Reso 2006-058 - Laserfiche WebLink

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Permanent Sources of Funds Financing Plan Low Income Housing Tax Credits $9,575,000 Agency Loan $584,000 General Partner $539,000 AHP Loan $340,000 Total Sources $11,038,000 Given the Project's rental restrictions, operating expenses, and the availability of other funding sources specified above, it is KMA's opinion that the fair reuse value of the site is nominal. Under the terms of the DDA, the Agency will provide a loan to the Developer to fund renovation costs and lease the Property for a contingent rent. The rent is to be paid from Net Cash Flow. However, it is not currently anticipated that there will be any positive cash flow to pay rent to the Agency. Estimated Value at Highest and Best Use The Property was appraised by Dean Chapman & Associates in April 2005. The appraisal determined that the highest and best use for the Property was its existing use as a motel and that the Property's fair market value as of March 1, 2005 was $4,400,000. V. CONSIDERATION RECEIVED AND REASONS THEREFOR Under the terms of the DDA, the Developer will lease the Property from the Agency. However, due to the deep affordability restrictions and resulting operating deficits, it is not anticipated that the Agency will receive any rent from the lease, which is consistent with the Property's nominal reuse value. At the expiration of the lease, the Agency can re.lease or sell the Property at its fair market value. The income restrictions that will be placed on the property combined with the cost of operating a primarily studio apartment complex greatly reduce the market value of the Project. Under the terms of the DDA, the Project will be restricted to households earning 30% to 45% of AMI for a period of 55 years.