C150240 Approval Letter

• Contract/PO #: C150240
• Contractor Name: Bull Creek Reservoir, Canal & Power Company
• Contract Type: Loan
• Water District: 0
• County: Mesa
• Loan Projects - Doc Type: Approval Letter

Bull Creek Reservoir, Canal & Power Company
January 23-24, 2007 (REVISED January 29, 2007)
Page 4 of 5
Agenda Item 9b
remaining cost will be paid by a special assessment of the shareholders and Company cash
reserves. The Company has adjusted the assessment rates as needed for the last four years in
order to cover ope followsn2000a e; 200 g- er 2002 r$20/share 2004n $30/s e;
increases were as
2005 — Current $50/share.
Table 1. Financial Summary
PROJECT/LOAN
Total Proiect Cost
CWCB Loan (90% of Total Project Cost)
CWCB Annual Loan Payment
CWCB Loan Obligation (including 10% d ebt reserve fundinc
Special Assessment per Share (500 shares)
Annual Assessment per Share for Project Only (500 shares
Total Cost per Acre-Foot of Recovered/New Storage (418 F
COMPANY
Share Assessment
Annual Water Deli�
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$126/share
$3,200/AF
Current Future
$50/share $150/sbare
650 ac-ft 900 ac-ft
Credifinrorthiness: The Company will pay off a current loan of $160,000 held by the Palisades
National Bank (PNB) in Palisade, Colorado with a portion of the CWCB loan. The PNB loan was
used to begin reconnaissance work on this Project. The Company will have no other debt service on
this Project. Repayment will be accomplished by increasing share assessments as necessary.
Table 2 shows the Financial Ratios for the Company. Cash resenres are weak which is typical of
irrigation companies since they attempt to set assessment rates at or near operating costs.
Table 2. Financial Ratios
Financial Ratio
Operating Ratio (revenues/expenses)
weak: <100% - average: 100% - 120% - stron :>120%
Without Project
100%(Average)
$10K/10K
Debt Service Coverage Ratio No Debt
(revenues-expenses)/debt service
weak: <100% - avera e: 100% - 120% - stron :>120%
40°/a(W eak)
Cash Reserves to Current Expenses
weak: <50% - average: 50% - 100% - stron : >100°/a $4K/10K
Annual Operating Cost per Acre-Ft Delivered $15(N/A)
eak: >$20 - avera e: $10 - $20 - stron : <$10 $10K/650
* based on currenf delivery of 650 AF and a future delivery of 900AF
$1,333
With Project
Future Years
100%(Average)
$10K/10K
103%(Average)
$75-10K/63K
40%(Weak)
$4K/10K
$83(N/A)
$75K/900
Collateral: As security for this loan, the Company will pledge assessment revenues backed by an
assessment covenant. In addition, the Shareholders will pledge individual stock certificates
representing no less than 90% of the Company stock. Ute Water Conservancy District has shown
support for the project and indicates a value of this stored water at $3,000/ac-ft. The value of 500
shares of Company stock which produces 900 ac-ft of water is $2,700,000. This security is in
cornpliance with CWCB Loan Policy #5 (Collateral).