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b.) Interim funding for the project will be provided if construction funds are needed prior to loan <br />funds being available. <br />1. Loan from Farmers Bank, Ault, Colorado, in the amount of $500,000 is available. We <br />believe that this amount will be adequate to cover costs prior to receiving CWCB funds. <br />This loan will be repaid and WRCC cash reinstated upon receipt of CWCB funds. The <br />Farmers Bank loan will be a credit line to be drawn on as needed. Farmers Bank will <br />charge WRCC interest at the rate of 1% over prime. <br />c.) WRCC annual expenses and income: <br />1. The WRCC 2009 budget projects income of $844,685 and expenses of $843,250. The <br />only realistic projection over the life of the proposed loan would be to increase the <br />numbers based on the 75 year average rate of inflation which is 4%. <br />d.) Loan repayment plan: <br />1. The annual loan repayment amount will be provided by assessments. The annual loan <br />repayment will be approximately $71,607.41 which will include the 1% origination fee <br />and for the first ten years an additional $14,500.00. The company will set aside a <br />Certificate of Deposit or other secured funds to cover the 10% ($14,500.00) for the first <br />ten years. The balance due of $71,607.41 will be divided by the 1,000 shares which <br />results in a maximum probable assessment increase of $71.60 per share. The current <br />assessment is $375.00 per share. <br />e.) The financial impact on the users will be the amount of annual assessment increase necessary to <br />make annual payments. The company has considered this and has concluded that this will not <br />result in an undue hardship particularly when balanced against the gains that will be obtained as a <br />result of the project. <br />Credit Worthiness <br />WRCC, Inc. has an in place loan with the CWCB in the principal amount of approximately <br />$1,250,000. The first payment will be due in 2010. WRCC, Inc. has no significant other debt. <br />There is a small operating loan with Farmers Bank with an outstanding balance of $50,000. The <br />company is financially strong as can be seen from the financial statements in Appendix I. The <br />investment package was created as a result of the sale of shares owned by Windsor Reservoir and <br />Canal Company in the Tunnel Water Company. The investment money has been used sparingly and <br />is currently with Capital Investments with the object being to generate operational funds from <br />income. <br />Previous loans by Windsor include the Poudre Valley Ditch improvement project and the Reservoir <br />#8, Annex and Elder project, both of which have been paid off in a timely manner. <br />Alternative Financing Considerations <br />WRCC, Inc. considered financing this project entirely through a loan from the Farmers Bank. The <br />company has a long term, good working relationship with Farmers Bank and Farmers has been the <br />source of funds in the past for project and operating expenses. All loans have been timely paid. <br />However, the bank cannot under current regulations enter into a long term loan such as the one being <br />requested here, and the cost of repayment would be significantly higher and more burdensome on the <br />shareholders. <br />0 <br />