18b ‎(3)‎

• Board Meeting Date: 3/18/2008
• Description: CF Section - New Project Loans - Lower Latham Reservoir Company - Well Augmentation Project ‎(Phase II)‎
• Board Meetings - Doc Type: Memo

Lower Latham Reserc oir Company .agenda Item 18b
Matroh 11, 2008
Page 3 of 4
The Company shares have been determined to be an excellent replacement source because they have a senior
right that sustains a high yield during both average and drought years. In addition, implementation of the
shares into the Company's plan of augmentation is easily achieved from an operational standpoint. Delivery
diversion locations are ideal for the augmentation plan. With the two shares purchased, the Company will
have a total of 24.5 Ditch Company shares to use in the plan for augmentation.
The Total Project cost is estimated to be:
1. Engineering/Appraisal $10,000
2. Water Rights Purchase -Schmidt 712,000
3. Bridge Loan Fees/Interest 16,000
Total $738,000
Schedule -The water rights acquisition occurred in January 2008, using short-term bridge financing.
Appraisal - In accordance with CWCB Financial Policy #8 (Purchase of Water Rights), a written appraisal
or opinion of value from a qualified water rights appraiser supporting the purchase price must be submitted
prior to disbursal of CWCB loan funds. An appraisal of the Ditch Company shares from the Rothe Farm
purchase was completed by Bud Clemons, Colorado Certified General Appraiser, of Greeley in April 2007
in conjunction with the previously approved CWCB loan. The appraisal was considered current enough to
use with this loan request. The appraised market value of the historic consumptive use of the two shares
contemplated in this loan request is $393,750/share and the Company is paying $355,910/share for the
Schmidt Farm shares.
Financial Analysis
Table 1 shows a summary of the financial aspects of the loan request. The Company qualifies for an
agriculture interest rate of 2.25% fora 30-year ter~rr. The Company will use their line of credit and cash
reserves as its contribution to the remaining 10% portion of the Project.
Table 1. Financial Summary
PROJECT/LOAN
Total Project Cost $738,000
CWCB Loan $664,000
CWCB Loan (Includin 1% Service Fee) $670,640
CWCB Annual Loan Pa ment $31,000
CWCB Loan Obli ation (includin 10% debt reserve fundin) $34,100
Total Project Cost per Acre-Foot (based on 106 AF Consumptive Use) $6,960/AF
Assessments Before After*
Assessments per irrigated acre (500,000 acres) $0.00/acre $0.00/acre
* Company revenues are generated from oil and gas royalties from wells located on Company owned property
Creditworthiness: The Company has historically operated without long-term debt until the contracted
CWCB loan in 2007. The final loan amount was $1,994,485 with an annual payment of $92,149. The
Company obtained a bridge loan from the Union Colony Bank of $996,000 in January 2008. The actual
amount borrowed is $775,000 for the purchase of the Schmidt Farm Water Rights. The Company intends to
pay down the balance of bridge loan as soon as possible with Company funds available. The Company will
maintain the line of credit account with the Union Colony Bank for use in future water rights purchases. The
line of credit has a variable interest rate currently at 6.5% and is secured by CBT shares.