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The District's annual assessment to each member breaks down the cost per acre necessary to cover each loan described above, and to cover the District's annual operating expenses. The District's annual assessment break down for 2008 and 2009 are summarized on the following page. 2008 2009 CateQorv Cos_ Cos_ Operating Expenses $40.00 $27.44 Spillway Loan $2.00 $1.80 Diversion Loan (this loan) $1.72 $5.54 East Dam Rehabilitation $2.86 11.80 Totals: $46.58 $46.58 It is the intent of the District to maintain the 2008 assessment rate of $46.58 per acre for 2009, by increasing the assessments for the loans that are proposed to increase, as identified above, and reducing the assessments for annual operating expenses. The District can reduce its annual operating assessments given the amount of carryover funds that have accrued since 2006 and the reduction in legal and engineering fees anticipated in 2009 and in future years. The financial ratios presented in Table 4 below are based on the proposed 2009 annual assessment of $46.58 and assuming the proposed increase to the Empire Reservoir East Dam Embankment Repair Loan is approved. Table 4. Financial Ratios Financial Ratio Without With project the project Future Year 2008 2009+ Operating Ratio (revenue/expense) weak: less than 100% ~ pg% ~~g~~~ average: 100% - 120% strong: greater than 120% (average) (strong) ,.,~.., ~s~~sxi~Q~s Debt Service Coverage Ratio (revenues-expenses)/debt service 149% 161 % weak: less than I OOo~o (strong) (strong) average: 100°io - 125°%, strong: greater than 125% (532K-426K/7/K) (893K-296K/371K) Cash Reserves to Current Expense o~ 58% weak: less than 50% average: 50°%- 100% strong: greaterthan 100°% ~g'0 (average) (average) /486K/497Kj I387K/667K) Annual Opcrating Cost per Acre-Ft. (19,900 AF) wcak: greatcrthan 520 $31.2G ~~~•5~ (weak) average: $10 -$20 strong: less than $10 ~weak) 9K) (66 7Ki I 9 I497K,/l 9. 9K) . Collateral: As security for the loan, the District will pledge its assessment revenues. This is in compliance with CWCB Financial Policy #5 (Collateral).