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<br />Number Six Ditch Company <br />July 12, 2005 <br />Page 4 of 4 <br /> <br />Agenda Item 6b <br /> <br />Table 3. Financial Ratios <br /> <br />Financial Ratio Without Project With Project <br />Previous Years. Future Years <br />Operating Ratio (revenue/expense) N/A 100% <br />I weak: <100% I-I average: 100% - 120% ~ - t strong: >120o/~ (average) <br />Debt Service Coverage Ratio 133% <br />(revenues-expenses)/debt service N/A <br />I weak: <100% 1- I averaae: 100% -120% I-I strona: >120%1 (strong) <br />Cash Reserves to Current Expense N/A After first 3 years <br />I weak: <50% I-I average: 50% - 100% I-I strong: >100o/~ 200% <br /> (strong) <br />Annual Operating Cost per Acre-Ft. (2591 AF) After first 3 years <br />I weak: >$20 I-I average: $10 - $20 I-I strong: <$1 c4 N/A $5.23 <br /> (strong) <br /> <br />· Values are not applicable (N/A) since the Company is new and financial records do not exist. <br /> <br />Collateral: As security for this loan, the Company will pledge its assessment revenues backed by an <br />assessment covenant, which includes a security interest that assigns the Company's right to enforce <br />the "step-up" provision in the Funding Agreement to CWCB in the event of default, and the Project <br />including pipeline, diversion structure and all associated access easement rights. This security is in <br />compliance with CWCB Loan Policy #5 (Collateral). <br /> <br />Staff Recommendation <br /> <br />Staff recommends an initial loan, not to exceed $688,942 for engineering and construction costs, to the <br />Number Six Ditch Company from the Severance Tax Trust Fund Perpetual Base Account, for the Number <br />Six Ditch Pipeline Project. The staff further recommends a post-construction loan not to exceed $265,242 <br />($258,353 for project costs and $6,889 for the 1 % Loan Service Fee) to the Company with terms based on <br />the current agricultural rate (30 years at 2.50% per annum). Security for the loan will be collateral in <br />compliance with CWCB Loan Policy No.5. <br /> <br />Staff further recommends that final approval of the loan be conditioned upon the following: <br /> <br />1. Executed USDA Conservation Program Contract. <br />2. Company's Funding Agreement shall include a "step-up" provision. <br />3. All standard contracting provisions of the CWCB Loan Program including a revised Debt Service <br />Reserve Fund Provision that requires two annual loan payments (one payment set aside at the <br />time of first draw of funds and one third of an annual payment set aside at the time of each of <br />the first three annual loan payments). <br />4. Entry of Decree by Division 7 Water Court approving the changes of points of diversion <br />necessary to enable the Company's members to benefit from the Project. <br /> <br />Action Taken bv the CWCB on Julv 18. 2005 <br /> <br />The CWCB approved the staff recommendation as written above. <br /> <br />Email copy: <br /> <br />Jack Burk, President, Number Six Ditch Company <br />Raymond Keith, Mancos Conservation District <br />Marcel Orton, Engineering and Technical Support <br />Amy Stengel, AGO <br /> <br />Attachment: Project Data Sheet <br />