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Lake Canal Reservoir Company September 9, 2009 (UPDATED September 16, 2009) Page 4 of 5 Financial Analysis Agenda Item 7b Table 1 shows a summary of the financial aspects of the loan request. The blended interest rate for the Company is based on a breakdown of ownership of 86% agricultural, 8% municipal, and 6% commercial interests. The rate was determined to be 3.15% for 30 years (Per Financial Policy #7). Table 1. Project Financial Summary PROJECT/LOAN Pro'ect Cost $433,000 CWCB Loan $390,000 CWCB Loan (Includin 1% Service Fee) $393,900 CWCB Annual Loan Payment $20,500 CWCB Loan Obligation (includin 10% debt reserve fundin $22,550 Pro'ect Cost er Acre-Foot 165AF saved $2,624/AF Assessments Before After* Assessments er share (160 shares $150lshare $330/share * Assessments are projected to increase at a special shareholder meeting in October 2009 Credihvorthiness: The Reservoir Company currently has a CWCB loan with a balance of $53,884 ($6,920 annual payment) with a maturity date of July 2018. The Reservoir Company has a history of paying on time and in the full amount. Table 2. Financial Ratios for the Reservoir Company Financial Ratio Past Years Futnre Operating Ratio (revenues/expenses) 101% 100% weak: <100% - avera e: 100% - 120% - stron : >120°/ (Average) $84K/83K (Average) $105/lOSK Debt Service Coverage Ratio 114% 100% (revenues-expenses)/debt service (Average) (Average) weak: <100% - avera e: 100% - 120% - stron : >120°/ $84-76K/7K $105-76K/29K Cash Reserves to Current Expenses 48% 15% weak: <50% - avera e: 50% - 100% - stron : >100°/ ~~k) $40K/83K (Weak) $16K/lOSK Annual Operating Cost per Acre-Foot (1,120 AF) $74/AF $93/AF `,eak: >$20 - avera e: $10 - $20 - stron : <$1 ~ ~ ~W~~ $83K/1 120AF ~e~~ $lOSK/1 120AF , , Collateral - Security for the loan sha11 be the Reservoir Company's pledge of assessment revenues backed by an assessment covenant. This is in compliance with CWCB Financial Policy #5 (Collateral).