PROJ01951 ‎(3)‎

• Contract/PO #: C150131
• Contractor Name: Paonia, Town of
• Contract Type: Loan
• Water District: 0
• Loan Projects - Doc Type: Approval Letter

...

Town of Paonia - Water Rights Purchase
January 22-23, 2003

Agenda Item 100

Financial Analvsis

The total estimated cost of the project is $1,900,000, with project funding as sho~n in Table 'I.

Table 1: Project Funding Sources

Fundin Source
CWCB Loan
Bond or Alternate Fundin
Town of Paonia
Total

Amount
$1,000,000
$710,000
$190,000
$1,900,000

The Town qualifies for the Municipal Low Income loan interest rate, and staff is ri~commending a
maximum loan amount of $1,000,000 (84% of the assumed water tap value of $ i, 188,750) for 30
years at an interest rate of 3.75%. The Town has budgeted $190,000, for its po~tion of the project,
and the money is in place in Water Fund reserves for that purpose. In addition the Town is
proposing a bond issue for the remaining $710,000 for the project, while at the s!:lme time pursuing
potential private purchasers for the land. The current water rates, discussed h~rein, will be
increased to support the loan and bond payments.

Table 1 is a summary of the financial aspects of the project. A CWCB Constructi~:m Fund Loan of
$1,000,000 would have an annual payment of $61,697 (including the 10% reserVe requirement) at
. I
the loan terms of 3.75% for 30 years. A bond issue for $710,000 would have an annual payment of
$46,187 at bond terms of 5.00% for 30 years. If a bond is issued, CWCB will rElquire that our loan
have parity of pledged water revenues. '

Table 2. Financial Summary

$1,900,000
2,297
1387
$1,000,000
$61,697
, $710,000
, $46,187
, $10.50
, $16.50
$6.48

Water Rates -The Town is planning to pay the CWCB loan and bond payment with Water Fund
Revenue from increased water rates and a portion of its fees (conservatively assumed to be 2 taps
per year at $8,500 each.) In order to stabilize revenues, the proposed water ra~e increases are
planned to be increased gradually over a 4-year period, increasing $1.50 per month for each year
from 2004-2007. This would represent a total increase of 57% over the 4-year period. A summary
of the proposed increases and the anticipated incremental annual revenue is as:follows:

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