12 ‎(3)‎

• Board Meeting Date: 1/22/2008
• Description: CF Section - Changes to Existing Loans - Beaver Reservoir Company - Beaver Reservoir Rehabilitation Project
• Board Meetings - Doc Type: Memo

Combining the current loan request with the previous CWCB loan provides a total loan of $935,035
and an annual loan obligation (including 10% debt reserve funding) of $45,711. This equates to an
annual debt service cost of $28.22/acre-foot for this reservoir.
The Company has an existing bridge loan with Paonia State Bank, Paonia, Colorado, with an
outstanding balance of $356,078, as of October 2007. The loan funds received from Paonia State
Bank were used to pay bills received from KC Construction (contractor), Golder & Associates
(engineer), and Willmore and Company (surveyor) for work performed in 2007 to complete the
improvements to Beaver Reservoir. The $355,000 in loan funds from CWCB will be used to pay
off the existing bridge loan with Paonia State Bank. The additional $1,078 remaining on the loan
balance will be paid off directly by the Company. CWCB will require that the existing lien on the
reservoir with Paonia State Bank be released, placing CWCB in first position with their interest in
the reservoir.
Creditivorthizzess: The Company is current with all payments to CWCB for the current loan. The
Company has no other debt. Repayment of the two loans will be accomplished by increasing share
assessments as necessary.
Table 3 shows the Financial Ratios for the Company. The Company will adjust the assessment rates
as needed to cover operating and repair costs and therefore, the ratios are shown as strong. Rate
history and projections are as follows: 2000 - $16.50/share; 2002 - $21.07/share; 2005 -
$25.29/share; and 2008 - 38.13/share. The cost per share was raised in 2001 in anticipation of the
Project and will be raised again in 2008 to cover the actual final project cost. The annual operating
cost is weak due to the extensive improvements, which have been made over the last 10 years.
Table 3. Financial Ratios
Approved With Amended
Financial Ratio Project Project
Operating Ratio (revenues/expenses) 500% 393%
weak: Q00% - avera e: 100%- 120% - stron : >120°/ (Strong) (Strong)
Debt Service Coverage Ratio
(revenues-expenses)/debt service 127% 100%
weak: Q00% - avera e: 100%- 120% - stron : >120°/ (Strong) (Average)
Cash Reserves to Current Expenses 18% 26%
weak: X50% - avera e: 50%- 100% - stron : >100°/ (Weak) (Weak)
Annual Operating Cost per Acre-Ft. (1,620 AF) $25 $28 22
eak: >$20 - avera e: $10 - $20 - stron : ~$10 (Weak) (Weak)
Collateral: As security for this loan, the Company will pledge assessment revenues backed by an
assessment covenant and a security interest in the Beaver Reservoir and storage rights totaling 1,620
acre-feet. At a conservative estimate of $1,000 per acre-foot, the value of the water alone would in
excess of $1,600,000. This security is in compliance with CWCB Loan Policy #5 (Collateral).