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<br />Consolidated Mutual Water Company
<br />July 17, 2006
<br />Page 2 of 4
<br />
<br />Agenda Item 9a
<br />
<br />Contract
<br />#C150011
<br />Ori inal
<br />Amendment 1
<br />Subtotal
<br />
<br />Table 1. Loan Contract Histo
<br />Amount 30-year term
<br />I nterest Rate
<br />5.25%
<br />5.50%
<br />
<br />$10,000,000
<br />$6,300,000
<br />$16,300,000
<br />
<br />1 O-year term
<br />Reduced Rate4
<br />4.75%
<br />5.00%
<br />4.85% (Blended)
<br />
<br />Amendment 2 $4,333,000 6.00% 5.50%
<br />Total $20,333,000
<br />1 1999 Municipal High Income Rate; 2000 Municipal High Income Rate; 2001 Municipal High Income Rate
<br />4The loan received a 0.50% interest rate reduction since the loan term is only 10 years
<br />
<br />The Company's current water rates are set to cover $2.5 million of debt service annually. Without
<br />this deferral, the Company will likely payoff the remaining balance of the CWCB loan
<br />(approximately $11.5 million) in 2006 to restructure their debt with a $26.6 million bank loan for 20
<br />years at an estimated 7.5% interest rate. This restructuring will allow the Company to finance the
<br />needed improvements while maintaining the current water rates.
<br />
<br />If CWCB approves the deferrals, the Company will use $7 million in cash and finance $13 million for
<br />seven years at an estimated 7.5% from an outside financial source. Table 2 shows the proposed
<br />annual loan repayment schedule. The loan term would be increased to 14 years. A loan term of 14
<br />years qualifies for a reduction of only 0.25%, therefore the loan interest rate will be increased by
<br />0.25% over the current loan rate. The Company has provided a cash flow analysis showing the
<br />ability to repay both loans.
<br />
<br /> Table 2. Proposed Annual Loan Repayment Schedule
<br /> CWCB - Fortune Reservoir Loan New Loan
<br />Pmt. Year Principal Interest Payment Payment Total Annual
<br /># Debt Service
<br />4 2006 $1,994,129 $676,296 $2,670,424 $0 $2,670,424
<br />5 2007 0 605,784 605,784 2,454,400 3,060,184
<br />6 2008 0 605,784 605,784 2,454,400 3,060,184
<br />7 2009 0 605,784 605,784 2.454,400 3,060,184
<br />8 2010 0 605,784 605.784 2,454,400 3,060.184
<br />9 2011 0 605,784 605,784 2,454,400 3,060,184
<br />10 2012 2,083,125 605,784 2,688,909 2,454,400 5,143,309
<br />11 2013 2,192,209 496,700 2,688,909 2,454,400 5,143.309
<br />12 2014 2,307,020 381,889 2,688,909 2,688,909
<br />13 2015 2,427,859 261,050 2,688,909 2,688,909
<br />14 2016 2,555,044 133,865 2,688,909 2,688,909
<br />
<br />Consolidated Mutual Water Company
<br />
<br />Consolidated Mutual Water Company is a mutually owned, non-profit corporation whose revenue is
<br />derived primarily from the distribution of water to its shareholders. The Company's service area
<br />includes unincorporated areas of Jefferson County as well as portions of the cities of Lakewood and
<br />Wheat Ridge. The Company purchases approximately 72% of its water from the Denver Water
<br />Board. Some of the major characteristics of the Company are summarized in Table 3. The
<br />Company currently has a Water Conservation Plan on file with the State, however it does not
<br />comply with recently amended statutory requirements. The Company has been notified of the
<br />requirement to update the Plan.
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