C150342 Increase Approval Letter

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Sanchez Ditch and Reservoir Company Agenda Item 25a July 16-17,2014 Board Meeting(Updated July 18, 2014) Page 3 of 4 TABLE 1: PROJECT FINANCIAL SUMMARY Original Approval New Request Total Project Cost $2,032,000 $2,282,000 WSRA Grant $914,400 (45%of Project) $914,400 (40% of Project) CWCB Loan Amount $1,117,600 (55%of $1,367,600 (60% of Project) Project) CWCB Loan Amount (including 1%Service Fee) $1,128,776 $1,381,276 CWCB Annual Loan Payment $56,133 $55,254 (30 years at 1.75%) (40 years at 2.0%) CWCB Loan Obligation (including 10%debt reserve $61,747 $60,780 funding) Interest Only Payment $19,754 $24,172 (est. 2015 - 2020) Number of Shareholders 34 34 Number of Shares 20,777 20,777 Current Annual Assessment $11.60 (per Share) $11.50 (*with $0.10 per share increase) Annual Cost of Project (per Share) $2.83 $2.93 Cost of Project per AF to Preserve Storage (103,155 AF) $19.70 $22.12 Creditworthiness: The Company has two existing loans with the CWCB (C153623 and C153755A). Both loans were for rehabilitation work on the Sanchez Reservoir outlet and dam. The Company received a one-year deferment on both loans in July 2011 so it could spend the otherwise obligated loan funds on a study titled "The Phase I Assessment & Upgrade Study." In 2009, 2010 and 2011, assessments were set at $10.50 per share. In anticipation of the Project, assessments were increased to $11.50 per share in 2012. The cost of this Project will ultimately be an additional $2.93 per share. At the time of the original loan request, the Company was concerned that the additional debt service would be a burden on shareholders and asked the CWCB for assistance in scheduling the debt repayment to help balance out the debt burden. CWCB staff worked with the Company and suggested accelerating the payments on the original two loans. The extra payments and new payoff dates are noted in Table 2. Upon substantial completion of the new Project, the Company will pay interest only for the first five years of repayment on the new loan. Principal and interest would have been paid over the remaining 25 years. With the increased Project cost, the Company is requesting a 40-year term with similar repayment terms of interest only for the first five years and the remaining balance will be paid over 35 years.