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Owl Creek Reservoir Company
<br />Loan Increase
<br />Alternate Bid: Spillw
<br />Design & Const. Eng
<br />Total:
<br />Agenda Item 26b
<br />March 17, 2004
<br />Alternative No. 3 Cost Estimate fcont.
<br />& Berm
<br />erin� &
<br />$213,530
<br />$500,077
<br />The difference in cost between Alternative No. 2 and No. 3 is $1,259,645. Therefore, the additiona1550
<br />acre-feet of storage created under Alternative No. 3, is at a cost of approximately $1,500 per acre-foot.
<br />SCHEDULE
<br />The final design for Alternative No. 3 is complete and has been approved by the State Engineer's Office.
<br />R.E. Monk, from Colorado Springs, Colorado, the low bidder, has informed the Company that it will still
<br />honor their bid submitted in May of 2003. Upon obtaining Board approval for the loan, the project is
<br />scheduled to commence construction in ApriUMay of 2004 and to be completed by August of 2004.
<br />FINANCIAL ANALYSIS
<br />The Owl Creek Reservoir Company currently has no existing debt. J. Gale Moody and Valerie A.
<br />Moody, however, currently own all interests in the Reservoir Company. Given the fact that all stock is
<br />non-assessable and currently owned by the Moody's, and no annual income is generated from the
<br />corporation itself, the credit worthiness of J. and Valerie Moody have been evaluated to ensure
<br />repayment of the loan.
<br />Currently, the Moody's have a number of outstanding loans for personal property, real estate, and farm
<br />implements. The outstanding balances for these loans are $4,780,407 of which $3,352,727 of the debt
<br />is specifically for agricultural operations. All loan payments are current. The loan contract will be
<br />subject to an acceptable credit report from these lenders.
<br />The total estimated cost of the project is $3,000,000. The Owl Creek Reservoir Company is requesting
<br />a loan for $2,700,000 to cover 90% of the project costs. The Company's current loan of $1,125,000 has
<br />an annual loan payment of $61,113, which includes the 10% reserve requirement. The requested
<br />$2,700,000 loan increase will have an annual payment of $146,672, which includes the 10% reserve
<br />requirement.
<br />The Company's existing water decree allows up to 1,200 acres of land to be irrigated, which is non-
<br />specific in location. Assuming the Company only puts 640 acres of land in alfalfa hay production, its
<br />annual generated income would be in excess of $130,000, assuming $55 per ton for alfalfa hay and pivot
<br />sprinkler rental. Additionally, if necessary, the Company could develop a hunting and fishing club to
<br />offset the cost of constructing the reservoir, which is common on many existing reservoirs throughout
<br />the state. Assuming a 50 member club with an annual fee of $1,200 per member, an additional $60,000
<br />of annual income could be generated.
<br />Table 2. Financial S
<br />Project Cost
<br />CWCB Loan Amount (90%)
<br />CWCB Loan Payment (Includes 10% Reserve)
<br />Annual Loan Cost per Acre-Foot (1,750 acre-ft.
<br />$1
<br />$84
<br />4
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