C153808 Approval Letter

• Contract/PO #: C153808
• Contractor Name: Arkansas Groundwater Users Association
• Contract Type: Loan
• Water District: 14
• County: Pueblo
• Bill Number: ARA
• Loan Projects - Doc Type: Approval Letter

AGUA - Warer Rights Purchase/Recharge project
September 22-23, 2003

Agenda lrem 5c

The Total Project cost is estimated to be as follows:

TOTAL

$ 863,500
20,000
164,000
25,000
9.608
$1,082,108

1.
2.
3.
4.
5.

EIC WaterRights Purchase
Acquisition Costs
Recharge Construction/Ditch Enlargement
Recharge Design Costs
Loan Origination Fee (1%)

Financial Analvsis

The total estimated cost of the water rights purchase and recharge project is $1,082,108. AGUA
qualifies for a blended interest rate of 2.5%. Staff recommends that the Soard consider a maximum
loan amount of $970,448 (89.7% of estimated project cost) for 30 years at an interest rate of 2.50%.
Table 1 is a summary of the financial aspects of the project. A CWCB Loan of $970,448 would have
an annual payment of $51,022 (including the 10% reserve requirement) at the loan terms of 2.50%
for 30 years.

Table 1. EIC Water Rights/Recharge Project Loan Financial Summary

$1,082,108
400
50
$970,448
$51,022
$290
$304
$5.00
$2.50 -7.50+
$34-60
$12-60
$72.58

Pro' ect Cost
Number of Active Members ells - Varies
Number of In-active Members
cwes Loan Amount 30 ears
CWCS Loan Pa ment includes 10% reserve, - Be in 2004
Member Fee er Well - 2003
Future Increase Loan Fee from $46 to $60 er well
Aug. Water Loan Assessment Fee in 2003 - (per ac-ft of well depletion)
Future, as needed
Au . Water Cost to Members in 2003 - er ac-ft of well de letion
Future, as needed
Annual Loan Cost er ac-foot aver. Consum tive use 703 ac-ft.

AGuA is proposing to repay the CWCS loans by raising its loan/acquisition-related fees. AGUA
plans on increasing the member loan fee (per well) from $46 to $60, and the loan assessment fee
(per acre-foot) of replacement water to $7.50, or more as needed. The Augmentation Water Cost to
members would not relate directly to CWCS loan repayment, as these charges are "pass-though"
costs to members of AGUA's lease expenses to secure replacement.

Table 2 shows the Financial Ratios for AGUA and indicates average ability to repay the $970,448
CWCS loan, with a new loan fee structure in place. The 2001 and 2002 ratios reflect annual
operating deficits of $52,475 and $42,117 respectively, and do not reflect the $100,000 Emergency
Drought grant from CWCS. The operating deficits can in large part be attributed to the high
engineering costs incurred those years of $49,500 in 2001 and $108,500 in 2002, where $25,000 per
year is more typical of normal operations. The large change in Debt Service Coverage Ratio from
2001 to 2002 can be attributed to the deferred $25,500 CWCS loan payment, which magnifies the
ratio calculated in the formula.' .

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