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<br />LAWMA - Water Rights Purchase <br /> <br />Agenda Item 20b <br /> <br />July 28-29. 2003 <br /> <br />The Total Project cost is estimated to be as follows: <br /> <br />1. <br />2. <br /> <br />Acquire Y2 Keesee Water Rights <br />Acquisition Costs <br /> <br />TOTAL <br /> <br />$2,250,000 <br />65,000 <br />$2,315,000 <br /> <br />The acquisition costs, being covered by LAWMA funds, are related to the water rights purchase and <br />include appraisal costs, legal costs for contract review and negotiations, and feasibility study <br />preparation. LAWMA has a closing date of October 1, 2003 to purchase Keesee water rights. <br /> <br />Financial Analvsis <br /> <br />LAWMA understands that CWCB Loan Policy No. 11 provides that the CWCB may generally lend up <br />to 90% of the costs of a water rights acquisition project. In order to purchase one-half of the Keesee <br />water rights LAWMA must borrow $ 2,250,000, the full purchase price. As previously discussed, <br />LAWMA's cash-flow situation is currently extremely tight as a direct result of the costs it had to cover <br />in participating in the Kansas v. Colorado trial, and because LAWMA plans to close-out Contract No. <br />C153768 as part of this transaction and pay the approximately $234,473 of accrued interest to the <br />CWCS. LAWMA has made a rental payment on the Keesee water rights of $150,000 that is <br />applicable against the overall purchase price. If LAWMA is able to borrow $ 2,250,000, they will <br />have sufficient cash to cover their share of the Keesee acquisition costs, and pay the accrued <br />interest on thecurrent CWCS loan. <br /> <br />The total estimated costof the Keesee Water Rights is $2,315,000. LAWMA qualifies for a blended <br />interest rate of 2.5%. Staff recommends that the Board consider a maximum loan amount of <br />$2,250,000 (97% of estimated project cost) for 30 years at an interest rate of 2.50%. Table 1 is a <br />summary of the financial aspects of the project. A CWCS Loan of $2,250,000 would have an annual <br />payment of $118,250 (including the 10% reserve requirement) at the loan terms of 2.50% for 30 <br />years. <br /> <br />Table 1. Keesee Loan Financial Summary <br /> <br />Proiect Cost $2,315,000 <br />Number of Shareholders 213 <br />Number of Shares of Stock 18,495 <br />CWCS Loan Amount(30 years) $2,250,000 <br />CWCB Loan Pavment7includes 10% reserve) - Beain 2004 $118,250 <br />Current Assessment oer share (2002) $11.30 <br />New Assessments per share (see Table 3) $11.75-$20.35 <br />Annual Loan Cost oer ac-foot (firm vield consumotive use 1887 ac-ft.) $62.66 <br /> <br />Table 2 shows the required annual payments on the existing loans as well as the proposed Keesee <br />water rights loan, as follows: <br /> <br />Page 5 of 9 <br />