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Owl Creek Reservoir Cornpany Agenda Item 26b Loan Increase Mazch 17, 2004 Table 3 illustrates the Financial Ratios for the Owl Creek Reservoir Company/J. Gale and Valerie A. Moody. The annual income of J. Ga1e and Valerie A. Moody can vary from year-to-year depending on the agricultural market. Table 3. - Financial Ratios Financial Ratios Before After Project Project Operating Ratio (revenue/expense) weak: less than 100% 105% 110% average:100%-120% (average) (average) strong: greater than 120% Debit Service Coverage Ratio (revenue-expenses)/debt service 108% 138% weak: less than 100% (average) (sirong) average: 100%-125% strong: greater than 125% Cash Reserves to Current Expenses weak: less than 50% 3.4% 2.9% average: 50%-100% (�,�,e�) (weak) strong: greater than 100% Annual Cost per Acre (1,750) Weak: greater than $20 n/a $84 Average: $10-$20 � Strong: less than $10 As security for the loan the Owl Creek Reservoir Company/J. Gale and Valerie A. Moody will pledge the completed facility, 30,010 shares of water stock, and 153 acres of real property that the reservoir will encompass, all combined being equal or greater in value than the proposed loan amount of $2,700,000. Given the Reservoir Company's variation in annual income, loan approval would be subject to verification of ownership of the security by the Owl Creek Reservoir Company/J.Gale and Valerie A. Moody, and an updated appraisal confirming the value of the water rights and property pledged. This security is in compliance with CWCB Loan Policy No. 5(Collateral). RECOMMENDATION Staff recommends that the Board approve an increase of $1,575,000 from the Construction Fund, to the Owl Creek Reservoir Company. The total loan amount to Owl Creek Reservoir would be amended to $2,700,000. The loan increase of $1,575,000 would be for 30-years at the Company's current loan rate of 2.75%. Security for the loan will be the completed facility, water rights, and real property of value equal to or greater than the loan amount, in accordance with Policy No. 5. Staff further recommends that the final approval of the loan be conditioned upon all standard contracting provisions of the CWCB.