C153701 Consents and certificates

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'.. -.-., / y;" :;i MEMORANDUM TO: The City of Fort Morgan File FROM: Bill Green DA TE: January 23, 1998 RE: Consent to Parity - Financial Analysis At the November 24, 1997 Board meeting, the Board authorized the Director to execute a consent to parity for the City of Fort Morgan's August 7, 1995 CWCB loan conditioned upon a detailed staff review of the proposed arrangements for which the City was requesting parity. A copy of my November 14 memo to the Board is included here as Attachment A. The following memo outlines the financial aspects of the staff analysis for the parity test. On December 16, 1997, the Deputy Director of the CWCB signed a Consent to Issuance of Parity Bonds (Attachment B to this memo) allowing parity on our existing loan to the City of Fort Morgan with: (1) $31 million in water revenue bonds issued by the City in December 1997, (2) the December 16, 1997 reimbursement agreement between the City of Fort Morgan and State Street Bank and Trust, and (3) loans or bonds to be issued by the Colorado Water Resources and Power Development Authority and by USDA Rural Development for retiring a portion of the $31 million in revenue bonds issued by the City. The approval was based on the conditions set forth in a Coverage Certificate by Anderson, Lee & Company dated December 16, 1997 (Attachment C to this memo). The conditions in the coverage certificate, in turn, are based on the water rate schedules in Exhibits A, Band C to the Coverage Certificate and on the revenues and expenditures in the City's 40-year projection in Attachment D to this memo. Paragraph 4 of the Coverage Certificate states that in the year 2000, if the rate schedule in Exhibit C is in effect, net water system revenues, exclusive of connection fees, would be $2,477,537. This figure is obtained by adding the projections for Total Residential Revenue and Total Commercial Revenue and subtracting Annual Operating Expenses for the year 2000 in the City's projections in Attachment D to this memo. (Included with the projections is a detailed summary of revenues by customer classification.) This was then compared with a debt service figure of $2,368,007 to demonstrate that net revenues would exceed debt service in 2000 under the given assumptions. The debt service is for all existing debt less the $31 million in interim bond financing which would be replaced by $31 million in new loans from the CWCB, the Water and Power Authority, and USDA Rural Development. The new loans are included in the projections.