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