C150209 Approval Letter 2 - Laserfiche WebLink

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Central Weld County Water District - Proposed Dry Creek Reservoir September 13-14, 2005 Agenda Item 12b Creditworthiness: The District's long-term debt decreased in 2004 due to refunding of their 1993 Revenue Bonds. As of December 31,2004, totallong.,term debt from two bond issues was $1,845,449. The balance on the 2004 Water Revenue Refunding Bond was $1,000,000, with annual payments ending in 2007, and the balance on the 1998 Colorado Water Resources and Power Development Authority Bond was $845,449, with annual payments ending in 2012. Annual payments on both bonds total $470,866 in 2005, increase to $485,897 in 2007, and drop to $130,216 in 2008. The District is in compliance with the covenants of the bond resolutions pertaining to revenues and expenses. CWCB will require parity of its lien on the pledged water revenues with these bonds. Table 2 shows the Financial Ratios for the District and indicates overall strong financial condition and strong ability to repay both CWCB loans. CWCWD does not plan to raise their water rates, as their current rate structure provides adequate revenue in excess of expenses. Table 2. Financicill Ratios Financial Ratio Without With project the project Future Year (.A ver. 2003-04) 2008+ Operating Ratio (revenue/expense) weak: less than 100% 145% 158% average: 100% - 120% (strong) (strong) strong: greater than 120% Debt Service Coverage Ratio (revenues-expenses)/debt service 124% 110% weak: less than 100% (aver.) (aver.) average: 100% - 125% strong: greater than 125% Cash Reserves to Current Expense weak: less than 50% 699% 510% average: 50% - 100% (strong) (strong) strono: oreater than 100% Debt per Tap weak: greater than $5000 $194 $788 average: $2500 - $5000 (strong) (strong) strono: less than $2500 Monthly Water Bill average: $30 $ 21.50 $21.50 weak: greater than $60 (average) (average) As security for the loan, the District will pledge water revenues backed by a rate covenant and annual financial reporting. This is in compliance with CWCB Loan Policy #5 (Collateral). Recommendation Staff recommends a loan not to exceed $4,994,955 ($4,945,500 for project costs and $49,455 for the 1 % Loan Service Fee in accordance with CWCB Loan Policy #16), to the Central Weld County Water District, acting by and through the Central Weld County Water District Water Activity Enterprise, from the Severance Tax Trust Fund Perpetual Base Account, to construct the proposed Dry Creek reservoir in 50/50 partnership with the Little Thompson Water District. The recommended terms of the loan are 20 years at 3.70% per annum. Security for the loan will be a pledge of water rate revenues backed by a rate covenant and annual financial reporting. Page 5 of 6