C150124 Approval Letter

• Contract/PO #: C150124
• Contractor Name: Shultz Farm, Inc.
• Contract Type: Loan
• Water District: 0
• County: Weld
• Bill Number: MC3
• Loan Projects - Doc Type: Approval Letter

Shultz Farm, Ine
November 25-26, 2002

Agenda Item 20j.
(Updated December 4, 2002)

Water Riqhts
Shultz Farm owns a 135 acre-foot storage right for the Hill Lake, out of the St. Vrain River, and
can also access "free river" water from the St. Vrain River. The Corporation also owns 13
shares of Highland Ditch water, 16 shares of New Ish Reservoir water, and 100 units of CBT
water.

Proiect Description
Three alternatives were analyzed in the feasibility study:
1. No Action
2. Dredge out Hill Lake to restore the 135 acre-foot decreed capacity ($200,000)
3. Dredge out Hill Lake to a capacity of 250 acre-feet ($445,000)

Alternative 2, Dredge out Hill Lake to restore the 135 acre-foot decreed capacity ($200,000) is a
feasible and less costly alternative. However, once the project is mobilized, the rnarginal cost of
removing additional material decreases, and the Borrower has decided that it makes economic
sense to increase the project scope. Alternative 3, Dredge out Hill Lake to a capacity of 250
acre-feet ($445,000) will restore the original Lake capacity (protecting the storage decree from
abandonment), and provide 115 acre-feet of additional storage. This option is considered the
preferred alternative. The no-action alternative was considered unacceptable since it would
mean the decreed storage right could not be stored for use during periods of drought.

Selected Alternative 3 consists of pumping all remaining water from the lakebed, removing
200,000 cubic yards of dirt, and then dressing the banks using excavating equipment. All
excavated material will be placed on a 16-acre pasture field on the east side of the lake. Critical
portions of the lakeshore will be protected with riprap.

Excavate 200,000 cubic yards at @$2/yard
Place rip-rap
Total Project Cost

$400,000
$ 45.000
$445,000

Financial Analvsis
The total estimated cost of the project is $445,000 and the borrower is a small farming/ranching
corporation that intends to use the water for agricultural purposes. The CWCB agricultural
lending rate would apply to this borrower. Shultz Farm, Inc. has requested a $400,000 loan at
2.75% for 30 years. This loan would represent 90% of the total project cost.

Table 1 is a summary of the financial aspects of the project. A CWCB Small Project Loan of
$400,000 would have an annual payment of $21,729 (including the 10% reserve requirement)
at the loan terms of 2.75% for 30 years. This represents an annual cost of $86 per acre-foot,
based on the new reservoir capacity of 250 acre-feet.

Table 1. Financial Summary

Proiect Cost $445,000
CWCB Loan Amount $400,000
Number of Owners 1
CWCB Loan Pavment (includes 10% reservS\ $21,729
Annual Loan Costner acre-footlNew total volume: 250 ac-ft.\ $86

Credit worthiness: Shultz Farm, Inc. has existing debt with the New Frontier Bank of Greeley
and with Diversified Financial Services of Omaha, on which all payments have been made as

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