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There is no other anticipated debt service on this project. The ditch company is involved <br />in litigation against its insurer to recover expenses from the penalties and costs incurred <br />as a result of the defense of its water rights. This litigation is being conduct on a <br />contingency fee basis and is of minor expense to the company. However this litigation <br />could eventually realize a receipt of revenue of approximately $180,000. These proceeds <br />maybe used to complete the third phase of the project. <br />Credit Worthiness: <br />The New Salida Ditch Company has no existing debt. Table 3 shows the Financial <br />Ratios for the New Salida Ditch Company. <br />Table 3. Financial Ratios <br />Financial Ratio Without the project With the project <br />(Based on 2009 Projected <br />Assessments of $94/Share) <br />Operating 189 % 102% <br />Ratio revenue/ex ense <br />Debt Service Coverage No Debt 162 <br />Cash Reserves to Current 89 % 22 %* <br />Ex enses <br />Annual Cost per Acre Foot $2.82 $6.86 <br />7,114 acre-feet diverted <br />Annual Cost per Irrigated $20.12 $37.60 <br />Acre <br />(1000 irri ated acres) <br />* The ditch company policy is to not carry large reserves but has historically only <br />assessed funding to cover annual maintenance costs. <br />Alternative Financing: The New Salida Ditch Company has not explored alternative <br />funding. <br />Collateral: As security for the CWCB loan the New Salida Ditch Company can pledge <br />assessment income, and the project itself. <br />Economic Analysis <br />The economic benefit to the ditch company and the region can be valued in the <br />productive capacity of the lands irrigated as well as the value of the land itself with water <br />-5- <br />