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I I Table 3 is a summary of the financial aspects of the project. Annual assessments will increase from $125 per share, up to $276 per share with an Emergency Loan of $250,000. This I represents an annual assessment increase of $151, or $2.14 per acre-foot, based on average annual diversions 7,425 acre-feet. I Table 3. Financial Summary Project Cost $1,000,000 I Loan Amount (75% of Project Cost) $250,000 CWCB Loan Payment Amount, including 10% loan reserve $15,903 Number of Shareholders 16 I Number of Shares of Stock 105 Current Assessment per Share $125 Future Assessment per Share $276 I Annual Project Cost per acre-foot $2.14 (Average annual diversions: 7,425 acre-feet) I Since all other funding for the project is in the form of grants, the Company would have no other debt service on this project. Operation and maintenance costs are expected to decrease with I the new diversion structure, and can be accommodated by the Company's existing budget. Credit worthiness: CDC has no existing debt. Table 4 shows the Financial Ratios for the CDC I and indicates average to strong ability to repay with thl~ project in place. Table 4. Financial Ratios I Financial Ratio Without the project With the project Operating Ratio (revenue/expense) 64% (weak) 100% (average) I Debit Service Coverage Ratio No debt (strong) 110% (average) (revenues-expenses )/debt service Cash Reserves to Current Expense 196% (strong) 113% (strong) I Annual Cost per acre-foot $1.76 (strong) $3.90 (strong) Alternative financing considerations: The CDC has investigated alternative financing I sources. They have obtained an in-kind grant from the NRCS for engineering design and construction inspection. The CDC has also obtained approximately $750,000 in cost share (grant) from the Federal Emergency Watershed Program to cover 75% of the construction I costs. Long-term financing for the Company's portion of the construction costs ($250,000) could not be attained elsewhere, and the cost could not be financed internally with a one-time assessment. The Company's commercial bank (Norwest Bank, Colorado Springs) declined to I offer financing because of the size of the loan and the lack of adequate collateral to secure it. The CDC request for NRCS technical and financial assistance and a memo concerning commercial bank financing are included in Appendix G. I Collateral: As security for the CWCB loan, the CDC can pledge assessment income, the project structures, and a certificate of deposit equivalent to one annual payment. I Chilcott Ditch Company Page 11 of 12 Diversion Structure Feasibility Study November 1999 I I