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South Metro Water Supply Authority March ]Q 2009 (UPDATED March l8, 2009) Page 7 of 8 Agenda Item 14b In the event of default by one of the borrowers, the CWCB contract will have a step up provision whereby the remaining participants in the Project will be required to pay for the defaulting party's commitment. The payments due must be sufficient to enable the Authority to meet the CWCB debt service requirements. Table 5 shows the financial ratios for each of the Authority members borrowing money from the CWCB. The Authority does not have any financial history of its own, so financial ratios for the Authority are not included in the table below. However, the ratios for each of the members borrowing funds from the CWCB are set forth to show the individual members' financial strength. Table 5. Financial Ratios - Future (with Project) Financial Ratio ACWWA Meridian Pinery Stonegate Operating Ratio (revenues/expenses) 113% 119% 88% 141% weak: <100% - average: 100% - 120% - (Average) (Average) (Weak) (Strong) tron : >120°/ $9.6M/8.SM $1.9M/1.6M $4.4M/S.OM $4.8M/3.4M Debt Service Coverage Ratio 158% 625% 63% 3400% (revenues-expenses)/debt service (Strong) (Strong) (Weak) (Strong) weak: <100% - avera e: 100% - 120% - $9.6M- $1.9M- $4.4M- $4.8M- stron :>1200~ 6.6M/1.9M 1.6M/48K 3.4M/1.6M 3.3M/44K Cash Reserves to Current Expenses l~go~a 63% 104% 218% weak: <50% - avera e: 50% - 100% - (Strong) (Average) (Strong) (Strong) stron : >1000~ $15.1M/8.SM $1.OM/1.6M $5.2M/S.OM $7.4M/3.4M Monthly Residential Water Bill eak: >$60 - avera e: $30 - $60 - $134 $49 $111 $126 k (Weak) (Average) (Weak) (Wea ) stron : <$3 Collateral - As security for the loan, the Authority will pledge assessment revenues backed by a rate covenant and a security interest in the pipeline capacity purchased by the Authority with the proceeds of this loan. This is in compliance with CWCB Financial Policy #5 (Collateral). Staff Recommendation (Board approved staff recommendation on March 17, 2009) Staff recommends the Board approve a loan not to exceed $5,090,400 ($5,040,000 for project costs and $50,400 for the 1% Loan Service Fee) to the South Metro Water Supply Authority for its Water Supply Pipeline Capacity Acquisition Project from the Construction Fund. The loan terms shall be 30 years at an interest rate of 4.5% per annum. Security for the loan shall be in compliance with CWCB Financial Policy #5. Staff further recommends additional approval conditions prior to contracting with the CWCB: 1) Water Conservation Plan: Pinery Water and Wastewater District must have a State approved water conservation plan in place.