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<br />Appleton Northwest lateral & Drainage Co. Agenda Item 5. <br />January 23-24, 2002 (Updated January 28, 2002) <br /> <br />'When construction is complete, the Company will receive $161,630 in NRCS cost share. <br />These funds will be used to pay all outstanding construction costs, and to reduce the CWCS <br />loan amount to $87,000, <br /> <br />Water is used primarily for agricultural purposes and the Staff is recommending a Small Project <br />loan in maximum amount of $100K during construction, reducing to $87,000 once construction <br />is complete, The recommended loan terms are 30 years at 2.75%, <br /> <br />Alternative financing sources: The Company actively sought alternative financing. They <br />were able to get an in-kind grant from the NRCS to cover project planning and design (value <br />about $19,270), as well as an NRCS cost share grant in amount of $161 ,630 for construction. <br />They also requested a loan from their local bank (The Sank of Grand Junction) but were turned <br />down because the bank does not provide long-term fixed rate financing for agricultural projects. <br /> <br />Table 2 is a summary of the financial aspects of the project. A CWCS Loan of $87K would have <br />an annual payment of $4,730 (including the 10% reserve requirement) at the loan terms of <br />2,75% for 30 years. This represents $5 per acre-foot, based on average annual diversions of <br />about 950 acre-feet. <br /> <br />a e mancla ummary <br />Project Cost $267,900 <br />Number of Shareholders 28 <br />Number of Shares of Stock 28 <br />CWCS Loan Amount $87,00 <br />CWCS Loan Payment (includes 10% reserve) $4,730 <br />Current Assessment per share $100 <br />New Assessments per share $220 <br />Annual Loan Cost per acre-foot (Averaae diversions 950 ac-ft.) $5 <br /> <br />T bl 2 F . I S <br /> <br />Credit worthiness: The ANLDC has no existing debt. Table 3 shows the Financial Ratios for <br />the ANLDC and indicates, with the exception of cash reserves, average to strong ability to <br />repay the $87K CWCS loan with the project in place. <br /> <br />Table 3. Financial Ratios <br /> <br />Financial Ratio Without With <br /> the proiect the proiect <br />Operating Ratio (revenue/expense) 135% 112% <br />weak: less than 100% (strong) (average) <br />average: 100% - 120% <br />strong: greater than 120% <br />Debit Service Coverage Ratio No Debt 1150/0 <br />(revenues-expenses)/debt service (strong) (average) <br />weak: less than 100% <br />average: 100% - 125% <br />stronq: qreater than 125% <br />Cash Reserves to Current Expense 92% 42% <br />weak: less than 50% (average) (weak) <br />average: 50% - 100% <br />strano: oreater than 100% <br />Annual Cost per Ac-Ft (950 ac-ft diverted) $2,95 $6.48 <br />weak: greater than $20 (strong) (strong) <br />average: $10 - $20 <br />strong: less than $10 <br /> <br />3 <br />