777 SOUTH FIGUEROA STREET, SUITE 2555 LOS ANGELES, CALIFORNIA 90017 PHONE 213.622.8095 2412002v3.SA.TRB
WWW.KEYSERMARSTON.COM 19090.018.035
ADVISORS IN:
Real Estate
Affordable Housing
Economic Development
BERKELEY
Debbie M. Kern
David Doezema
LOS ANGELES
Kathleen H. Head
Kevin E. Engstrom
Julie L. Romey
Tim R. Bretz
SAN DIEGO
Paul C. Marra
Linnie A. Gavino
EMERITUS
A. Jerry Keyser
Timothy C. Kelly
M
EMORANDUM
At
your request, Keyser Marston Associates, Inc. (KMA) prepared a preliminary financial gap analysis for the project proposed to be developed at 425 East Wellington Avenue (Site) by Habitat for Humanity of Orange County (Habitat). Habitat purchased the Site in November 2024.
The Site includes an existing 9-unit apartment building. Habitat proposes to convert the existing rental units into for-sale condominium units which will be sold to Low or Moderate Income households (Project). Habitat is requesting up to $920,000 in financial assistance from the City of Santa Ana (City). The City’s financial assistance package is proposed to be structured as follows:
1. The City proposes to utilize up to $720,000 in Inclusionary Housing (Inclusionary) Funds to provide down payment assistance to eligible homebuyers (Down Payment Assistance Program Allocation).
2. The City may provide up to $200,000 in Inclusionary Funds to provide relocation assistance to existing apartment tenants that do not purchase an affordable unit at the property (Conditional Relocation Allocation).
To: Judson Brown, Housing Division Manager
City of Santa Ana
From: Tim Bretz
Date: February 10, 2025
Subject: Habitat Wellington Avenue – Preliminary Financial Gap Analysis
EXHIBIT 3
Judson Brown, City of Santa Ana February 10, 2025
Habitat Wellington – Preliminary Financial Gap Analysis Page 2
2412002v3.SA.TRB
19090.018.035
The purpose of the KMA analysis is to evaluate Habitat’s financial assistance request.
EXECUTIVE SUMMARY
As noted previously, the City’s financial assistance package is proposed to be structured in two components:
Down Payment Assistance Program Allocation
KMA completed a financial gap analysis to evaluate Habitat’s request for $720,000 in Down Payment Assistance Program funds. The results of the KMA financial gap analysis are compared to Habitat’s financial proposal in the following table:
KMA Habitat Difference
Total Development Costs $4,402,000 $4,374,200 $27,800 (Less) Total Available Revenue (3,654,200) (3,654,200) (-0-)
Estimated Financial Gap $747,800 $720,000 $27,800
As shown in the preceding table, KMA estimates the Project’s financial gap at $747,800.
Comparatively, Habitat is requesting $720,000 in Down Payment Assistance Program funds from the City. This represents a $27,800, or approximately 4% differential. Habitat will be responsible for any unfunded financial gap above the $7200,000 in financial assistance proposed to be provided by the City. As such, it can be concluded that the City’s proposed Down Payment Assistance Program funding is warranted by the Project’s economics.
The City proposes to utilize $720,000 in Inclusionary Funds to provide Down Payment Assistance Program funds to eligible homebuyers. The City Down Payment Assistance Program Allocation is based on providing up to $80,000 per unit in down payment assistance to each eligible Moderate or Low Income homebuyer.
Conditional Relocation Allocation
The City may utilize up to $200,000 in Inclusionary Funds to provide relocation assistance to existing apartment tenants that do not purchase an affordable unit at the property (City Relocation Assistance). The specific amounts utilized for the Conditional Relocation Allocation EXHIBIT 3
Judson Brown, City of Santa Ana February 10, 2025
Habitat Wellington – Preliminary Financial Gap Analysis Page 3
2412002v3.SA.TRB
19090.018.035
will based on actual amounts determined immediately prior to the relocation of existing tenants.
PROJECT DESCRIPTION
The proposed scope of development can be described as follows:
1. The Site area totals approximately 9,150 square feet, or approximately 0.21 acres of land area.
2. The Site consists of one existing apartment building. The apartment units will be converted to condominium units.
3. The Project’s unit mix can be summarized as follows:
a. The Project will include 9 for-sale units, which equates to a density of 43 units per acre.
b. The unit mix consists of the following:
i. Eight (8) one-bedroom units consisting of approximately 550 square feet of living area; and
ii. One (1) two bedroom unit consisting of approximately 850 square feet of living area.
c. The Project’s total gross building area (GBA) is estimated at 5,266 square feet.
4. Each unit has an existing one-car garage for a total of 9 parking spaces for the Project.
5. The Project’s affordability mix will consist of the following:
a. All nine units will be sold to Low or Moderate Income households. For the purposes of this financial gap analysis, KMA assumed that all units will be sold to Moderate Income households.
b. To limit displacement, existing apartment tenants with household incomes of less than 120% of the Area Median Income (AMI) and that qualify to purchase a unit will be given the first right to purchase a unit at an affordable sales price.
EXHIBIT 3
Judson Brown, City of Santa Ana February 10, 2025
Habitat Wellington – Preliminary Financial Gap Analysis Page 4
2412002v3.SA.TRB
19090.018.035
FINANCIAL GAP ANALYSIS
KMA prepared a pro forma analysis to estimate the Project’s financial gap. The analysis is located at the end of this memorandum, and is organized as follows:
Table 1: Estimated Development Costs
Table 2: Estimated Available Revenue
Table 3: Estimated Financial Gap
Table 4: Silent Second Mortgage Revenue Calculations
Table 5: Affordable Sales Price Calculation
ESTIMATED DEVELOPMENT COSTS (TABLE 1)
KMA reviewed Habitat’s December 2024 pro forma, and then independently prepared a pro forma analysis for the Project. The resulting development costs are estimated as follows:
Property Assemblage Costs
The property assemblage costs are estimated at $3.23 million as follows:
PROPERTY ACQUISITION COSTS
Based on information provided by Habitat, Habitat purchased the Site for $3.11 million, or $345,000 per unit. Habitat provided an appraisal prepared by AEI Consultants on July 26, 2024 that estimated the as-is market value of the property at $2.78 million, or $309,000 per unit.
As such, Habitat purchased the property for $325,000, or approximately 12% more than the appraised value of the Property.
RELOCATION COSTS
The property is currently utilized as an apartment building that contains existing apartment tenants. The funding source proposed to be provided by the City does not trigger the Federal Uniform Relocation Act. To that end, Habitat estimates the relocation costs at $60,000, which is based on three months of current rent payments.
EXHIBIT 3
Judson Brown, City of Santa Ana February 10, 2025
Habitat Wellington – Preliminary Financial Gap Analysis Page 5
2412002v3.SA.TRB
19090.018.035
However, Habitat will provide current tenants that earn 120% AMI or less and qualify to purchase an affordable unit with a Right of First Refusal to purchase a unit at an affordable sales price.
CLOSING COSTS
Habitat estimates the closing costs at $69,000 or approximately 2% of the purchase price.
Direct Costs
The direct costs assume that the Project will be subject to the City’s Community Workforce Agreement. The direct costs can be summarized as follows:
1. Habitat estimates the site improvement costs at $30,000, or $3 per square foot of land area. The site improvement costs include asphalt repaving and trash enclosure improvements.
2. The building renovation costs are estimated at $76,000, or approximately $8,500 per unit. The scope of rehabilitation includes new water meters, garage doors, windows, and additional repairs required by the insurance company.
3. The prevailing wage premium is estimated at 30% of construction costs, or $32,000.
4. The general conditions are estimated at 20% of construction costs, or $28,000.
5. Habitat will not charge for the costs to supervise the construction of the Project.
6. A direct cost contingency allowance equal to 15% of other direct costs is provided.
KMA estimates the total direct costs at $191,000, which equates to approximately $21,200 per unit.
Indirect Costs
KMA utilized the following assumptions in estimating the indirect costs:
1. The architecture, engineering and consulting costs are estimated at 3% of the property assemblage and direct costs, or $103,000.
EXHIBIT 3
Judson Brown, City of Santa Ana February 10, 2025
Habitat Wellington – Preliminary Financial Gap Analysis Page 6
2412002v3.SA.TRB
19090.018.035
2. Habitat estimates the public permits and fees costs at $3,800 per unit, or $34,000. City staff should verify the accuracy of this estimate.
3. The taxes, legal and accounting costs are estimated at 3% of direct costs, or $103,000.
4. Habitat estimates the insurance costs at $27,000 or $3,000 per unit.
5. The Developer Fee is set at $207,000 which is based on the following:
a. Management and Overhead costs are set at $4,000 per month for an 18-month development period.
b. Habitat will charge the Project to provide homeownership services to potential affordable homebuyers. Habitat set this fee at $15,000 per unit.
6. An indirect cost contingency allowance equal to 7% of other indirect costs is provided.
KMA estimates the total indirect costs at $507,000.
Financing Costs
1. The interest costs to be incurred during the development period are estimated at $340,000. This cost estimate is based on the following:
a. Habitat states that a $3.0 million predevelopment/construction loan will be obtained from a third party lender for the Project.
b. KMA assumes the predevelopment/construction loan will carry the following terms:
i. A 7.56% interest rate;
ii. An 18-month development period; and
iii. A 100% average outstanding balance.
2. The financing fees for the predevelopment/construction loan are estimated at 1.0 point, or $30,000.
EXHIBIT 3
Judson Brown, City of Santa Ana February 10, 2025
Habitat Wellington – Preliminary Financial Gap Analysis Page 7
2412002v3.SA.TRB
19090.018.035
3. The closing costs related to the sale of each affordable unit are estimated at $3,000 per unit, or $27,000.
4. Habitat proposes to fund an $8,000 reserve for the Homeowners Association.
5. The warranty costs are estimated at $65,000, which equates to approximately $7,200 per unit.
KMA estimates the total financing costs at $470,000.
TOTAL DEVELOPMENT COSTS
As shown in Table 1, KMA estimates the total development costs at $4.40 million. In comparison, Habitat estimates the total development costs at $4.37 million. This represents an approximately $28,000 differential, which equates to less than 1% of the total development costs.
Estimated Available Revenue
KMA estimates the revenue available to the Project as follows:
MODERATE INCOME SALES PRICES – INCLUSIONARY HOUSING FUNDS The City will provide Inclusionary Funds to the Project. As such, KMA estimated the affordable sales as follows:
1. The household income used in the calculations is based on the area median income published by the California Department of Housing and Community Development (HCD) and adjusted for the number of persons per household (Area Median Income (AMI)).
KMA assumes the household size is estimated at one plus the number of bedrooms (four persons for a three-bedroom unit).
2. KMA assumes that the qualifying Moderate Income limits are set at 120% of AMI.
3. Since the Project consists of more than four units, the Project is required to have an HOA. Habitat estimates the annual HOA dues at $400 per unit per month.
4. Habitat estimates the homeowner’s insurance cost at 0.75% of the affordable sales price.
EXHIBIT 3
Judson Brown, City of Santa Ana February 10, 2025
Habitat Wellington – Preliminary Financial Gap Analysis Page 8
2412002v3.SA.TRB
19090.018.035
5. The annual utilities are based on the utility allowances published by the Santa Ana Housing Authority (SAHA) as of October 1, 2024. KMA assumes the homeowners will pay for: electric cooking, electric heating, electric water heating, basic electricity, air conditioning, water, sewer and trash.
6. Habitat estimates the property tax cost based on 1.25% of the estimated affordable sales price.
7. The mortgage interest rate is set at 7.0%. The mortgage is assumed to be fully amortizing over 30 years and provided by a conventional lender.
8. The homebuyer down payment is set at 5% of the affordable sales price.
Based on the assumptions outlined above, KMA estimates the Moderate Income affordable sales prices at $310,400 for the eight (8) one-bedroom units and $350,500 for the one (1) two- bedroom unit.
AFFORDABLE SALES PRICE REVENUE
KMA estimates that nine Moderate Income units will generate $2.83 million in affordable sales revenue.
However, it is important to note that the affordable sales prices will ultimately be determined immediately prior to the sale of each unit. This analysis may need to be revised if the affordable sales prices differ from the sales prices utilized in this analysis.
ADDITIONAL REVENUE
Rental Income
The property is currently operating as an apartment building and is collecting rents from existing tenants. Habitat estimates that the Project will generate $229,700 in rental income during the condominium conversion process. Habitat will utilize this rental income as a funding source for the Project.
EXHIBIT 3
Judson Brown, City of Santa Ana February 10, 2025
Habitat Wellington – Preliminary Financial Gap Analysis Page 9
2412002v3.SA.TRB
19090.018.035
Habitat Financial Assistance
Habitat proposes to utilize fundraising contributions to off-set a portion of the development costs. As such, Habitat estimates the financial assistance that they will provide to the Project at $590,800, or $65,600 per unit.
ESTIMATED AVAILABLE REVENUE
The Project’s estimated total available revenue is equal to the sum of the Affordable Sales Price revenue and the Project’s additional revenue. KMA estimates the total available revenue as follows:
Affordable Sales Price Revenue $2,833,700
Rental Income 229,700
Habitat Financial Assistance 590,800
Estimated Available Revenue $3,654,200
Financial Gap Calculation
The financial gap is estimated by deducting the Project’s available revenue from the Project’s total development costs. Based on the preceding analysis, KMA estimates the Project’s financial gap as follows:
KMA
Total Development Costs $4,402,000
(Less) Total Available Revenue (3,654,200)
Estimated Financial Gap $747,800
Per Unit $83,100
As shown in the preceding table, KMA estimates the Project’s financial gap at $747,800.
Comparatively, Habitat is requesting $720,000 in Down Payment Assistance Program funding from the City. Since this amount is less than the financial gap identified by KMA, it can be EXHIBIT 3
Judson Brown, City of Santa Ana February 10, 2025
Habitat Wellington – Preliminary Financial Gap Analysis Page 10
2412002v3.SA.TRB
19090.018.035
concluded that the proposed Down Payment Assistance Program Allocation is warranted by the project economics.
However, KMA estimates that the Project exhibits an unfunded financial gap of $27,800.
Habitat will need to secure funding sources for any unfunded financial gap in order for the Project to be financially feasible. The City should confirm that Habitat has secured all necessary funding sources before formally disbursing any City funds.
SILENT SECOND MORTGAGE REVENUE CALCULATION (TABLE 4)
As a basic premise, it must be assumed that the total of the liens accepted by a homebuyer cannot exceed the unrestricted market value of the home. Furthermore, based on previous City homeownership projects, the City will record a second trust deed equal to the difference between the Affordable Sales Price and the estimated market value of the home.
KMA assumes that the City’s second trust deed will be structured as deferred payment loans which are commonly known as silent second mortgages. These loans typically become due and payable when the home is resold to a non-affordable home buyer. KMA assumes that the City’s silent second trust deed will fall second in the lien hierarchy behind the conventional first trust deed mortgage.
The calculations used to estimate the supportable silent mortgages are presented in the following sections of this analysis.
Market Rate Sales Prices
KMA researched sales comparables for similar units in the market area for the purpose of estimating the current silent second mortgage amount. The appraisal provided by Habitat included additional sales comparable data. Based on this information, KMA estimates the market rate sales price for the units as follows:
1. One-Bedroom Units: $345,600
2. Two-Bedroom Unit: $389,700
EXHIBIT 3
Judson Brown, City of Santa Ana February 10, 2025
Habitat Wellington – Preliminary Financial Gap Analysis Page 11
2412002v3.SA.TRB
19090.018.035
Available Silent Second Mortgage Revenue
Based on the estimated market rate sales prices, the available silent second mortgage revenue is estimated at as follows:
Moderate Income Units
One-Bedroom
Units
Two-Bedroom
Unit
Market Rate Sales Price $345,600 $389,700
(Less) Affordable Sales Price (310,400) (350,500)
Silent Second Mortgage Amounts (Per Unit) $35,200 $39,200 Number of Units 8 1
Available Silent Second Mortgage Capacity $281,600 $39,200
Total Amount of City Down Payment
Assistance Secured as Silent Mortgages
$320,800
Thus, it is important to note that based on the estimated market rate prices, the City will not be able to secure the full $80,000 in City Down Payment Assistance Program funding per unit. The City will only be able to secure the amount of mortgage capacity between the appraised market value and the first mortgage amount.
Based on current estimates, the City will be able to secure $320,800 of the $720,000 in City Down Payment Assistance Program funding as silent mortgages.
Proposed City Down Payment Assistance $720,000
(Less) Amount Secured by Silent Mortgages (320,800)
Estimated Amount Unable to be Secured Against
Affordable Units
$399,200
EXHIBIT 3
Judson Brown, City of Santa Ana February 10, 2025
Habitat Wellington – Preliminary Financial Gap Analysis Page 12
2412002v3.SA.TRB
19090.018.035
However, this calculation is provided for illustrative purposes only at this time. The calculation will need to be conducted at the time of sale of each unit and must be based on the actual appraised value and affordable sales prices at the time of sale.
Affordable Sales Price Differential
Furthermore, it is important to note that there typically needs to be a sales price differential between the market rate sales price and the affordable sales price in order to entice homebuyers to accept an affordability covenant.
The following illustrates the price differential based on the currently estimated market rate sales affordable sales prices:
Moderate Income Units
One-Bedroom
Units
Two-Bedroom
Unit
Market Rate Sales Price $345,600 $389,700
(Less) Affordable Sales Price (310,400) (350,500)
Price Differential $35,200 $39,200
% of Market Rate Sales Price 10% 10%
Ultimately, the silent second mortgage and sales price differential calculations will occur once sales of the units commence. At that point, the appraised market values of the homes and the defined Affordable Sales Prices will be utilized to determine the silent second mortgage amounts and any possible affordable sales price reductions that are necessary to entice affordable homebuyers.
CONCLUSIONS / RECOMMENDATIONS
The following summarizes the conclusions of the KMA analysis:
1. City Financial Assistance:
a. Down Payment Assistance Program Allocation:
EXHIBIT 3
Judson Brown, City of Santa Ana February 10, 2025
Habitat Wellington – Preliminary Financial Gap Analysis Page 13
2412002v3.SA.TRB
19090.018.035
i. Based on currently available information, KMA estimates the Project’s financial gap at $747,800. In comparison, Habitat is requesting $720,000 in Down Payment Assistance Program funding from the City. As such, Habitat’s request is supported by the Project economics. ii. KMA estimates that the Project exhibits a $27,800 unfunded financial gap. Habitat will need to secure funding sources for any unfunded financial gap in order for the Project to be financially feasible. The City should confirm that Habitat has secured all necessary funding sources before disbursing any funds.
b. Conditional Relocation Allocation: The City may utilize up to $200,000 in Inclusionary Funds to provide relocation assistance to existing apartment tenants that do not purchase an affordable unit at the property. The specific amounts utilized for the Conditional Relocation Allocation will based on actual amounts determined immediately prior to the relocation of existing tenants.
2. Habitat purchased the property for $325,000, or approximately 12%, more than the appraised value. However, the City established the maximum amount of City Down Payment Assistance Program Allocation based on the funding limits established by the City’s Down Payment Assistance Program (DPAP). Habitat is required to fund any remaining financial gap amount after the affordable sales price revenue and City’s financial assistance amount is taken into consideration. Therefore, Habitat is responsible for the purchase price that exceeds the appraised value of the property.
3. Given the preliminary nature of the proposal, if the scope of development or financing assumptions change, the KMA analysis may need to be updated accordingly.
4. The affordable sales prices cannot be finalized until the Project commences sales activities. It is likely that the actual affordable sales prices will differ from the amounts estimated in this analysis.
5. The silent second mortgage and sales price differential calculations will occur once sales of the units commence. At that point, the appraised market values of the homes and the defined affordable sales prices will be utilized to determine the silent second mortgage amounts and any possible affordable sales price reductions that are necessary to entice affordable homebuyers.
EXHIBIT 3
Judson Brown, City of Santa Ana February 10, 2025
Habitat Wellington – Preliminary Financial Gap Analysis Page 14
2412002v3.SA.TRB
19090.018.035
a. Based on current estimates of market rate sales prices, the City will not be able to secure the full $80,000 per unit in City Down Payment Assistance with silent second mortgages. KMA estimates that approximately $399,200 of the City’s $720,000 in City Down Payment Assistance Program funds will not be able to be secured by the affordable units.
b. The affordable sales prices may need to be reduced further in order to entice homebuyers to accept an affordable covenant.
6. KMA typically recommends that the City retain 10% of the City’s financial assistance amount (or $92,000) until after the completion of the construction. However, in this instance, the City will provide the Down Payment Assistance Program funds directly to eligible homebuyers and any relocation assistance will be based on actual relocation costs at the time of the relocation of tenants. As such, there is no need to impose a 10% retention requirement on the Project.
EXHIBIT 3
TABLE 1
ESTIMATED DEVELOPMENT COSTS
9 FOR-SALE MODERATE INCOME UNITS
HABITAT FOR HUMANITY - WELLINGTON
SANTA ANA, CALIFORNIA
I. Property Assemblage Costs
Property Acquisition Costs 1 9 Units $345,000 /Unit $3,105,000 Relocation Costs 2 60,000
Closing Costs 2% Property Acquisition Costs 69,000
Total Property Assemblage Costs $3,234,000
II. Direct Costs 3
On-Site Improvements 9,148 Sf Land $3 /Sf Land $30,000
Rehabilitation Costs 9 Units $8,461 /Unit 76,000
Prevailing Wage Premium 30% Construction Costs 32,000
General Conditions 4 20% Construction Costs 28,000
Habitat Supervision 0% Construction Costs 0
Contingency Allowance 15% Other Direct Costs 25,000
Total Direct Costs 9 Units $21,200 /Unit $191,000
III. Indirect Costs
Architecture, Engineering & Consulting 3% Assemblage + Direct Costs $103,000 Public Permits & Fees 5 9 Units $3,773 /Unit 34,000
Taxes, Legal & Accounting 3% Assemblage + Direct Costs 103,000 Insurance 9 Units $3,000 /Unit 27,000
Developer Fee 4 5% Net Development Cost (Excl. Dev Fee) 207,000 Contingency Allowance 7% Other Indirect Costs 33,000
Total Indirect Costs $507,000
IV. Financing Costs
Interest During Construction 6 $3,000,000 Loan 7.6% Interest $340,000 Loan Origination Fee $3,000,000 Loan 1.0 Point 30,000
Closing Costs 9 Units $3,000 /Unit 27,000
HOA Reserves 9 Units $889 /Unit 8,000
Warranties 9 Units $7,183 /Unit 65,000
Total Financing Costs $470,000
V. Total Development Costs 9 Units $489,100 /Unit $4,402,000 1 2
3 4
5 6
Based on Habitat estimate. An appraisal prepared by AEI Consultants estimated the market value of the property at $2.78 million on 7/26/2024.
Habitat's purchase price is $325,000 or approximately 12% higher than the appraised value of the property.
Based on Habitat estimates. Assumes that the City's Community Workforce Agreement wage requirements will be imposed on the Project.
Per Habitat, the Project will obtain a $3.0 million predevelopment/construction loan. The loan interest is based on an 18-month loan term and a 100% average outstanding balance.
Based on Habitat estimates. City staff should verify the accuracy of this estimate.
Based on estimate provided by Habitat.
Assumes existing tenants that do not purchase a unit are provided relocation assistance equal to up to 3 months of rent payments.
Prepared by: Keyser Marston Associates, Inc.
File name: Habitat Wellington_2 10 25; Pf
EXHIBIT 3
TABLE 2
ESTIMATED AVAILABLE REVENUE
9 FOR-SALE MODERATE INCOME UNITS
HABITAT FOR HUMANITY - WELLINGTON
SANTA ANA, CALIFORNIA
I. Affordable Sales Revenue 1
Moderate Income: One-Bedroom Units 8 Units $310,400 /Unit $2,483,200 Moderate Income: Two-Bedroom Unit 1 Unit $350,500 /Unit 350,500 Total Affordable Sales Revenue $2,833,700
II. Rental Income 2 $229,700
III. Habitat Financial Assistance 9 Units $65,600 $590,800 IV. Estimated Available Revenue 9 Units $406,020 /Unit $3,654,200 1 See TABLE 5 for the KMA affordable sales price calculations. 2 Per Habitat.
Prepared by: Keyser Marston Associates, Inc.
File name: Habitat Wellington_2 10 25; Pf
EXHIBIT 3
TABLE 3
ESTIMATED HABITAT FINANCIAL GAP
9 FOR-SALE MODERATE INCOME UNITS
HABITAT FOR HUMANITY - WELLINGTON
SANTA ANA, CALIFORNIA
I. Total Development Costs See TABLE 1 $4,402,000
II. (Less) Estimated Available Revenue See TABLE 2 ($3,654,200) III. Estimated Financial Gap 9 Units $83,100 /Unit $747,800 IV. Distribution of Proposed City Financial Assistance
Proposed City Development Assistance 9 Low Inc. Units $80,000 /Mod Inc. Unit (720,000) Proposed City Relocation Assistance (200,000)
Total Proposed City Financial Assistance 9 Units ($102,200) /Unit ($920,000) V. Estimated Additional Habitat Financial Gap
Estimated Financial Gap $747,800
Proposed City Development Assistance 9 Low Inc. Units $80,000 /Mod Inc. Unit (720,000) Estimated Additional Habitat Financial Gap $27,800
Prepared by: Keyser Marston Associates, Inc.
File name: Habitat Wellington_2 10 25; Pf
EXHIBIT 3
TABLE 4
SILENT MORTGAGE REVENUE SAMPLE CALCULATIONS
9 FOR-SALE MODERATE INCOME UNITS
HABITAT FOR HUMANITY - WELLINGTON
SANTA ANA, CALIFORNIA
I. Silent Mortgage Capacity for City Financial Assistance A. Moderate Income: One-Bedroom Units
Estimated Market Rate Sales Price 1 $345,600
(Less) Moderate Income Affordable Sales Price 2 (310,400) Available Silent Mortgage Capacity Per One-Bedroom Unit $35,200 Number of Units 8
Maximum Amount Secured as Silent Mortgage $281,600
B. Moderate Income: Two Bedroom Unit
Estimated Market Rate Sales Price 1 $389,700
(Less) Moderate Income Affordable Sales Price 2 (350,500) Available Silent Mortgage Capacity Per Two-Bedroom Unit $39,200 Number of Units 1
Maximum Amount Secured as Silent Mortgage $39,200
II. Total Amount of City Development Assistance Secured as Silent Mortgages $320,800 III. Estimated City Development Assistance Provided as Grant to Habitat 3 Proposed City Development Assistance $720,000
(Less) Total Amount of City Development Assistance Secured as Silent Mortgages ($320,800) Estimated City Development Assistance Provided as Grant to Habitat $399,200 1 2 The final Affordable Sales Prices will be set prior to the sale of each unit. 3 For illustration purposes only. This calculation will need to be conducted at the time of sale of the units to reflect the current appraised values and current affordable sales prices for each unit.
Based on KMA survey of sales comparables. The market rate sales price will be determined by a fair market value appraisal that assumes no income restrictions prior to the sale of each unit.
Prepared by: Keyser Marston Associates, Inc.
File name: Habitat Wellington_2 10 25; Pf
EXHIBIT 3
TABLE 5
AHOCO CALCULATIONS: 2024 INCOME STANDARDS
SANTA ANA, CALIFORNIA
Median 80% Median 120% Median
1 Person $90,300 $72,240 $108,360
2 Person $103,200 $82,560 $123,840
3 Person $116,100 $92,880 $139,320
4 Person $129,000 $103,200 $154,800
5 Person $139,300 $111,440 $167,160
6 Person $149,650 $119,720 $179,580
7 Person $159,950 $127,960 $191,940
8 Person $170,300 $136,240 $204,360
I. Low Income: 80% Median Income - 30% of Income Allotted to Housing Expenses 1-Bdrm 2-Bdrm 3-Bdrm 4-Bdrm
A. Income
Benchmark Household Size 2 3 4 5
Household Income $82,560 $92,880 $103,200 $111,440
% of Income Allocated to Housing 30% 30% 30% 30%
Income Allotted to Housing $24,770 $27,860 $30,960 $33,430 B. Ongoing Expenses
HOA/Maintenance $4,800 $4,800 $4,800 $4,800
Insurance @ 0.75% Affordable Sales Price 1,360 1,539 1,711 1,828 Utility Allowances 1 2,592 3,396 4,296 5,268
Property Taxes @ 1.25% of Affordable Price 2,266 2,565 2,851 3,046 Total Expenses $11,018 $12,300 $13,658 $14,942
C. Income Available for Mortgage $13,752 $15,560 $17,302 $18,488 D. Affordable Housing Price
Supportable Mtg @ 7.00% Interest 2 $172,200 $194,900 $216,700 $231,500 Home Buyer Down Pymt @ 5% Affordable Price 9,100 10,300 11,400 12,200 Maximum Purchase Price $181,300 $205,200 $228,100 $243,700 II. Moderate Income: 120% Median Income - 30% of Income Allotted to Housing Expenses 1-Bdrm 2-Bdrm 3-Bdrm 4-Bdrm
A. Income
Benchmark Household Size 2 3 4 5
Household Income $123,840 $139,320 $154,800 $167,160
% of Income Allocated to Housing 30% 30% 30% 30%
Income Allotted to Housing $37,150 $41,800 $46,440 $50,150 B. Ongoing Expenses
Utility Allowances 1 $2,592 $3,396 $4,296 $5,268
HOA/Maintenance 4,800 4,800 4,800 4,800
Insurance @ 0.75% Affordable Sales Price 2,328 2,629 2,922 3,137 Property Taxes @ 1.25% of Affordable Price 3,880 4,381 4,870 5,228 Total Expenses $13,600 $15,206 $16,888 $18,433
C. Income Available for Mortgage $23,550 $26,594 $29,552 $31,718 D. Affordable Housing Price
Supportable Mtg @ 7.00% Interest 2 $294,900 $333,000 $370,100 $397,200 Home Buyer Down Pymt @ 5% Affordable Price 15,500 17,500 19,500 20,900 Maximum Purchase Price $310,400 $350,500 $389,600 $418,100 1 2
Based on the Santa Ana Housing Authority utilities allowances effective as of 10/1/24. Assumes: Electric Cooking; Electric Heating; Electric Water Heater; Basic Electric; Air Conditioning; Water; Sewer; and Trash.
Based on Habitat estimate.
Prepared by: Keyser Marston Associates, Inc.
File name: Habitat Wellington_2 10 25; DPA Wellington
EXHIBIT 3