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<br />, <br /> <br />Sheek Ditch Company <br />May 16, 2005 (Revised May 31, 2005) <br />Page 4 of 4 <br /> <br />Agenda Item 15b <br /> <br />Table 3 shows the Financial Ratios for the Company. The Company proposes to assess the members <br />$1 ,200/share to cover the CWCB Loan and maintenance costs. The Cqmpany has 9.3 shares, which is <br />based on the amount of decreed flow in the ditch. (1cfs = 1 share) <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% ~ -I strong: >120%~ (average) <br />Debt Service Coverage Ratio 133% <br />(revenues-expenses )/debt service N/A <br />.1 weak: <100% 1- I averaae: 100% - 120% 1- 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: >100%1 200% <br /> (strong) <br />Annual Operating Cost per Acre-Ft. (1,781 AF) N/A $6.29 <br />I weak: >$20 I-I average: $10 - $20 I-I strong: <$101 (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 #565 and all associated access easement rights. This security is <br />in compliance with CWCB Loan Policy #5 (Collateral). . <br /> <br />Staff Recommendation <br />Staff recommends an initial loan, not to exceed $427,200 for engineering and construction costs, to the <br />Sheek Ditch Company from the Severance Tax Trust Fund Perpetual Ba.se Account, for the Sheek Ditch <br />Pipeline Project. The staff further recommends a post-construction .Ioan not to exceed $164,472 ($160,200 <br />for project costs and $4,272 for the 1 % Loan Service Fee) to the Compar)y with terms based on the <br />current agricultural rate (30 years at 2.50% per annum). Security for the Ipan will be collateral in <br />compliance with CWCB Loan Policy No.5. <br /> <br />Staff further recommends that final approval of the loan be conditionedj upon the following: <br />1. An executed USDA Conservation Program Contract shall be provided. <br />2. The 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 /> <br />Action Taken bv the CWCB on Mav 24. 2005 <br />The CWCB approved the staff recommendation. <br /> <br />Email copy: <br /> <br />Tom Weaver, President, Sheek Ditch Company <br />Raymond Keith, Mancos Conservation District . <br />Tim Ouellette, Engineering and Technical Support, NRCS Cortez Service Center <br />Amy Stengel, AGO <br /> <br />Attachment: Project Data Sheet <br />