BOARD00062 ‎(2)‎

• Board Meeting Date: 11/13/2006
• Description: CF Section - Construction Fund and Severance Tax Trust Fund Perpetual Base Account New Loans - Lazy O Ranch Homeowners Assoc - Secondary Water System
• Board Meetings - Doc Type: Memo

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The project is currently under construction and is anticipated to be completed by the end of
November 2006. The LORHA is covering the engineering and construction costs of the project
by a bridge loan obtained from Community Bank of Basalt, Colorado. It is the intent of the
LORHOA to pay off this bridge loan upon securing a loan with the Water Conservation Board.

Financial Analvsis
The total estimated cost of the project, including engineering, is $167,500. Staffis
recommending a Small Project loan in the maximum amount of$152,258 (90% of the total
project cost, plus a 1 % loan service fee). The recommended loan term is 30-years at the high
income municipal rate of 4.25%.

Table 1 is a summary of the financial aspects of the project with a $152,258 CWCB loan. The
annual payment would be $9,981 (including the 10% reserve requirement) at the loan term of
4.25% for 30-years. This represents a cost of$767 per acre-foot, based on an expected annual
diversion for outside irrigation of 13 acre-feet by the LORHOA.

Table 1. financial Summary

Project Cost $167,500
CWCB Loan Amount $152,258
Number of Shareholders 22
CWCB Annual Payment $9,074
CWCB Loan Payment (includes 10% reserve) $9,981
Current Annual Assessment per Shareholder 2006 $7,186
Proposed Annual Assessment per Shareholder 2007 $9,342
Annual Cost of Loan per AF delivered (13 ac- ft.) $767

Creditworthiness: The LORHA has an existing "bridge" loan with the Community Bank of
Basalt, Colorado. The loan with Community Bank is a $150,000 line of credit, which will be
paid off from the loan funds received from CWCB. The LORHOA has no other existing debt.

Table 2 shows the Financial Ratios and indicates overall strong ability to repay the $152,258
CWCB loan, with annual assessments raised from $7,186 to $9,342 per shareholder in 2007 and
from $9,342 to $12,145 per shareholder in 2011.

Table 2. Financial Ratios

Financial Ratio Without With the project
the project Future Year -
(Aver. 2004-06) (2007+)
Operating Ratio (revenue/expense)
weak: less than 100% 116% 140%
average: 100% - 120% (aver. ) ( strong)
strong: greater than 120%
($260,460/$225,600) ($303,218/217,391 )
Debt Service Coverage Ratio
(revenues-expenses)/ debt service N/A 700%
weak: less than 100% ( strong)
average: 100% - 125%
strong: greater than 125% ($303,218-217391)
($12,323)

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