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<br />The amended loan amount for Guenzi Farms will be $352,000, at the present interest rate of 2.5 % <br />for 30-years. The new annual payment will be $18,500, which includes the 10% reserve <br />requirement. The Guenzi's current loan of $334,739 has an annual payment of $17,419, .which <br />includes the 10% reserve requirement. <br /> <br />Discussions with Premier Farm Credit, as well as a review of Guenzi Farms financial <br />information, indicates that the Guenzis have a very strong credit history. This is evidenced in <br />Table 2 below. <br /> <br />Table 2 shows the combined FinancialRatios for the Guenzis (Ken, Dave, and John as <br />individuals, as wells as Guenzi Farms, Inc.) and indicates strong ability to repay the $352,000 <br />CWCB loan, as well as other outstanding debts. <br /> <br />Financial Ratio With Amended <br /> the oroject Droiect <br />Operating Ratio (revenue/expense) 136% 136% <br />weak: less than 100% (average) (average) <br />average: 100% - 120% <br />strona: areater than 120% <br />Debt Service Coverage Ratio 214% 212% <br />(revenues-expenses)/debt service (strong) ( strong) <br />weak: less than 100% <br />average: 100% - 125% <br />strono: oreater than 125% <br />Cash Reserves to Current Expense 21% 10% <br />weak: less than 50% (weak) (weak) <br />average: 50% - 100% <br />strono: oreater than 100% <br />Annual Cost per Ac-Ft diverted (8,000 ac-ft) $18.00 $18.50 <br />weak: greater than $20 (strong) (strong) <br />average: $10 - $20 <br />strong: less than $10 <br /> <br />Table 2. Financial Ratios <br /> <br />As security for the loan the Guenzis have pledged the Hettinger Farm Recharge Land at an <br />appraised value of$112,000 and the Bundy Farm at an appraised value of$240,000. The combined <br />appraised value of these two farms is $352,000, which equals the value of the amended loan <br />amount. This security is in compliance with Colorado Water Conservation Board Policy No.5 <br />(Collateral), which at the time of the original loan request in May of 2004 required 100% loan to <br />collateral value. <br /> <br />Based on staffs review of the original feasibility cost projections, the supporting documentation <br />provided by Guenzi Farms, Incorporated for additional cost incurred to-date, inspection of the site, <br />and overall financial strength of the Farm, staff finds the requested loan increase of $17,261 to be <br />economically, financially, and technically sound. <br /> <br />3 <br />