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<br />The PDC is requesting a 20-year loan from the CWCS. The standard agricultural lending rate <br />would be 3.75%, resulting in annual payments of $3,094. To this would be added $309 per year <br />for the first 10 years to fund the emergency reserve account, for a total annual cost of $3.404. <br />Table 3 is a summary of the financial aspects of the project. Annual assessments will increase <br />from $30 per share, up to $125 per share with a Small Project Loan of $43,000. This represents <br />an annual assessment increase of $95, or $2.84 per acre-foot, based on average annual <br />diversions 1 ,200 acre-feet. <br /> <br />Table 3. Financial Summary <br /> <br /> <br />1 0% loan reserve <br /> <br />$75,000 <br />$43,000 <br />$3,404 <br />6 <br />36 <br />$30 <br />$125 <br />$2.84 <br /> <br />Since all other funding for the project is in the form of a grant, the Company will have no other <br />debt service on this project. Operation and maintenance costs are expected to decrease with <br />the new diversion structure, and can be accommodated by the Company's existing budget. <br /> <br />Credit worthiness: PDC has no existing debt. Table 4 shows the Financial Ratios for the PDC <br />and indicates average to strong ability to repay with the project in place. <br /> <br />Table 4. Financial Ratios <br /> <br /> <br /> <br /> <br />36% <br />$ 1.14 <br /> <br /> <br />23% <br />$3.41 <br /> <br /> <br />Alternative financing considerations: The Company actively sought alternative financing. <br />They were able to obtain a grant to cover project planning and design through the NRCS <br />($5,000), and a grant for just under $27,000 from the USDA-NRCS EQIP program for <br />construction. The PDC also requested a loan from their bank (Sank of Colorado, Sterling), but <br />was turned down because of inadequate repayment capacity and the lack of marketable <br />collateral. The bank letter of denial is included in Appendix H. <br /> <br />Collateral: As security for the loan the PDC will pledge assessment revenues backed by <br />assessment covenant and one payment in a certificate of deposit account to be held by the <br />State. This security is in compliance with CWCS Loan Policy #5 (Collateral), and is considered <br />adequate because of the small loan size and the relatively low cost of water with the project in <br />place. <br /> <br />Peoples Ditch Company <br />Diversion and Pipeline Feasibility Study <br />July 2000 <br /> <br />Page 10 of 11 <br />