C150118 Approval letter

• Contract/PO #: C150118
• Contractor Name: Kern Reservoir and Ditch Company
• Contract Type: Loan
• Water District: 1
• County: Weld
• Bill Number: SB 03-110
• Loan Projects - Doc Type: Approval Letter

Kem Reservoir and Ditch Company
November 25-26, 2002

Agenda Item 20h
(Updated December 4, 2002)

headquartered in Greeley and has participated in the construction of more than 1,500
commercial and residential subdivisions along the front-range, as well as many cross-country
transmission projects. Hall-Irwin is a commercial borrower, and the CWCB commercial lending
rate of 6% (30 year term) would apply to their portion of stock in the KRDC. The Town of
Windsor is a municipality with median household income of more than 110% of the statewide
median, qualifying it for the CWCB high-income municipal rate of 4.75% (30 year term.) The
blended rate for a loan to the KRDC is calculated as follows:

Table 1: KRDC Share Ownership and Blended Interest Rate

Shareholder Rate Cateaorv Year 2002 Rate # Shares Rate x Shares
Town of Municipal 4.75% 70 332.5
Windsor Hiqh Income
Hall-Irwin Commercial 6.0% 30 180
Corporation
Totals 100 512.5
Blended rate for KRDC Blended Rate = 512.5 /100 5.1%
shares (rounded down to
nearest .1 %)

The blended interest rate for the KRDC would be 5.1 % for a 30-year loan. (By similar
calculation, the 20-year loan rate would be 4.8%.) The Company is requesting a follow-up loan
of $3.62 million, and has already been approved for a $1 million Small Project Loan. These 2
loans will total $4.62 million, which is 75% of the total project cost.

Table 2 is a summary of the financial aspects of the project. A CWCB total loan amount of
$4.62 million would have an annual payment of $334,369 (including the 10% reserve
requirement) at the loan terms of 5.1% for 30 years. This represents a loan cost of $129 per
acre-foot, based on the new total reservoir storage capacity of 2,600 acre-feet.

Table 2. Financial Summary

Proiect Cost $6, 160,000
Number of Shareholders 2
Number of Shares of Stock 100
CWCB Loan (total amount) $4,620,000
CWCB Loan Payment (includes 10% reserve) $334,369
Current assessment per share $100
New Assessment per share (with $3.87 million loan in place.) $3443
Annual Loan Cost per acre-foot (New total volume: 2,600 ac-ft.) $129

Credit worthiness: The KRDC has an existing loan with the CWCB taken out in 1984 (original
principal amount of $82,964 with an annual payment of $5, 321) Payments on that loan have
been made as agreed and the loan will be paid off by 2003. Table 3 shows the Financial Ratios
for the KRDC and indicates 2 ratios in the average category and 2 in the weak category with
$3,870,000 of CWCB loans in place. The Annual Cost per Acre-Foot is a ratio relating to purely
agricultural projects. Municipal and multiple use projects can typically support a much higher
annual cost. (Note: Gravel obtained during the dredging process will be processed for sale,
resulting in a significant savings on the project bid cost.)

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