C150156 approval

• Contract/PO #: C150156
• Contractor Name: Arkansas Groundwater Users Association
• Contract Type: Loan
• Water District: 14
• County: Pueblo
• Loan Projects - Doc Type: Approval Letter

AGUA — Water Rights Purchase/Recharge Project
September 22-23, 2003
The Total Project cost is estimated to be as follows:
1. EIC Water Rights Purchase
2. Acquisition Costs
3. Recharge Construction/Ditch Enlargement
4. Recharge Design Costs
5. Loan Origination Fee (1%)
TOTAL
Financial Analvsis
$ 863,500
20,000
164,000
25,000
9.608
$1,082,108
Agenda Item 5c
The total estimated cost of the water rights purchase and recharge project is $1,082,108. AGUA
qualifies for a blended interest rate of 2.5%. Staff recommends that the Board consider a maximum
loan amount of $970,448 (89.7% of estimated project cost) for 30 years at an interest rate of 2.50%.
Table 1 is a summary of the financial aspects of the project. A CWCB Loan of $970,448 would have
an annual payment of $51,022 (including the 10% reserve requirement) at the loan terms of 2.50%
for 30 years.
Table 1. EIC Water Rights/Recharge Project Loan Financial Summary
Pro'ect Cost $1,082,108
Number of Active Members ells — Varies 400
Number of In-active Members ells — Varies 50
CWCB Loan Amount 30 ears $970,448
CWCB Loan Pa ment includes 10% reserve — Be in 2004 $51,022
Member Fee er Well — 2003 $290
Future Increase Loan Fee from $46 to $60 er well $304
Aug. Water Loan Assessment Fee in 2003 -(per ac-ft of well depletion) $5.00
Future, as needed $2.50 -7.50+
Au . Water Cost to Members in 2003 - er ac-ft of well de letion $34-60
Future, as needed $12-60
Annual Loan Cost er ac-foot aver. Consum tive use 703 ac-ft. $72.58
AGUA is proposing to repay the CWCB loans by raising its loan/acquisition-related fees. AGUA
plans on increasing the member loan fee (per well) from $46 to $60, and the loan assessment fee
(per acre-foot) of replacement water to $7.50, or more as needed. The Augmentation Water Cost to
rnembers would not relate directly to CWCB loan repayment, as these charges are "pass-though"
costs to members of AGUA's lease expenses to secure replacement.
Table 2 shows the Financial Ratios for AGUA and indicates average ability to repay the $970,448
CWCB loan, with a new loan fee structure in place. The 2001 and 2002 ratios reflect annual
operating deficits of $52,475 and $42,117 respectively, and do not reflect the $100,000 Emergency
Drought grant from CWCB. The operating deficits can in large part be attributed to the high
engineering costs incurred those years of $49,500 in 2001 and $108,500 in 2002, where $25,000 per
year is more typical of normal operations. The large change in Debt Service Coverage Ratio from
2001 to 2002 can be attributed to the deferred $25,500 CWCB loan payment, which magnifies the
ratio calculated in the formula.
Page 6 of 9