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Pagosa Area Water & Sanitation Dishict 7anuaiy 14, 2007 Page ~ of 6 .Agenda Item l la debt service payments on all outstanding obligations. The District's Water Activity Enterprise has several outstanding long-term debts totaling approximately $10 million. The District will repay the loan from funds available through a collection of a Water Resource Fee, a component of the District's Capital Investment Fee from each new water customer. If that funding source is not adequate, the District will increase water service rates to provide funds sufficient to meet the CWCB loan debt service. A cash flow analysis provided in the Loan Feasibility Study integrates the debt service for this CWCB Loan into the overall financial planning through 2020 and indicates sufficient coverage for the CWCB loan as well as other capital needs of the District. The SJWCD will participate financially with the District to contribute a substantial portion of the 10% match required for obtaining this CWCB Loan. SJWCD will donate the $1 million grant fi-om the CWCB Water Reserve Account Fund for the purchase of the Weber property. In addition, the SJWCD may provide other funds toward development of the Project such as: a) $37,750 grant from the Southwestern Water Conservation District; b) a SJWCD reserve account of $300,000 for study costs; c) impact fees collected on behalf of SJWCD by the Town of Pagosa Springs through an Intergovernmental Agreement (est. yield from $190,000 to $285,000 per year based on growth); d) possible increase to the current SJWCD mill levy for funding of the Reservoir Project (a ballot question is being considered). Table 2 shows the Financial Ratios for the District's Water Revenues. Table 2. Financial Ratios Current With CWCB Financial Ratio Loan Operating Ratio (revenues/expenses) 127% 133% weak: <100% - average: 100% - 120% - strong: >120°/ (Strong) $3.8M/3.OM (Strong) $4.4M/3.3M Debt Service Coverage Ratio 440% 279% (total revenues-expenses)/debt service (Strong)* (Strong)* weak: Q00% - avera e: 100%- 120% - stron : >120°/ $(6.2-3.0)M/0.74M $(7.1-3.2)M/1.4M Cash Reserves to Current Expenses 133% 133% weak: <50% - avera e: 50% - 100% - stron : >100°/ (Strong) (Strong) $4.OM/3.OM $4.OM/3.OM Debt per Tap (based on 5,081 taps) $2,240/tap $3,660/tap** 'eak: >$5000 - avera e: $SIk - $2.5K - stron : <$2500 (Strong) (Average) Average Monthly Residential Water Bill (8,000ga1) $31 $31*** eak >$60 - avera e: $60 - $30 - st-on : <$30 (Average) (Average) * Includes tap fees ** Includes 5.0% growth in taps *** Dist. does not anticipate increasing rates for new loan Collateral: Security for the CWCB loan will be a pledge of Enterprise revenues. The pledge shall be backed by a rate covenant and annual financial reporting. CWCB shall have parity with all existing and future Entelprise debt.