C150332 Approval Letter 3/23/12

• Contract/PO #: CT2015-033
• Contract/PO #: C150332
• Contractor Name: Terrace Irrigation Company
• Contract Type: Loan
• Water District: 3
• County: Conejos
• Loan Projects - Doc Type: Approval Letter

Terrace Irrigation Company
March 9, 2012 (Updated March 23, 2012)
Page 5 of 6
Agenda Item I6a
Creditworthiness:
The Company generates revenue through annual water assessments. The assessments are evaluated
annually and set at a rate sufficient to cover projected operation, maintenance and debt service
expenses. Assessments have recently been raised to meet the growing expenses for the Company.
In addition, the Company has three outstanding loans with the CWCB. Table 3 provides a
summary of the existing loans the Company has with CWCB.
TABLE 3: EXISTING LOANS
CWCB
Contract # - Project
Contract
Date
Rate
Term
Remaining
Balance
Annual
Payment
Maturity
Date
C153332-System Im rov.
9/1982
2.455%
40-year
$224,424
$26,310
9/1/2021
C153606 -Ditch limn
10/1994
5.00%
40-year
$1,297,060
$96,162
6/1/2034
C150171- Terrace Res. Outlet
4/2004
2.50%
30 ear
$203,237
$11,726
1/1/2035
TOTAL
$19724,721
$1349198
$168K/$179K
By consolidating the existing loans with the proposed request, the Company will offset the
immediate financial burden brought on by this Project by extending the repayment period for the
consolidated loans. In addition, the consolidation will strengthen the Company's ability to address
future financial demands, enabling it to better meet its long -term obligations while continuing its
active participation in the ISF Project.
Table 4 provides financial ratios for the Company. The ratios are based on an average of the
Company's financial reporting for fiscal years 2010 -2011 and projected future ratios with loan
consolidation.
TABLE 4: FINANCIAL RATIOS
"Future w / Project " ratios are based on consolidated data; therefore, all existing debt service has
been replaced with the loan terms from this Project, using a principal balance of $2.75M.
2 Assessment rates were increased to $230 1share following the collection of 2011 assessments,
increasing revenues from $185K to $195K annually.
Future'
Financial Ratio
2010-2011
w/ Project
Operating Ratio (operating revenues/operating expenses)
103%
111%
weak: <100% - average: 100% - 120% - stron >120 °/
(average)
(average)
2
$185K/$179K
$195K/$176K
Debt Service Coverage Ratio
104%
115%
(total eligible revenues- operating expenses) /total debt service
(average)
(average)
weak: <100% - I average: 100 % - 120 ° /a - stron : >120°/
($185K•$45KNS134K
($195K- $45K)/$131K'
Cash Reserves to Current Expenses
94%
95%
average: 50 %- 100% - stron : >I00 °/o
(average)
(average)
$168K/$179K
$168K/$176K
Annual Operating Cost per Acre -Foot (based on 15,339 AF)
$11.67
$11.47
average: $10 - $20 - stron : <$1
(average)
(average)
$179K/15,339AF
$176K/15,339AF
"Future w / Project " ratios are based on consolidated data; therefore, all existing debt service has
been replaced with the loan terms from this Project, using a principal balance of $2.75M.
2 Assessment rates were increased to $230 1share following the collection of 2011 assessments,
increasing revenues from $185K to $195K annually.