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Credit worthiness: EFMIC has no existing debt. Table 4 shows the Financial Ratios for the EFMIC and indicates average to strong ability to repay with the project in place. Table 4. Financial Ratios Financial Ratio Without the ro'ect With the ro'ect O eratin Ratio revenue/ex ense 100% (avera a 106% avera e Debit Service Coverage Ratio revenues-ex enses /debt service No debt (strong) 110% (average) Cash Reserves to Current Ex ense 40% weak 15% weak Annual Cost per acre-foot 8,000 acre-feet diverted. $0.92 (strong) (strong) ~``'/~ Alternative Financing Considerations: The EFMIC has not investigated alternative financing sources. Collateral: As security for the CWCB loan the EFMIC can pledge assessment income, and the project itself. Economic Analysis The economic benefit of the project is considerable. The NRCS estimates the value of property affected to be $5.5 million, within the 2000-acre service area. The short-term value of potential damage to this property in the event the ABC Diversion is not repaired is estimated as $2.9 million. Using an estimated total project cost of $1.1 million (to cover design, construction of the diversion and all appurtenances, construction supervision, and up to $100,000 in cost overrun), the project cost/benefit ratio is $2.9/ $1.1 or 2.64. ~ Social and Physical Impacts The project will have no social impacts as it will assure the continued operation of the ditch. Physical impacts will lessen with the landslide problems being mitigated. Conclusions The EFMIC is an incorporated entity in the State of Colorado. The EFMIC has the ability to enter into a contract with the CWCB for the purposed of obtaining a Construction Fund Loan. 2. Right of Way easements are adequate for the construction of this project. 3. The project is needed to continue delivery of in^igation water to the shareholders. • East Fork Ditch Repairs Feasibility Study December 2003 Page 9