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<br />Town of New Castle - Colorado River Diversion <br />July 28-29, 2003 <br /> <br />Agenda Item 21f <br /> <br />At the $110,000 level, tap fees would constitute less than 15% of total Utility Fund revenues. In the <br />"worst-case" scenario, assuming that the Utility Fund would receive no tap fees in a given year, the <br />water rates would need to be raised an additional $9.50 per month per household, to approximately <br />$38 per month, to cover the shortfall. Staff feels that this would still be a reasonable water rate, <br />and that the assumed level of tap fees in the financial analysis could be justified. <br /> <br />Table 2. Financial Ratios <br /> <br />Financial Ratio Without With project <br /> the project Future YealS <br /> (Aver~ 2001-o2J <br />Operating Ratio (revenue/expense) <br />weak: less than 100% 104% 112% <br />average: 100%- 120% (aver.) (aver.) <br />strong: greater than 120% <br />Debt Service Coverage Ratio <br />(revenues-expenses )/debt service 109% 101% <br />weak: less than 100% (aver.) (aver.) <br />average: 100% - 125% <br />stron~: greater than 125% <br />Cash Reserves to Current Expense <br />weak: less than 50% 110% 87% <br />average: 50% - 100% (strong) (aver.) <br />strong: greater than 100% <br />Debt per Tap (1001 taps) <br />weak: greater than $5000 $435 $1135 <br />average: $2500 - $5000 (strong) (strong) <br />stron~: less than $2500 <br />Monthly Water Bill <br />average: $30 $24.50 $28.58 <br />weak: greater than $60 (aver.) (aver.) <br /> <br />As security for the loan the Town of New Castle will pledge enterprise fund revenues (Utility Fund), <br />backed by a rate covenant and annual financial reporting. This is in compliance with ewCB Loan <br />Policy #5 (Collateral). <br /> <br />Recommendation <br /> <br />- <br />Staff recommends a CWCS Small Project Loan from the Construction, Fund, not to exceed <br />$700,000, to the Town of New Castle, acting by and through its Utility Fund (enterprise fund), to <br />construct a new diversion structure and pump station on the Colorado River, and a raw water pipeline <br />to the Town's existing water treatment facility. The recommended term of the loan is 30 years and <br />the recommended lending rate is 4.5% per annum. Security for the loan will be a pledge of enterprise <br />fund revenues backed by a rate covenant and annual financial reporting. <br /> <br />Staff further recommends that final approval of the loan be conditioned upon all other standard <br />contracting provisions of the CWCS, including the 1 % loan origination fee in accordance with <br />CWCS Policy #16. The maximum loan amount may be increased to $707,000 if the borrower <br />elects to finance the 1 % loan service charge. Staff further recommends the following approval <br />condition: <br /> <br />In the event that State grant funds for the project are obtained through the Department of <br />Local Affairs, said funds shall be used to reduce the principal amount of the CWCS loan. <br /> <br />Page 5 of 7 <br /> <br />