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' Mancos Valley Beaver Ditch Company Agenda Item 4a <br />September 7, 2004 <br />Page 4 of 4 <br />Table 3. Financial Ratios <br />Financial Ratio Without Project With Project <br /> Previous Years* Future Years <br />Operating Ratio (revenue/expense) NSA 100% <br />weak: <100% - avera e: 100% -120% - strop : >120% (average) <br />Debt Service Coverage Ratio <br />(revenues-expenses)/debt service N/A 133% <br />weak: <100% - avera e: 100% - 120% - strop : >120% (Strong) <br />Cash Reserves to Current Expense After first 3 years <br />weak: <50% - avera e: 50% - 100% - strop : >100% N/A 200% <br /> (strong) <br />Annual Operating Cost per Acre-Ft. (1431AF) $4 <br />00 <br />weak: >$20 - avera e: $10 - $20 - strop : <$1 NSA . <br />(strong) <br />* Values are not applicable (NIA) since the Company is new and financial records do not exist. <br />Collateral: As security for this loan the Company will pledge it's assessment revenues backed by an <br />assessment covenant which includes a security interest in the Company's Funding Agreement) and <br />Project including pipeline, diversion structure No. 505 and all associated access easement rights. This <br />security is in compliance with CWCB Loan Policy #5 (Collateral). <br />Staff Recommendation <br />Staff recommends an initial loan, not to exceed $413,000 for construction costs, to the Mancos Valley <br />Beaver Ditch Company from the Severance Tax Trust Fund Perpetual Base Account, for the Mancos <br />Valley Beaver Ditch Pipeline Project. The staff further recommends apost-construction loan not to exceed <br />$107,100 ($103,000 for project costs and $4,130 for the 1% Loan Service Fee} to the Company with terms <br />based on the current agricultural rate (30 years at 2.50% per annum). Security for the loan will be collateral <br />in compliance with CWCB Loan Policy No. 5. <br />Staff further recommends that final approval of the loan be conditioned upon the following: <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 contract execution and one third of an annual payment set aside at the time of each of <br />the first three annual loan payments. <br />Action Taken by the CWCB on September 14, 2004 <br />The CWCB approved the staff recommendation with the additional condition that the parties to <br />the Funding Agreement conditionally assign to the CWCB the right to enforce the step up <br />provision in the event of a default. <br />Email copy: Oran White, President, Mancos Valley Beaver Ditch Company <br />Raymond Keith, Mancos Conservation District <br />Tim Ouellette, Engineering and Technical Support, NRCS Cortez Service Center <br />Amy Stengel, AGO <br />Attachment: Project Data Sheet <br />