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MWF Apartment Proposal January 16, 2018 Page 2 1. Acquisition Costs - Acquisition costs of approximately $11,000 per unit are within the typical market range of $5,000 to $15,000 per unit. 2. Total Development Costs (TDC) -The TDC is approximately $14.65 million or $244,000 per unit. Multi -family projects in this market generally range between $225,000 and $275,000 per unit. Developer Fee - The proposed developer fee is approximately 9% of TDC, which is within the typical industry range of 8-10% for LIHTC projects. The Developer is also deferring approximately 81 % of their developer fee. The deferred portion of the fee is then paid to the Developer through future cash flow, which is projected to take approximately 13 years and is longer than the typical 8-10 years. The reasonable developer fee and higher deferred fee helps minimize the project's funding gap. 4. Rents - The proposed rents are within 5% of the regulatory maximum allowed to be charged in projects using LIHTC proceeds. 5. Operating Expenses - The operating expenses of approximately $3,900 per unit per year are within the typical range of $3,500 to $4,500 per unit per year. 6. Management Fee - The proposed management fee of 5.8% of revenue is higher than the typical 3% to 5% of revenue; however, reducing the fee has a nominal impact because this relatively small project produces less revenue. 7. Reserves - The annual deposit to replacement reserves is set at $450 per unit per year, .which is typical for projects that include financing from Minnesota Housing. Amount Pct. Per Unit Acquisition Costs Amount Pct. Per Unit First Mortgage 6,074,700 41% 101,245 TIF Note 546,000 4% 9,100 MWF GP Loan 516,192 4% 8,603 Low Income Housing Tax Credits 3,814,404 26% 63,573 Energy Rebate 1,800 0% 30 Minnesota Housing Deferred Loan 1,736,000 12% 28,933 Ramsey County HRA HOME Loan 400,000 3% 6,667 Met Council LHIA Deferred Loan 500,000 3% 8,333 Deferred Developer Fee (81% of Total Fee) 1,059,223 7% 17,654 TOTAL SOURCES 14,648,319 100% 244,139 1. Acquisition Costs - Acquisition costs of approximately $11,000 per unit are within the typical market range of $5,000 to $15,000 per unit. 2. Total Development Costs (TDC) -The TDC is approximately $14.65 million or $244,000 per unit. Multi -family projects in this market generally range between $225,000 and $275,000 per unit. Developer Fee - The proposed developer fee is approximately 9% of TDC, which is within the typical industry range of 8-10% for LIHTC projects. The Developer is also deferring approximately 81 % of their developer fee. The deferred portion of the fee is then paid to the Developer through future cash flow, which is projected to take approximately 13 years and is longer than the typical 8-10 years. The reasonable developer fee and higher deferred fee helps minimize the project's funding gap. 4. Rents - The proposed rents are within 5% of the regulatory maximum allowed to be charged in projects using LIHTC proceeds. 5. Operating Expenses - The operating expenses of approximately $3,900 per unit per year are within the typical range of $3,500 to $4,500 per unit per year. 6. Management Fee - The proposed management fee of 5.8% of revenue is higher than the typical 3% to 5% of revenue; however, reducing the fee has a nominal impact because this relatively small project produces less revenue. 7. Reserves - The annual deposit to replacement reserves is set at $450 per unit per year, .which is typical for projects that include financing from Minnesota Housing. Amount Pct. Per Unit Acquisition Costs 655,461 4% 10,924 Construction Costs 11,036,876 75% 183,948 Professional Services 523,000 4% 8,717 Financing Costs 765,729 5% 12,762 Developer Fee 1,300,000 9% 21,667 Cash Accounts/Escrows/Reserves 367,253 3% 6,121 TOTAL USES 14,648,319 100% 244,139 1. Acquisition Costs - Acquisition costs of approximately $11,000 per unit are within the typical market range of $5,000 to $15,000 per unit. 2. Total Development Costs (TDC) -The TDC is approximately $14.65 million or $244,000 per unit. Multi -family projects in this market generally range between $225,000 and $275,000 per unit. Developer Fee - The proposed developer fee is approximately 9% of TDC, which is within the typical industry range of 8-10% for LIHTC projects. The Developer is also deferring approximately 81 % of their developer fee. The deferred portion of the fee is then paid to the Developer through future cash flow, which is projected to take approximately 13 years and is longer than the typical 8-10 years. The reasonable developer fee and higher deferred fee helps minimize the project's funding gap. 4. Rents - The proposed rents are within 5% of the regulatory maximum allowed to be charged in projects using LIHTC proceeds. 5. Operating Expenses - The operating expenses of approximately $3,900 per unit per year are within the typical range of $3,500 to $4,500 per unit per year. 6. Management Fee - The proposed management fee of 5.8% of revenue is higher than the typical 3% to 5% of revenue; however, reducing the fee has a nominal impact because this relatively small project produces less revenue. 7. Reserves - The annual deposit to replacement reserves is set at $450 per unit per year, .which is typical for projects that include financing from Minnesota Housing.