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Republican River Water Conservation District Agenda Item 26e November 10 , 2008 Page 6 of 7 engineering and legal costs to complete the purchase bu t these are ex pected to be small and will be covered by sources other than the CWCB loan . The Republican District agreed to lease the w ater r ights from the Yuma County PID for 20 years for a one - time, upfront lease payment of $5 million. The Yuma County PID is requestin g a CWCB loan of $9.5 million to help fund a portion of the remaining $15 million purchase price . The Yuma County PID will use the sale of bonds to raise the remaining $5.5 million. The North Fork Lease price of $5 million was determined by doubling the t ypical farmland lease price in t he area of $125/ac ($250/ac) and multiplying it times the anticipated land taken out of production (1,444 ac). Using a discount rate of 4. 0 %, the present value of the $361,000 annual lease is approximately $5 million. Fina ncial Analysis Table 1 shows a summary of the financial aspects of the loan request. The Republican Enterprise s revenue source is predominantly from use fees on the diversion of ground water for agriculture ( 99%) with a small portion coming from use fee s on municipal/commercial ( 1%) diversions . Therefore, the Republican District qualifies for an Agricultur al i nterest r ate of 2. 25 % for a 2 0 - year term (reduced by 0.25% per Policy #7 from a standard 30 year Agricultural loan rate of 2.5 0 % ) . Table 1. Finan cial Summary PROJECT/LOAN 20 year North Fork Lease of the w ater r ights $5,000,000 CWCB Loan (90% of Republican District $ 4,5 00,000 CWCB Loan (Inc luding 1% Service Fee) $ 4,545 ,000 CWCB Annual Loan Payment $ 285 , 0 00 CWCB Loan Obligation (i ncluding 10% debt reserve funding) $ 313 , 5 0 0 Annual Cost Per Assessed Acre for Project (500,000 acres) $ 0.63 / ac re Cost of Surface Water Rights per AF (based on 2,500AF of consumptive water) $8,000/AF Cost of Surface Water per AF /yr (based on 2,500AF of c onsumptive water) $ 400 /AF Assessments Before After* Assessments per irrigated acre (500, 0 00 acres) $ 5 .50 /acre $14.50 /acre * Collection at new rate during 2009 Creditworthiness: The Republican District operates as a water activity enterprise. R evenues r eceived from use fees on assessed irrigated acres and water used by municipal and commercial users will cover operating expenses and debt service . The Enterprise has one outstanding debt with a balance of $ 1,053,990 with Farm Credit Services of Colorado w hich was used for a down payment for the Cure property purchase. The Enterprise anticipates using available Certificates of Deposit s that mature in 2009 to pay this debt in full . The Enterprise has a $60,600,000 loan for the Compact Compliance Pipeline Project that was approved at the January 2008 CWCB meeting (HB 1346). The loan contract is currently in the review process.