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<br /> Total Nominal Net Present <br /> Net Cost Value <br /> (discounted at <br /> 6%) <br />Agency Costs $12,128,000 $8,352,000 <br />(Less) Agency Cost Recovery Payments ($121,611,000) ($2,205,000) <br />and Revenues <br />Total Net Agency Cost/(Gain) ($109,483,000) $6,147,000 <br /> <br />IV. VALUE OF THE INTEREST TO BE CONVEYED <br /> <br />Reuse Value <br /> <br />The reuse value of the site is directly a function of the development economics <br />specific to the proposed Project. The Project will be renovated to a high quality <br />and will include significant improvements to the building. The units in the Project <br />will be restricted to extremely low~ and very low-income households. The income <br />restrictions are critical to the Property's reuse value. <br /> <br />Given the income restrictions, it is estimated that the rents will range from $406 <br />per month for the 30% AMI units to $626 per month for the 45% AMI units. A <br />studio apartment complex also requires more intensive and complex managerial <br />services than a traditional apartment project, which translates into relatively high <br />monthly operating expenses. Given the deep affordability restrictions combined <br />with the relatively high operating expenses, the Project is not anticipated to <br />generate sufficient revenue to cover operating expenses, resulting in a projected <br />annual operating deficit. The Project's annual operating deficit is estimated at <br />approximately $69,600 in Year 1. Consequently, the Project will not support any <br />conventional debt with which to pay for the Project's projected $11 million in <br />development costs. Due to these economics, the Project is not feasible without <br />the Agency Loan of $584,000 (potentially $884,000 with eligible cost overruns) <br />and annual operating subsidies estimated to total $5,713,000. <br /> <br />The Developer anticipates funding the $11 million in development costs with the <br />sources of funds shown below: <br />