Laserfiche WebLink
Northern Colorado Water Conservancy Municipal Sub District Agenda Item 9d (1) <br /> November 16-17, 2016 Board Meeting (Updated November 17,2016) <br /> Page 2 of 2 <br /> The idea behind this type of financing is to meet the debt service coverage ratio required by the bond <br /> market to keep the interest rate as low as possible for all participants. In order to qualify for the most <br /> favorable interest rate, the pooled participants need to meet a favorable debt coverage ratio (income - <br /> expenses / debt). If the total project cost is such that optimum debt coverage cannot be met by <br /> pooled participants, the CWCB might be able to offset the risk to the bond holders by issuing a <br /> subordinate loan. <br /> For instance, assuming a total project cost of $400 million, a possible loan arrangement under this <br /> scenario would be a $310 million revenue bond and a subordinate loan of $90 million from the CWCB. <br /> At this time, project participants are still evaluating options and some might opt to bring cash for their <br /> pro rata portions of the project cost. <br /> Revenue into the Subdistrict will be allotment assessments from participants. Staff and project <br /> participants have discussed a step up provision in the event that a participant fails to make a payment <br /> and options for other participants to purchase a defaulting participant's interest in the project if a <br /> payment is missed. <br /> If approved, the CWCB loan will be a 30 year fixed rate at the market rate of a AA Bond unless it is <br /> determined that the pooled credit rating is a higher rating. <br />