C150253 Feasibility Study

• Contract/PO #: C150253
• Contractor Name: Lower Latham Reservoir Company
• Contract Type: Loan
• Water District: 64
• County: Weld
• Loan Projects - Doc Type: Feasibility Study

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accrue at the rate of8.25 percent until October 1, 2007. Bridge loan interest is pro-rated to include
the amount resulting from the value of the subject six shares ofLLDC. We understand that the
CWCB would offer LLRC a loan at 90 percent, resulting in a total loan amount of$I,974,848. The
term and rate for the CWCB loan is requested to be 30 years at two and one-quarter percent. At this
rate, annual payments for the $1,974,848 loan would be $91,237. This amount does not include the
10 percent reserve required by the CWCB to be set aside fc)r the first ten years of loan repayment.
The 10 percent reserve will set aside for the first ten years will add an annual payment of $9,124,
resulting in a total annual payment of $1 00,360 for the first ten years.

The LLRC has historically operated without debt, or assessment income. Revenue generated from
oil and gas royalties hav(: greatly exceeded operating expenses for many years. LLRC proposes to
utilize the LLRC oil and gas royalties to repay the CWCB loan. In addition, oil and gas operators
have recently notified LLRC that a total of 18 new oil and gas wells will be drilled over the next 12
months that LLRC will fteceive royalty revenue from. Cuncently, LLRC draws royalty income from a
total of 52 wells. The additional 18 wells could conceivablly increase royalty income by at least 35
percent within the next 12 months. Appendix E includes copies of the financial statements and
budgets for the LLRC for the past three years, verifying th(: income needed to repay the subject
CWCB loan and balances remaining on the above described bridge loans.

XII.COLATERAL

As security of the loan the LLRC will pledge the project water rights, and assessment income if
needed.

XIII. ECONOMIC ANALYSIS

The economic benefit of the project is considerable as the continued operation of the irrigation wells
will significantly increase the value of the properties within the Lower Latham service area.

XlIII. SOCIAL AND PHYSICAL IMP ACTS

The project will have no significant social impacts, since it will assure the continued operation of 85
irrigation wells within the: service area, resulting in the continuation of historical agricultural

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