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<br />Dolores Water Conservancy District - WETPACK II
<br />January 25-26, 2004
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<br />Agenda Item 20a
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<br />The above loan payment amounts do not includH the typical 10% reserve amount, consistent with
<br />the way the original loan contract was executed. Similarly, in view of the guaranteed nature of the
<br />annuity funds being used for loan repayment, standard financial ratios were not calculated. DWCD
<br />will pay a 1 % Loan Service Fee ($33,232) on the new loan, at the time of substantial completion of
<br />the project, in accordance with CWCB Loan Policy #16.
<br />
<br />The DWCD collects $250 per acre (financed over 10-years) for lands included in the project (2892
<br />ac. x $250 = $723,000). This will be used, in conjunction with temporary use of DWCD reserve
<br />accounts, to pay loan costs incurred by DWCD until the annuity begins in 2008. Costs will include
<br />approximately $215,000 in IDC (interest during construction) on Loan #1 due December 1, 2005,
<br />plus two loan payments of $137,559 for 2006 and 2007; the 1 % ($33,232) fee for the new loan; as
<br />well as other costs related to the new loan. IDC for the new Loan #2 that will be due on December
<br />1, 2008 will be covered by the annuity. The annual operating cost of the existing Dove Creek
<br />Canal system is $2,160,000, or $39.13 per acre foot for 55,200 acre feet. The added cost of
<br />approximately 3000 acres of new lands will be about $112,000 ($90,000 pumping costs and
<br />$22,000 USBR carrying costs) for a total of $2,2i72,000, or $37.12 per acre foot for 61,200 acre
<br />feet. Spreading the cost over more acreage (from 28,500 ac. to 31,500 ac.) results in a savings of
<br />$2.01 per acre foot. The DWCD Board has set the current water (2005) charge to landowners at
<br />$32.60 per acre foot. This may increase to as much as $38-39 per acre foot in the future.
<br />
<br />Security for the loan will be the existing annuity used to secure the original loan. The DWCD has
<br />purchased an annuity that will yield $296,333 per year for 30 years beginning December 1, 2008.
<br />The Annuity Agreement dated, December 5,2002, is between MBIA, Inc. and the Dolores Water
<br />Conservancy District Water Activity Enterprise. LInder the Agreement all proceeds from the annuity
<br />are to be paid directly to the CWCB. MBIA, Inc. has verbally indicated agreement to modify the
<br />annuity agreement to add reference to the new loan.
<br />
<br />Recommendation
<br />
<br />Staff recommends a loan not to exceed $3,323,180 to the Dolores Water Conservancy District,
<br />acting by and through the Dolores Water Conservancy District Water Activity Enterprise, from the
<br />Severance Tax Trust Fund Perpetual Base Account, to construct pumping plant and pipeline
<br />facilities to provide water to irrigate approximately 2200 acres, as part of the WETPACK project.
<br />The recommended term of the loan is 30 years and the recommended lending rate is 2.50 % per
<br />annum. Security for the loan will be the existing annuity with MBIA, Inc., as amended to reflect the
<br />new loan. Staff further recommends that final approval of the loan be conditioned upon all other
<br />standard contracting provisions of the CWCB, as well as the following approval conditions:
<br />
<br />1. Approval of this loan is contingent upon the Dolores Water Conservancy District, acting
<br />by and through its Water Activity Enterprise, requesting that the CWCB close out the
<br />District's existing loan (Contract No. 150058A), in accordance with the District's
<br />Resolution No. 04-08-E. The close out of the existing loan shall occur prior to or
<br />concurrent with the effective date of thl3 new CWCB loan. Approval of this loan is also
<br />contingent upon the District drawing no more than $2,530,000 from its existing loan.
<br />2. Approval of this loan is contingent upon the amendment of the existing loan contract to
<br />add, as additional security, the pledge of District revenues from its Water Activity
<br />Enterprise necessary to assure payment of the annual debt service until such time as
<br />MBIA, Inc. makes its first payment from the annuity to the CWCB.
<br />
<br />cc: Philip Saletta, General Manager, Dolores Water Conservancy District
<br />Amy Stengel, AGO
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<br />Attachment
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<br />Page 6 of 7
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