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Sanchez Ditch and Reservoir Company <br />July 1, 2011 (UPDATED July 18, 2011) <br />Page 3 of 4 <br />Task 1 <br />Task 2 <br />Task 3 <br />Task 4 <br />Task 5 <br />Table 2. Project Estimate <br />Gondola/Tramway Upgrades <br />Cylinder Repair <br />Solar System & SCADA <br />Feasibility Study <br />Administration & Report <br />Total <br />$27,000 <br />$6,100 <br />$71,900 <br />$13,500 <br />9 600 <br />$128,160 <br />Agenda Item 22a <br />Task 1 has been identified by the Company as urgent and requiring immediate attention. The task <br />includes inspection, analysis, and upgrades to the gondola/tramway system for operational safety <br />and has been estimated at $27,000. <br />It is anticipated that the remaining costs (tasks 2 through 5) will be covered in part by a$95,000 <br />WSRA Grant. <br />Discussion <br />If the Company is allowed to utilize a deferred annual payment of $31,385.92 for the <br />tramway/gondola system upgrades the Company can quickly start work and not have to administer <br />a special assessment to cover the urgenY costs. <br />If the deferral is approved the loan will be re-amortized keeping the annual payment the same. The <br />term of the loan will increase by two years to allow payment of the interest which converts to <br />principal in the loan. <br />Financial Analysis <br />Credihvorthiness: The Company has a history of eighteen years of prompt loan repayment to <br />CWCB. The Company has been in the business of providing irrigation water to its shareholders <br />since 1956. Table 3 shows the Financial Ratios of the Company for the last two years. <br />TABLE 3: Financial Ratios <br />Last Two <br />Financiat Ratio Years <br />Operating Ratio (revenues/expenses) 103% <br />weak: <100% - avera e: 100% - 120% - stron :>120°/ (Average) <br />�� $237K/$229K <br />Debt Service Coverage Ratio 125% <br />(revenues-expenses)/debt service (Strong) <br />weak: <100% - average: 100% - 120% - stron � >120°/ ($237-$198K)/ <br />$31K <br />Cash Reserves to Current Expenses 23% <br />weak: <50% - avera e: 50% - 100% - stron :>100°/ (weak) <br />$53K/$229K <br />