted that an efficient, well-scoped RFP—focused on developer qualifications, capacity and readiness rather than design detail—would attract a strong pool of proposers while reducing administrative burden for both applicants and City staff. Three Development Scenarios We tested three different building sizes, each consistent with the massing studies prepared by the design team. The table below compares the three building prototypes studied for a potential affordable housing project at this site. It summarizes key physical and programmatic characteristics, including building height, total square footage, unit mix, and parking ratios. 5 Table 2: Building Prototypes Studied Option 1 – 5 stories Option 2 – 6 stories Option 3 – 7 stories Building Height ± 55 ft ± 65 ft ± 75 ft Total Gross Area (sf) 110,935 150,030 173,950 Residential Area (sf) 73,200 92,200 110,780 1-Bedroom Units 37 49 59 2-Bedroom Units 26 30 36 3-Bedroom Units 26 30 36 Total Units 89 109 131 Average Unit Size (sf) 1BR 590 / 2BR 870 / 3BR 1,080 1BR 590 / 2BR 870 / 3BR 1,080 1BR 590 / 2BR 870 / 3BR 1,080 Parking Provided 45 (90 with stackers) 52 (104 with stackers) 52 (104 with stackers) Parking Ratio 0.5 (1.0 w/stackers) 0.5 (1.0 w/stackers) 0.4 (0.8 w/stackers) Development Cost Estimates In order to evaluate the financing need, we first estimated the total cost to develop each of the prototypes. We reviewed detailed proformas for several recently proposed affordable projects in and around Palo Alto, development cost proposals provided to the State for dozens of other projects as part of the most recent affordable housing SuperNOFA, as well as a detailed study on the cost of development of both market rate and affordable housing commissioned by the City of San Jose in 20241. We intentionally selected cost assumptions at the high end of the ranges suggested by these sources, both to reflect the likely cost increases that have occurred since these projects were proposed and to provide a somewhat more conservative estimate of the financing need. Note that we have not attempted to adjust these costs to reflect future cost inflation. This project will take many years to develop, and the actual costs will certainly be somewhat higher than these present-day projections. Appendix A includes the detailed cost assumptions we used to construct the proformas. Table 3 summarizes the high-level cost break down for each prototype. 1 San Jose Cost of Development Study, Century Urban 2024 6 Table 3: Development Cost Summary
The taller, denser projects cost more to build, both because there is more building to construct and because we assume that the cost per foot is higher for denser buildings. Affordability For each scenario we assumed that all units (aside from 1 managers unit) would be restricted to households earning less than 60% of Area Median Income (AMI). For reasons of competitiveness for State funding, we have assumed that 20% of units in each scenario would target Extremely Low Income (ELI) households earning less than 30% of AMI. We assumed that the remaining units would serve a mix of incomes between 40% and 60% of AMI. Table 4: Income Mix Key State and Federal Financing Sources Affordable housing projects in California almost always require a combination of federal and state subsidies in addition to local funds and tax credit equity. The primary programs are administered by the California Department of Housing and Community Development (HCD), the California Tax Credit Allocation Committee (TCAC/CDLAC), and federal agencies such as the U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of the Treasury. Federal Programs
7 Low-Income Housing Tax Credit (LIHTC) What it is: The main federal incentive for building affordable rental housing, created under Section 42 of the Internal Revenue Code. How it works: Provides a dollar-for-dollar tax credit to investors who finance affordable housing. Projects receive either 4% or 9% credits depending on the financing structure. Why it matters: LIHTC is the financial backbone of nearly all affordable rental developments in the U.S., generating about 40–50% of the total project funding. Tax-Exempt Multifamily Housing Bonds (Private Activity Bonds) What it is: Long-term, below-market-rate financing made possible when states and localities issue tax-exempt bonds for affordable housing. How it works: Developers borrow bond proceeds to finance construction and permanent loans. Projects using these bonds automatically qualify for 4% LIHTCs if at least 50% of the project’s costs are financed with bond proceeds. The loans are generally made by commercial banks with tax exemption facilitated by a public agency. Why it matters: This pairing of bonds and 4% tax credits is a cornerstone of financing for larger affordable projects like 340 Portage. Project-Based Vouchers (PBVs) What it is: HUD-funded rental assistance administered by local housing authorities. How it works: Provides long-term rental subsidies tied to specific units, ensuring that very low-income households pay no more than 30% of their income toward rent. Why it matters: PBVs make the deepest affordability levels financially sustainable by guaranteeing stable rental income for the most vulnerable residents. State Programs Multifamily Housing Program (MHP) What it is: The state’s core subsidy program for new affordable rental housing. How it works: Provides long-term, low-interest loans (often 55 years) to help fill the gap between development costs and other financing sources. Why it matters: Almost every competitive affordable housing project in California applies for MHP funds. Affordable Housing and Sustainable Communities (AHSC) What it is: Funding from the state’s cap-and-trade revenues to support housing near transit. How it works: Provides loans for housing plus grants for related infrastructure 8 (sidewalks, bike lanes, transit stops). Why it matters: 340 Portage, located near jobs and transit, would be a strong candidate for this program. Infill Infrastructure Grant Program (IIG) What it is: Grants to help cover infrastructure costs for infill housing sites. How it works: Can fund utilities, streets, sidewalks, and other improvements needed to make a site ready for housing. Why it matters: Helps reduce the amount of subsidy needed for construction by covering upfront site prep. No Place Like Home (NPLH) What it is: Funds permanent supportive housing for people experiencing homelessness and mental illness. How it works: Counties receive allocations and may partner with affordable housing developers. Why it matters: If supportive units are included in the mix, NPLH could provide both capital and operating support. Other Targeted Programs • Veterans Housing and Homelessness Prevention (VHHP): For projects that include units for veterans. • Joe Serna Jr. Farmworker Housing Grant Program: For developments serving farmworker households. • Transit-Oriented Development (TOD) Program: For projects adjacent to major public transit corridors. Financing Strategy The 9% tax credits are more generous (they provide a higher share of cost per project) but also more competitive. The 9% tax credits are allocated by the State into regional pools and the South Bay pool may be too small to support a large project like this. The 4% tax credits are a more likely source, but they leave a larger gap for the developer to fill. Based on a review of the 4% projects funded in 2024, we assumed that tax credits would provide 47% of the total development cost in each of our prototypes (though a number of factors could mean that more or less tax credit equity was available to a project at this site). The 4% tax credits must be paired with tax exempt bond financing which lowers the cost of the permanent debt on the project. In each case we have calculated the maximum supportable permanent loan given the restricted rents. But the tax credits and debt together cover less than 60% of the cost of the project. This leaves a ‘gap’ that has to be filled with affordable housing subsidies from one source or another (often many different sources). The most promising sources are the State MHP and AHSC programs. Most of the 4% LIHTC projects receive one or the other or sometimes both of these sources. 9 The MPH Program is promising because it provides significant scoring incentives both to projects located in “High Resource Areas” and to projects developed on surplus public land. The Portage Ave site would qualify for both of these bonus categories. Only 19% of projects that applied in the last round qualified for both. The challenge with MHP is that ongoing funding for the program is uncertain. It seems likely that the State will continue to invest, but the budget situation in Sacramento makes it difficult to anticipate the level of funding. The other large state program, AHSC, was recently extended. The program will receive $800 million annually in proceeds from the state’s cap and trade greenhouse gas emissions auctions through 2045. Portage Avenue also appears to be a competitive site for AHSC funding. AHSC requires pairing an affordable housing project with a transportation infrastructure project serving the same area. A successful award funds both projects. The other critical source for any project is local government funding. For the purpose of this analysis, we assumed that the City of Palo Alto would commit additional Affordable Housing Fund resources to the project to help fill the gap. Figure 1: Capital Stack The Impact of Local Investment In order to understand the critical role that local government investment can play in making projects like this feasible, we evaluated the data from recently funded projects. We looked at all the 4% LIHTC projects funded in the most recent State SuperNOFA2. The State awards funding from several sources including MHP, IIG and VHHP in a single competitive process. In 2025 they funded 16 projects that also received 4% tax credits. These projects received between $2 and $42.5 million in state funding. This funding represented between 4% and 2 February 2025 Multifamily Finance SuperNOFA (Round 3). https://www.hcd.ca.gov/grants-and-funding/supernofa
10 51% of total development costs with the average State share representing 22% of total development costs. Table 5: Financing Mix with $5 Million in City funding Table 5 shows the financing mix for each of the prototypes under the assumption that the City committed $5 million in funding3. The table shows that, at this level of City funding, the project would require between $24 and $50 million in State funding. That funding would represent between 27 and 33% of total development cost. This is well above the average State funding share from the last SuperNOFA but not outside of the range. We also considered an alternative where the City contribution to the project was $10 million. As Table 6 shows, at this level the State share of funding would range from 22 to 29% of cost – closer to the average among winning projects in the last State funding round. Table 6: Financing Mix with $10 Million in City funding
3 While the need for subsidy increases for the larger projects we assumed a flat level of funding regardless of project size on the assumption that the City would either commit a given level of funding or indicate that a given amount is being held aside for future commitment for this site prior to issuance of an RFP. This would mean that developers would receive the same level of city funding regardless of the density of their project. An alternative approach would be to allow developers to request funds from the City either as part of the RFP or through the City’s regular award process after selection. Either of those approaches might result in a higher award of City funding for projects with more units. The developers we interviewed, however, indicated that a clear statement of available City funding would strengthen the RFP and make it more attractive to potential developers.
11 What This Means Going Forward These three scenarios are not recommendations. They are examples of what a developer could reasonably propose given the City’s goals and site conditions. A developer responding to the RFP might bring forward something that looks like Option 1, Option 3, or something in between. The takeaway is that all are financially possible — but each comes with different tradeoffs. Smaller buildings mean fewer homes but easier financing. Larger buildings mean more homes but bigger gaps to close. 12 Appendix A – Key Assumptions Behind All Scenarios This project’s financial analysis is based on a common set of assumptions. Below we outline those assumptions and explain in plain language what they mean. Affordability Who the housing is for: For each prototype we assumed that all units would be restricted to households earning less than 60% of Area Median Income (AMI). For reasons of competitiveness for State funding, we have assumed that 20% of units in each scenario would target Extremely Low Income (ELI) households earning less than 30% of AMI. We assumed that the remaining units would serve a mix of incomes between 40% and 60% of AMI. How rents are set: Rents are capped for each income group based on LIHTC rent limits published by the California Department of Housing and Community Development. How big are the units: For all the prototypes we assumed roughly the same mix of 1, 2- and 3-bedroom units based on Van Meter, Williams, Pollack’s designs.
Voucher support: In the case of scenarios that take advantage of Project Based Vouchers, we assume rental income based on HUD’s Fair Market Rent (FMR) for the unit size rather than the tenant’s income. Tenants in voucher units pay a share of their income and HUD makes up the difference between this payment and FMR. Rent and Utilities Maximum affordable rents: The rent shown in the model is the most a household at that income level could be asked to pay, based on federal and state formulas. Utility deductions: Because tenants pay utilities, we subtract a standard allowance from the maximum rent. For example, about $98 is taken off for a 1-bedroom, $128 for a 2-bedroom, and $157 for a 3-bedroom. Manager’s unit: One apartment in each scenario is set aside for an on-site manager and doesn’t generate rent. Costs to Build Construction type: Costs assume modern wood-frame apartments over a concrete podium (the most common and efficient structure for this type of project). Hard costs: We budget between $535 to $650 per gross residential foot for the direct costs to build the building. Parking cost: In addition, we assume a cost of $65,000 per parking space to build the parking.
13 Soft costs: Professional fees, permits, and other non-construction costs are assumed to be about 18% of hard construction costs. Land: The site is contributed by the City, so no land purchase cost is included. How It’s Paid For Permanent loan: Each scenario assumes a long-term mortgage funded with tax exempt bond financing. This loan is sized conservatively based on the project’s income, so it can be safely repaid. We assume a Debt Service Coverage Ratio of 1.15 meaning that the Net Operating Income (after all expenses) for the building must be at least 15% greater than the monthly loan payment. This ratio limits the amount that the project can borrow because the rents are limited. We assume a permanent loan interest rate of 6.5% and a loan term of 35 years. Construction loan: We assume a construction loan interest rate of 6.85% and that the construction loan will cover 60% of the total development cost. Tax Credit Equity: While the exact amount of tax credit equity depends on both building cost and market factors, we assumed that tax credit equity would contribute 47% of total development cost for each prototype. This was the average tax credit investment among 15 projects funded with 4% LIHTC credits in 2023 in San Mateo and Santa Clara counties. State funding: For each prototype we calculated the amount of funding from the State that would be necessary to fill the remaining gap after accounting for all other sources. We then compared the resulting funding levels to the typical amounts awarded to successful 4% LIHTC projects in recent rounds of State funding. This State funding could come from MHP, AHSC or any of several other state programs. City contribution: We assumed, for the purpose of analysis a City of Palo Alto commitment of $5,000,000 for each project prototype. Other contributions: The financial model includes a standard “owner’s equity” contribution of $84,000 per unit and a small portion of the developer fee being deferred until after the building is operating. Operations Once Built Operating expenses: We assumed that the operating expenses for each building would be $10,000 per unit per year. 14 Net Operating Income (NOI): This is the project’s annual bottom line after paying for operating costs. The first year NOI ranges from about $1.1M to $1.6M depending on building size. No extras included: For now, the models don’t count potential income from things like commercial rent, parking, or services. 15 Appendix B – Project Prototype Pro formas
Matadero Creek Affordable Housing ProjectOption 1 - 5 Stories Unit Mix and Rent StructureRent InformationArea Median Income30% (PBV)50% (PBV)30% AMI40% AMI50% AMI60% AMIMGRStudio 968$ 1,291$ 1,613$ 1,936$ -$ 1-Bed -$ 1,037$ 1,383$ 1,728$ 2,074$ -$ 2-Bed 3,124$ 1,244$ 1,659$ 2,073$ 2,488$ -$ 3-Bed 4,004$ 4,033$ 1,437$ 1,917$ 2,396$ 2,875$ -$ 4-Bed 1,603$ 2,138$ 2,672$ 3,207$ -$ Commercial BedroomsUtility AllowanceStudio -$ 1-Bed 98$ 2-Bed 128$ 3-Bed 157$ 4-Bed Unit Mix# of BedroomsNumber of UnitsSquare FeetTotal Sq FtAMI LevelMonthly RentMax Affordable Rent (with Utilities) Utility Allowance1st Year Annual Revenue
Studio 0 500 0 30% AMI$968$968$0 $0Studio 0 500 0 40% AMI$1,291$1,291$0 $0Studio 0 500 0 60% AMI$1,936$1,936$0 $01-Bed 7 590 4,13030% AMI$939$1,037$98$78,8761-Bed 11 590 6,49040% AMI$1,285$1,383$98$169,6201-Bed 19 590 11,21060% AMI$1,976$2,074$98$450,5282-Bed 5 870 4,35030% AMI$1,116$1,244$128$66,9602-Bed 8 870 6,96040% AMI$1,531$1,659$128$146,9762-Bed 12 870 10,44060% AMI$2,360$2,488$128$339,8402-Bed 1 870 870MGR-$128$0 $128($1,536)3-Bed 5 1,0805,40030% AMI$1,280$1,437$157$76,8003-Bed 8 1,0808,64040% AMI$1,760$1,917$157$168,9603-Bed 13 1,08014,04060% AMI$2,718$2,875$157$424,008 Total 89 72,530 $1,921,032
AMI Units % Total Units% Tot Rev.AMIUnits% Total Units30% (PBV) 0 0%0.0% ELI 1719.1%50% (PBV) 0 0%0.0% VLI 2730.3%30% AMI 17 19%11.6% Low Income4449.4%40% AMI 27 30%25.3% MGR 1 1.1%50% AMI 0 0%0.0% Total 89 100%60% AMI 44 49%63.2%MGR 1 1%-0.1% ParkingSpacesSpaces/unit450.51 Total 89 100%100% BuildingNet FeetEfficiencyGross FeetUnit TypeUnits % Total Units% Tot Rev. 72,53065%110,935 Studio 0 0%0.0%1-Bed 37 42%36.4%2-Bed 26 29%28.7%3-Bed 26 29%34.9%4-Bed 0 0%0.0%Total 89 100%100% Project Proforma
Construction SourcesTotal Per Unit Financing AssumptionsConstruction Loan53,263,039$ 598,461$ Debt Coverage Ratio 1.15Tax Credit Investor Proceeds14,602,950$ 164,078$ Construction Loan Amount (%TDC)60%GP Equity 7,480,094$ 84,046$ Construction Interest Rate6.85%HCD/Other -$ Permanent Interest Rate6.50%City of Palo Alto5,000,000$ 56,180$ Permanent Loan Term 35Total 80,346,083$ 902,765$ LIHTC Price 0.95Basis Boost TRUELIHTC Eligible % 100%LIHTC Investor Proceeds % TDC47%City of Palo Alto Investment Limit5,000,000$ HCD/Other %TDC 20%Permanent SourcesTotal Per Unit% GP Equity per Unit 84046Amortizing Permanent Loan10,017,980$ 112,562$ 11% Tax Credit $ During Construction35%Tax Credit Investor Proceeds41,722,714$ 468,795$ 47% Deferred Developer Fee per Unit4790GP Equity 7,480,094$ 84,046$ 8%Deferred Developer Fee426,310$ 4,790$ 0% Development AssumptionsHCD/Other 24,124,634$ 271,063$ 27% Construction Costs Per Gross Foot535City of Palo Alto5,000,000$ 56,180$ 6% Site Acquisition Cost Per Acre0Total 88,771,732$ 997,435$ 100% Parking Cost per Space65000Soft Costs (as % of hard costs)18%Financing Costs per unit53,000 Developer Fee % of TDC12.5% Operating AssumptionsUses Total Per UnitPer GSF Operating Costs10,000$ Per UnitAcquisition -$ -$ -$ Expense Inflation Rate3.50%Hard Cost 59,350,225$ 666,856$ 535$ Resident Services1,700$ Per unitParking Cost 2,925,000$ 32,865$ 26$ Reserves 500$ Per UnitFinancing Costs4,717,000$ 53,000$ 43$ Other Soft Costs10,683,041$ 120,034$ 96$ Developer Fee11,096,467$ 124,679$ 100$ Total Development Costs88,771,732$ 997,435$ 800$ Cash FlowYear 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10Effective Gross Income1,921,032$ 1,988,268$ 2,057,858$ 2,129,883$ 2,204,428$ 2,281,583$ 2,361,439$ 2,444,089$ 2,529,632$ 2,618,169$ Operating Expenses(890,000)$ (921,150)$ (953,390)$ (986,759)$ (1,021,295)$ (1,057,041)$ (1,094,037)$ (1,132,329)$ (1,171,960)$ (1,212,979)$ Services (151,300)$ (156,596)$ (162,076)$ (167,749)$ (173,620)$ (179,697)$ (185,986)$ (192,496)$ (199,233)$ (206,206)$ Reserves (44,500)$ (46,058)$ (47,670)$ (49,338)$ (51,065)$ (52,852)$ (54,702)$ (56,616)$ (58,598)$ (60,649)$ Net Operating Income835,232$ 864,465$ 894,721$ 926,037$ 958,448$ 991,994$ 1,026,713$ 1,062,648$ 1,099,841$ 1,138,335$ Debt Service (726,289)$ (726,289)$ (726,289)$ (726,289)$ (726,289)$ (726,289)$ (726,289)$ (726,289)$ (726,289)$ (726,289)$ Net Cash Flow 108,943$ 138,176$ 168,433$ 199,748$ 232,159$ 265,705$ 300,425$ 336,360$ 373,552$ 412,047$ Debt Coverage Ratio1.15 1.19 1.23 1.28 1.32 1.37 1.41 1.46 1.51 1.57 Bedrooms
Matadero Creek Affordable Housing ProjectOption 2 - 6 Stories Unit Mix and Rent StructureRent InformationArea Median Income30% (PBV)50% (PBV)30% AMI40% AMI50% AMI60% AMIMGRStudio 968$ 1,291$ 1,613$ 1,936$ -$ 1-Bed -$ 1,037$ 1,383$ 1,728$ 2,074$ -$ 2-Bed 3,124$ 1,244$ 1,659$ 2,073$ 2,488$ -$ 3-Bed 4,004$ 4,033$ 1,437$ 1,917$ 2,396$ 2,875$ -$ 4-Bed 1,603$ 2,138$ 2,672$ 3,207$ -$ Commercial BedroomsUtility AllowanceStudio -$ 1-Bed 98$ 2-Bed 128$ 3-Bed 157$ 4-Bed Unit Mix# of BedroomsNumber of UnitsSquare FeetTotal Sq FtAMI LevelMonthly RentMax Affordable Rent (with Utilities) Utility Allowance1st Year Annual Revenue
Studio 0 500 0 30% AMI$968$968$0 $0Studio 0 500 0 40% AMI$1,291$1,291$0 $0Studio 0 500 0 60% AMI$1,936$1,936$0 $01-Bed 10 590 5,90030% AMI$939$1,037$98$112,6801-Bed 15 590 8,85040% AMI$1,285$1,383$98$231,3001-Bed 24 59014,16060% AMI$1,976$2,074$98$569,0882-Bed 6 870 5,22030% AMI$1,116$1,244$128$80,3522-Bed 9 870 7,83040% AMI$1,531$1,659$128$165,3482-Bed 14 87012,18060% AMI$2,360$2,488$128$396,4802-Bed 1 870 870MGR-$128$0 $128($1,536)3-Bed 6 1,0806,48030% AMI$1,280$1,437$157$92,1603-Bed 9 1,0809,72040% AMI$1,760$1,917$157$190,0803-Bed 15 1,08016,20060% AMI$2,718$2,875$157$489,240 Total 109 87,410 $2,325,192
AMI Units % Total Units% Tot Rev.AMIUnits% Total Units30% (PBV) 0 0%0.0% ELI 2220.2%50% (PBV) 0 0%0.0% VLI 3330.3%30% AMI 22 20%12.3%Low Income5348.6%40% AMI 33 30%25.2%MGR 1 0.9%50% AMI 0 0%0.0% Total 109100%60% AMI 53 49%62.6%MGR 1 1%-0.1% ParkingSpacesSpaces/unit520.48 Total 109 100%100% BuildingNet FeetEfficiencyGross FeetUnit TypeUnits % Total Units% Tot Rev. 87,41065%134,477 Studio 0 0%0.0%1-Bed 49 45%39.3%2-Bed 30 28%27.6%3-Bed 30 28%33.2%4-Bed 0 0%0.0%Total 109 100%100% Project Proforma
Construction SourcesTotal Per Unit Financing AssumptionsConstruction Loan71,565,711$ 656,566$ Debt Coverage Ratio 1.15Tax Credit Investor Proceeds8,408,971$ 77,147$ Construction Loan Amount (%TDC)60%GP Equity 9,161,014$ 84,046$ Construction Interest Rate6.85%HCD/Other -$ Permanent Interest Rate6.50%City of Palo Alto5,000,000$ 45,872$ Permanent Loan Term 35Total 94,135,696$ 863,630$ LIHTC Price 0.95Basis Boost TRUELIHTC Eligible % 100%LIHTC Investor Proceeds % TDC47%City of Palo Alto Investment Limit5,000,000$ HCD/Other %TDC 35%Permanent SourcesTotal Per Unit% GP Equity per Unit 84046Amortizing Permanent Loan11,938,979$ 109,532$ 10% Tax Credit $ During Construction15%Tax Credit Investor Proceeds56,059,807$ 514,310$ 47% Deferred Developer Fee per Unit4790GP Equity 9,161,014$ 84,046$ 8%Deferred Developer Fee522,110$ 4,790$ 0% Development AssumptionsHCD/Other 36,594,275$ 335,727$ 31% Construction Costs Per Gross Foot600City of Palo Alto5,000,000$ 45,872$ 4% Site Acquisition Cost Per Acre0Total 119,276,185$ 1,094,277$ 100% Parking Cost per Space65000Soft Costs (as % of hard costs)18%Financing Costs per unit53,000 Developer Fee % of TDC12.5% Operating AssumptionsUses Total Per UnitPer GSF Operating Costs10,000$ Per UnitAcquisition -$ -$ -$ Expense Inflation Rate3.50%Hard Cost 80,686,154$ 740,240$ 600$ Resident Services1,700$ Per unitParking Cost 3,380,000$ 31,009$ 25$ Reserves 500$ Per UnitFinancing Costs5,777,000$ 53,000$ 43$ Other Soft Costs14,523,508$ 133,243$ 108$ Developer Fee14,909,523$ 136,785$ 111$ Total Development Costs119,276,185$ 1,094,277$ 887$ Cash FlowYear 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10Effective Gross Income2,325,192$ 2,406,574$ 2,490,804$ 2,577,982$ 2,668,211$ 2,761,599$ 2,858,255$ 2,958,294$ 3,061,834$ 3,168,998$ Operating Expenses(1,090,000)$ (1,128,150)$ (1,167,635)$ (1,208,502)$ (1,250,800)$ (1,294,578)$ (1,339,888)$ (1,386,784)$ (1,435,322)$ (1,485,558)$ Services (185,300)$ (191,786)$ (198,498)$ (205,445)$ (212,636)$ (220,078)$ (227,781)$ (235,753)$ (244,005)$ (252,545)$ Reserves (54,500)$ (56,408)$ (58,382)$ (60,425)$ (62,540)$ (64,729)$ (66,994)$ (69,339)$ (71,766)$ (74,278)$ Net Operating Income995,392$ 1,030,231$ 1,066,289$ 1,103,609$ 1,142,235$ 1,182,213$ 1,223,591$ 1,266,417$ 1,310,741$ 1,356,617$ Debt Service (865,558)$ (865,558)$ (865,558)$ (865,558)$ (865,558)$ (865,558)$ (865,558)$ (865,558)$ (865,558)$ (865,558)$ Net Cash Flow 129,834$ 164,672$ 200,731$ 238,051$ 276,677$ 316,655$ 358,033$ 400,858$ 445,183$ 491,059$ Debt Coverage Ratio1.15 1.19 1.23 1.28 1.32 1.37 1.41 1.46 1.51 1.57 Bedrooms
Matadero Creek Affordable Housing ProjectOption 3 - 7 Stories Unit Mix and Rent StructureRent InformationArea Median Income30% (PBV)50% (PBV)30% AMI40% AMI50% AMI60% AMIMGRStudio 968$ 1,291$ 1,613$ 1,936$ -$ 1-Bed -$ 1,037$ 1,383$ 1,728$ 2,074$ -$ 2-Bed 3,124$ 1,244$ 1,659$ 2,073$ 2,488$ -$ 3-Bed 4,004$ 4,033$ 1,437$ 1,917$ 2,396$ 2,875$ -$ 4-Bed 1,603$ 2,138$ 2,672$ 3,207$ -$ Commercial BedroomsUtility AllowanceStudio -$ 1-Bed 98$ 2-Bed 128$ 3-Bed 157$ 4-Bed Unit Mix# of BedroomsNumber of UnitsSquare FeetTotal Sq FtAMI LevelMonthly RentMax Affordable Rent (with Utilities) Utility Allowance1st Year Annual Revenue
Studio 0 500 0 30% AMI$968$968$0 $0Studio 0 500 0 40% AMI$1,291$1,291$0 $0Studio 0 500 0 60% AMI$1,936$1,936$0 $01-Bed 12 590 7,08030% AMI$939$1,037$98$135,2161-Bed 18 59010,62040% AMI$1,285$1,383$98$277,5601-Bed 29 59017,11060% AMI$1,976$2,074$98$687,6482-Bed 7 870 6,09030% AMI$1,116$1,244$128$93,7442-Bed 11 870 9,57040% AMI$1,531$1,659$128$202,0922-Bed 17 87014,79060% AMI$2,360$2,488$128$481,4402-Bed 1 870 870MGR-$128$0 $128($1,536)3-Bed 7 1,0807,56030% AMI$1,280$1,437$157$107,5203-Bed 11 1,08011,88040% AMI$1,760$1,917$157$232,3203-Bed 18 1,08019,44060% AMI$2,718$2,875$157$587,088 Total 131 105,010 $2,803,092
AMI Units % Total Units% Tot Rev.AMIUnits% Total Units30% (PBV) 0 0%0.0% ELI 2619.8%50% (PBV) 0 0%0.0% VLI 4030.5%30% AMI 26 20%12.0%Low Income6448.9%40% AMI 40 31%25.4%MGR 1 0.8%50% AMI 0 0%0.0% Total 131100%60% AMI 64 49%62.7%MGR 1 1%-0.1% ParkingSpacesSpaces/unit520.40 Total 131 100%100% BuildingNet FeetEfficiencyGross FeetUnit TypeUnits % Total Units% Tot Rev. 105,01065%161,554 Studio 0 0%0.0%1-Bed 59 45%39.3%2-Bed 36 27%27.7%3-Bed 36 27%33.1%4-Bed 0 0%0.0%Total 131 100%100% Project Proforma
Construction SourcesTotal Per Unit Financing AssumptionsConstruction Loan92,046,720$ 702,647$ Debt Coverage Ratio 1.15Tax Credit Investor Proceeds10,815,490$ 82,561$ Construction Loan Amount (%TDC)60%GP Equity 11,010,026$ 84,046$ Construction Interest Rate6.85%HCD/Other -$ Permanent Interest Rate6.50%City of Palo Alto5,000,000$ 38,168$ Permanent Loan Term 35Total 118,872,236$ 907,422$ LIHTC Price 0.95Basis Boost TRUELIHTC Eligible % 100%LIHTC Investor Proceeds % TDC47%City of Palo Alto Investment Limit5,000,000$ HCD/Other %TDC 35%Permanent SourcesTotal Per Unit% GP Equity per Unit 84046Amortizing Permanent Loan14,451,774$ 110,319$ 9% Tax Credit $ During Construction15%Tax Credit Investor Proceeds72,103,264$ 550,407$ 47% Deferred Developer Fee per Unit4790GP Equity 11,010,026$ 84,046$ 7%Deferred Developer Fee627,490$ 4,790$ 0% Development AssumptionsHCD/Other 50,218,646$ 383,348$ 33% Construction Costs Per Gross Foot650City of Palo Alto5,000,000$ 38,168$ 3% Site Acquisition Cost Per Acre0Total 153,411,200$ 1,171,078$ 100% Parking Cost per Space65000Soft Costs (as % of hard costs)18%Financing Costs per unit53,000 Developer Fee % of TDC12.5% Operating AssumptionsUses Total Per UnitPer GSF Operating Costs10,000$ Per UnitAcquisition -$ -$ -$ Expense Inflation Rate3.50%Hard Cost 105,010,000$ 801,603$ 650$ Resident Services1,700$ Per unitParking Cost 3,380,000$ 25,802$ 21$ Reserves 500$ Per UnitFinancing Costs6,943,000$ 53,000$ 43$ Other Soft Costs18,901,800$ 144,289$ 117$ Developer Fee19,176,400$ 146,385$ 119$ Total Development Costs153,411,200$ 1,171,078$ 950$ Cash FlowYear 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10Effective Gross Income2,803,092$ 2,901,200$ 3,002,742$ 3,107,838$ 3,216,613$ 3,329,194$ 3,445,716$ 3,566,316$ 3,691,137$ 3,820,327$ Operating Expenses(1,310,000)$ (1,355,850)$ (1,403,305)$ (1,452,420)$ (1,503,255)$ (1,555,869)$ (1,610,324)$ (1,666,686)$ (1,725,020)$ (1,785,396)$ Services (222,700)$ (230,495)$ (238,562)$ (246,911)$ (255,553)$ (264,498)$ (273,755)$ (283,337)$ (293,253)$ (303,517)$ Reserves (65,500)$ (67,793)$ (70,165)$ (72,621)$ (75,163)$ (77,793)$ (80,516)$ (83,334)$ (86,251)$ (89,270)$ Net Operating Income1,204,892$ 1,247,063$ 1,290,710$ 1,335,885$ 1,382,641$ 1,431,034$ 1,481,120$ 1,532,959$ 1,586,613$ 1,642,144$ Debt Service (1,047,732)$ (1,047,732)$ (1,047,732)$ (1,047,732)$ (1,047,732)$ (1,047,732)$ (1,047,732)$ (1,047,732)$ (1,047,732)$ (1,047,732)$ Net Cash Flow 157,160$ 199,331$ 242,978$ 288,153$ 334,909$ 383,302$ 433,388$ 485,227$ 538,881$ 594,412$ Debt Coverage Ratio1.15 1.19 1.23 1.28 1.32 1.37 1.41 1.46 1.51 1.57 Bedrooms