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Republican River Water Conservation District Agenda Item 26e November 10, 2008 (UPDATED NOVEMBER 19, 2008) Page 6 of 7 engineering and legal costs to complete the purchase but these are expected to be small and will be covered by sources other than the CWCB loan. The Republican District agreed to lease the water rights from the Yuma County PID for 20 years for aone-time, upfront lease payment of $5 million. The Yuma County PID is requesting 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 typical farmland lease price in the 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. Financial 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 fees on municipallcommercial (1%) diversions. Therefore, the Republican District qualifies for an Agricultural interest rate of 2.25% fora 20-year term (reduced by 0.25% per Policy #7 from a standard 30 year Agricultural loan rate of 2.50%). Table 1. Financial Summary PROJECT/LOAN 20 ear North Fork Lease of the water ri is ~ $5,000,000 CWCB Loan (90% of Re ublican District's Obli ation) $4,500,000 CWCB Loan (Includin 1% Service Fee) $4,545,000 CWCB Annual Loan Pa ent $285,000 CWCB Loan Obli ation (includin 10% debt reserve fundin) $313,500 Annual Cost Per Assessed Acre for Project (500,000 acres) $0.63/acre Cost of Surface Water Ri is er AF (based on 2,SOOAF of consum tive water) $8,000/AF Cost of Surface Water er AF/ (based on 2,SOOAF of consum tive water) $400/AF Assessments Before After* Assessments er irri ated acre (500,000 acres) $5.50/acre $14.50/acre * Collection at new rate during 2009 Creditworthiness: The Republican District operates as a water activity enterprise. Revenues received 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 which 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.