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Union Well Augmentation Group Agenda Item 21b May 18-19,2016 Board Meeting(Updated May 20, 2016) Page 5 of 5 Creditworthiness: The Augmentation Group has no existing debt. In March 2004 before the Augmentation Group was officially formed, the Ditch Company was approved for a CWCB Loan (Contract C150172) to construct the Miller Recharge Pond. Although the CWCB loan legally remains the responsibility of the Ditch Company, the Augmentation Group assesses its shareholders for the debt service and sends payment to the Ditch Company. The loan was substantially completed in 2013 and is in good standing. The annual payment of the loan is $4,781 and its maturity date is 2043. The collateral is the Ditch Company's headgate and assessment revenue. The debt is included in Table 5 since the debt service is a part of the Augmentation Group's normal operating expense. TABLE 5: FINANCIAL RATIOS Financial Ratio Past 2 Years' Future w/ Project Operating Ratio (revenues/expenses) 99% 100% weak: <100% - average: 100% - 120% - strong: >120% (weak) (average) $70.1K/$71.0K $86.8K/$86.8K Debt Service Coverage Ratio 81% 100% (revenues-expenses)/debt service (weak) (average) weak: <100% - average: 100% - 120%r- strong: >120%11 ($70.1K-$66.2K) ($86.8K-$66.2K) $4.8K $20.6K Cash Reserves to Current Expenses 5% 4% weak: <50% - average: 50% - 100% - strong: >100% (weak) (weak) $3.2K/$71.0K $3.2K/$86.8K As a for-profit corporation, assessments have intentionally been set to make minimal profits rather than build cash reserves. Collateral: Security for this loan will be a pledge of the Augmentation Group's assessment revenues backed by an assessment covenant, and the water shares purchased with the loan proceeds. This is in compliance with the CWCB Financial Policy #5 (Collateral). cc: Gary Alles, President, Union Well Augmentation Group Susan Schneider/Jennifer Mete, Colorado Attorney General's Office Attachment: Water Project Loan Program - Project Data Sheet