LPPD000466

• Contract/PO #: C150173
• Contractor Name: Upper Surface Creek Domestic Water Users Association
• Contract Type: Loan
• Water District: 0
• County: Delta
• Loan Projects - Doc Type: Approval Letter

Upper Surface Creek Domestic Water Users Association
March 16-17,2004

Agenda Item 25h

Financial Analvsis

The total estimated cost of the raw water portion of the project is $180,200. USCDWUA qualifies
for the Municipal Low Income interest rate. Staff is recommending a loan for a maximum amount
of $162,180 (90% of estimated raw water project cost) for 20 years at an interest rate of 3.25% per
annum. USCDWUA's share of the raw water project will be $18,020. In addition, USCDWUA will
obtain bank financing for $694,000 for the treatment plant and the treated water pipeline portion of
the project.

Project funding sources for the entire water treatment project are shown in Table 1.

Table 1: Proiect Funding ources
Funding Source Amount %
ParticiDation
CWCB Loan (Raw Water) $162,180 12%
Bank Loan (Treated Water) $694,000 53%
USCDWUA Fundinq $463,820 35%
Total $1,320,000 100%

S

USCDWUA's local share of the total project is $463,820. To date, about $300,000 of this has been
spent from Association reserves, and the remaining $163,820 will come from increased
assessments and tap fee revenue. (Current tap fees are $8000, and USCDWUA is projecting
about 20 taps per year in the near future.)

The current water rate charges will be raised from approximately $26 to $30 per month, to repay the
CWCB loan and bank loan. USCDWUA expects to decrease its operating expenses by treating its
own water rather than paying the Town of Cedaredge. USCDWUA will cover any costs that exceed
the estimated project cost.

Table 2 is a summary of the financial aspects of the project. A CWCB loan of $162,180 would have
an annual payment of $12,270 (including the 10% reserve requirement) at the loan terms of 3.25%
for 20 years. USCDWUA will also obtain a loan from a local bank for $694,000 at 6.5% for 20
years, with an annual payment of $62,985.

Table 2. Financial Summary
Total Project Cost $1,320,000
Raw Water Proiect Cost 180,200
Number of MembershipslTaps Issued 857
CWCB Loan Amount (20 years) $162,180
CWCB Loan Payment (includes 10% reserve) $12,270
Bank Loan Amount $694,000
Bank Loan Annual Payment $62,985
Current Monthly Water Rate $26
Future Monthlv Water Rate $30
Monthly per tap cost of the CWCB loan and Bank Loan $7.32

Economics: There are approximately 770 residences currently served by USCDWUA. If each
property is assigned a conservative value of $150,000, the value of property affected is $115.5
million. A reliable domestic water supply is necessary to maintain this value. If there were no

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