LPPD000446 ‎(2)‎

• Contract/PO #: C150098
• Contractor Name: Lake Henry Reservoir Company
• Contract Type: Loan
• Water District: 17
• County: Crowley
• Bill Number: HB 02-1152
• Loan Projects - Doc Type: Approval Letter

Lake Henry Reservoir Co,
November 19-20, 2001

Agenda Item 22g,
(Updated November 27,2001)

Financial Analvsis
The total estimated cost of the project is $653,000, and the water is used primarily for municipal
purposes, with some agricultural use. Staff is recommending a 30-year loan in maximum
amount of $490K (approximately 75% of the estimated total project cost.)

801 of the LHRC shares are owned and used for agricultural purposes, with this use expected
to continue for the foreseeable future. The remaining 8,167 shares are currently, or will soon
be, used for municipal or domestic purposes. Table 2 shows the calculation of the interest rate
for this project:

Shareholder

Rate x Shares

A ricultural
Municipal
Hi h Income
Municipal
Middle Income
Municipal 3.75%
Low Income

i~
'II

80

{Round to~ll%}

6923

8968

30-year blended rate for LHRC

Blended Rate = 399/8968 shares

Alternative financing sources: The Company actively sought alternative financing but was
not able find such. They requested a loan from their local bank (The First National Bank of
Ordway) but the bank does not provide long-term fixed rate financing for agricultural projects.
The Bank was able to commit to provide financing during construction, if needed, and to
provide financing of the Company's 25% cost share at typical bank terms.

Table 3 is a summary of the financial aspects of the project. A CWCB Loan of $490K would
have an annual payment of (includin[the10% reserve requirement) at the loan terms
of for 30 years. This represents about mill per acre-foot, based on a reservoir capacity
of 9,500 acre-feet.

Table 3. Financial Summary

$653,000
12
8968
$490,000

Credit worthiness: The LHRC has no existing debt. Table 4 shows the Financial Ratios for the
LHRC and indicates average to strong ability to repay the $490K CWCB loan with the project in
place. The financial evaluation assumes the Company obtains a bank loan for their cost share
at terms of 8% for 10 years, with an annual payment of $24,329.

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