11-28-2022 EDA - Laserfiche WebLink

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Pro Forma Analysis: Overall, the information contained in the development pro forma generally meets the expectations of a rental housing project utilizing 4% low-income housing tax credits (LIHTC) and other sources of public financial assistance. 1. Acquisition Costs – The proposed land acquisition cost is anticipated to be $1,300,000, or $9,286 per unit. Similar projects typically range between $10,000 to $18,000 per unit. The cost for land acquisition is acceptable for the project. 2. Total Development Costs (TDC) – The TDC is approximately $45.89 million or $327,786 per unit. Construction costs in the past 9 months have risen precipitously. Under current market conditions, similar projects generally range between $250,000 and $330,000 per unit. 3. Developer Fee – The proposed developer fee is 4,350,000 million, which is 9.5% of the TDC. This is within the typical industry range between 8-10% for LIHTC projects. In addition, the Developer is proposing to defer 84% of its fee to close the financial gap. Instead of being compensated up-front for their time and resources, the Developer will be paid out of available cash flow within the first 10-15 years of operation of the project. 4. Rents – The project will include 14 units affordable to households at or below 30% of the area median income (AMI), and 126-units affordable to households at or below 60% AMI. Rent and income limits are derived by the United States Department of Housing and Urban Development (HUD) on an annual basis and are gross rents, meaning utilities are included in the maximum rent a developer may charge to a qualifying tenant. The incomes and rents noted in the following table are for 2022 and change from year to year. 5. Operating Expenses – The operating expenses on a per unit basis are $4,243, which is within the typical market range of $3,500 to $4,500 per unit per year. This per unit expense is before management fees, property taxes, and replacement reserves. We conclude the operating expenses are not being overstated for the project.