C153716 Refinancing Approval Letter

• Contract/PO #: C153716
• Contractor Name: Purgatorie River Water Conservancy District
• Contract Type: Grant
• Water District: 0
• County: Las Animas
• Loan Projects - Doc Type: Approval Letter

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BUREAU LOAN

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The PR WCD entered into a 70-year contract with the Bureau in 1967 for repayment of
$6,435,600 in project costs. The current balance on the loan is $5,626,007. Annual'payments to
the Bureau vary from about $20,000 to $140,000 per year and average $94,000 per year. The
formula for calculating the amount of the annual payments is complicated but is essentially based
on the percent of a full water supply available in any given year.

The Bureau has indicated that it may be willing to discount the loan and allow the District tq
retire its obligation. The actual amounJ of the payoff is unknown at present but would probably
be somewhat less than $1.5 million based on the current yield of the 30-year Treasury Bond.
Actual authorization to allow the payoff would have to come from Congress or from the
Commissioner of Reclamation. The District may be able to contribute as much as $200,000
toward the retirement of the debt.

FINANCIAL ANALYSIS

The District obtains revenues from a district-wide mill levy , from assessments for operations and
maintenance expenses, and from assessments for payments on the Bureau loan. Table 1 gives
the District's total revenues, operating expenses, and USBR loan payments as taken from the
three most recent auditor's reports for calendar years 1993 through 1995.

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Table 1. PRWCD Financial Analysis

peratlng
Ex ense
$206,615
$181,240
$247,203

Year
1995
1994
1993

otal
Revenues
$334,835
$314,048
$277,805

As Table 1 indicates, the District had an annual deficit in each of the three years ranging from
about $7,000 to $52,000. In each year, the debt service coverage ratio (a measure of the ext~nt to
which revenues are adequate to cover debt service) was less than one, which is considered the
minimum level of coverage.

Table 2 gives an analysis of the estimated impacts on the District of a 30-year and a 40-year
Construction Fund loan for $1.5 million at 3.75 percent (the Board's agricultural lending rate for
1997). The table shows the estimated reduction in the amount of the annual payment, the annual
deficit for the District, and resulting debt service coverage ratio ifthe Bureau loan were replaced
by a Construction Fund loan in the years 1993 through 1995. The table indicates significan~

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