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/,,1'. . . . FINANCIAL ANALYSIS The Company is proposing to finance the Poudre Valley Canal and Cobb Lake projects with a Construction Fund loan for $1,202,000 and with $400,000 of its own funds raised through assessments. The Construction Fund agricultural lending rate for 1995 was 4.0 percent (on $500,000) and for 1996 it is 4.25 percent (on $702,000) resulting in annual payments of about $70,760 for 30 years. The weighted average lending rate would be 4.15 percent. The total current indebtedness of the WRCC consists of two Construction Fund loans: a 1991 loan for rehabilitation of Douglas Reservoir with a current balance of about $700,000 and a 1994 loan for repairs to the Poudre Valley Canal with a current balance of about $300,000. Total current debt service amounts to approximately $72,000 per year. The new loan would increase total debt service to about $143,000 per year. By way of comparison, total WRCC revenues in 1994 amounted to approximately $512,000. Subtracting $292,000 in 1994 operating expenses would leave about $220,000 and result in a debt service coverage ratio of $220,000/$143,000 or 1.54 which is considered favorable. In 1994, the WRCC significantly increased assessments to $405 and $425 per share, depending on the type of share owned, in order to pay for the two proposed projects. This amounts to a cost per acre- foot of about $14.00, The WRCC will present the proposal for the current loan request to its shareholders at the annual . shareholder meeting in Februmy of this year. The Smith report includes revenue and expenditure projections from the present to 2042 which indicate that, for the entire 15-vear rehabilitation orol!l1U11. total debt service would increase to a maximum of $220,000 per year with an assessment of about $585 per share in 2008. The assessment would decrease substantially in following years. RECOMMENDATION Based on a detailed review of the Smith Geotechnical feasibility study, on discussions with the project sponsor, and on the preceding analysis, the staff frnds the proposed Poudre Valley Canal and Cobb Lake projects to be economically, frnancially,and technically feasible. Staff recommends that the 1995 Construction Fund legislation be amended to increase the Windsor Reservoir and Canal Company authorization for a dam and canal rehabilitation project from $500,000 to $1,202,000 at a lending rate of 4.15 percent subject to all standard contracting requirements of the CWCB. Attachment . cc: Elmer Gustafson, Windsor Reservoir and Canal Company Bany Anderson, Windsor Reservoir and Canal Company Don Engle, Windsor Reservoir and Canal Company Linda Bassi, Attorney General's Office Duane Smith, Smith Geotechnical Tim Dow, Sommenneyer,Wick, Dow & Campbell WEGIlm 3