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<br />Johnson, Bruce <br /> <br />From: <br />Sent: <br />To: <br />Subject: <br /> <br />Johnson, Bruce <br />Tuesday, April 20, 200411 :13 AM <br />'ewilkinson@ncwcd.org'; Serlet, Mike; Bassi, Linda <br />Trollco, Inc. - Dual Water System <br /> <br />Here are my latest thoughts on this loan, after going through the files and notes from the Board Meeting. I am meeting <br />with Trollco on Thurs. 4/22 at 10:00 am to become more familiar with the project. More and more I think, that if we do this <br />loan, it should actually be 2 loans - one to Trollco for the lake construction, and one to Poudre Tech Metro District (PT) for <br />the distribution system - possibly with Trollco as a co-signer on the loan. <br /> <br />One of my biggest concerns has been who will own the system when it is completed, and how does the transfer of facilities <br />and water rights occur? The answer is that Trollco will retain owership of the 2 lakes, and the diversion system from the <br />Eaton Ditch, as well as all water rights; and PT will own, operate, and maintain all of the distribution system including 3 <br />pump stations and appurtenances and 65,000 If of 4,6,8" piping. Raw water will be provided to PT by Trollco based on a <br />100-lease agreement signed in 1996. PT pays a monthly rent (established by Trollco every year) that has a water use <br />component and a lake use recreation component. The water use component has a ceiling - it can't be higher than the <br />rate the Town of Windsor charges for treated water, and the recreation components is supposed to take into account <br />Trollco's reasonable costs of ownership of the lakes. <br /> <br />The total project cost is $ 5,548,609 and the loan request was for 75%, or $4,161,457. I have broken the loan reauest <br />amount down into lake excavation/ditch diversion (Trolloco) at $2,798,688, and dual water system (PT) at $1,362,769. <br /> <br />Interest Rate (30-year): The Trollco loan would be at 5.5% (commerciallindustrial) and the PT loan would be 4.5% (high <br />income municipal). The previous loan to PT was approved in 2002 at 4.75%. <br /> <br />Collateral: <br /> <br />For the Trollco loan, the collateral would be 1) both lakes, including storage rights, and 2) at a minimum, enough Eaton <br />Ditch Shares to supply the dual water system project. They own 100 shares of Eaton Ditch, and they were originally <br />proposing 32 shares as collateral. John had indicated that about 800 AF per year are required for the dual water system. <br />With historic diversions from the ditch of 27.4 AF per share, this calculates roughly to 29 shares required. (I still need to <br />do more research on this.) <br /> <br />For the PT Metro District loan the collateral would be 1) pledge of district revenues, and 2) the project itself. Normally for <br />a District we would just take the pledge of revenues, but because of the "development" nature of this loan we might want <br />more. I exactly not sure what problem PT had with the last loan that we approved, or how many of hOlJses have been <br />built in the area to be served by this system, so maybe we will want Trollco to also put up water shares for this loan. The <br />Eaton Ditch shares have been valued at $66,000 per share, so 63 shares would cover 100% of both loans, and 100 <br />shares would cover 158% of both loans. <br /> <br />I may be off base with my thinking, but if you have any thoughts on the above, let me know. Thanks. <br /> <br />Bruce <br /> <br />1 <br />