LPPD000427

• Contract/PO #: C150136
• Contractor Name: Stieb Brothers, Inc.
• Contract Type: Loan
• Water District: 0
• County: Logan
• Loan Projects - Doc Type: Approval Letter

Stieb Brothers, Inc. - Well Augmentation Project
March 25-26, 2003

Agenda Item 24b

Table 1. Financial Summary

$ 202,000
$151,500
$10,690
$1.78

Creditworthiness: SBI has no long-term real estate or equipment debt. They do maintain a
$1.75 million operating Line of Credit at the Wells Fargo Bank in Sterling, which renews annually in
June.

Table 2 shows the Financial Ratios for the SBI and indicates, with the exception of cash reserves,
strong ability to repay the $151,000 CWCB loan. Annual operating costs per acre-foot, while shown
in the weak category, are representative costs of providing pressurized irrigation water to the land.

Table 2. Financial Ratios

Financial Ratio Without With project
the project Future Years
(Aver. 2000-01)
Operating Ratio (revenue/expense)
weak: less than 100% 125% 121%
average: 100% - 120% (strong) (strong)
strong: greater than 120%
Debit Service Coverage Ratio
(revenues-expenses )/debt service 3000%
weak: less than 100% N/A (strong)
average: 100% - 125%
strong: greater than 125%
Cash Reserves to Current Expense
weak: less than 50% <10% <10%
average: 50% - 100% (weak) (weak)
strong: greater than 100%
Annual Operating Cost per Acre-Ft.
weak: greater than $20 $24 $22
average: $10 - $20 (weak) (weak)
strong: less than $10

Collateral - As security for the loan the SBI will pledge a security interest in real estate, 220 acres of
sprinkler irrigated farmland owned by Stieb Land Company, LLP, located in Section 26, T9N,
R51W. Wells Fargo Bank in Sterling has indicated that the SBlland would be valued at
approximately $950 per irrigated acre. At this level the proposed collateral would be sufficient to
secure the $151,500 loan. During the contract process supporting documentation of land values,
based on current land use, will be submitted by a Colorado Certified General Appraiser. The
collateral would be in compliance with revised CWCB Loan Policy #5 (Collateral).

Recommendation

Staff recommends a CWCB Small Project Loan not to exceed $151,500 to Stieb Brothers, Inc. from
the Construction Fund to construct a system of wells and recharge ponds to replace out-of-priority
irrigation well depletions. The recommended term of the loan is 20 years and the recommended
lending rate is 2.5% per year. Security for the loan will be SBI real estate with a total collateral value
of $151,500. The real estate value will be supported by documentation from a Colorado Certified
General Appraiser, and all necessary permits and easements must be obtained.

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