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Surface Creek Ditch & Reservoir Company - Dam Rehabilitation November 25-26, 2002 Agenda Item 20c Creditworthiness: The SCD & RC has an existing construction loan that will be paid off with the . CWCB permanent loan. Table 2 shows the Financial Ratios for the SCD & RC and indicates, with the exception of cash reserves, strong ability to repay the $265,000 CWCB loan with the project in place, particularly with the 2002 assessment of $70 per share left in place. Table 2. Finan.clal Ratios Financial Ratio . Without With project the project Future Years (Aver. 2000-01) 2003+ Operating Ratio (revenue/expense) weak: less than 100% 116% 162% average: 100% - 120% (Average) (Strong) strono: oreaterthan 120% Debit Service Coverage Ratio (revenues-expenses )/debt service N/A 150% weak: less than 100% (Strong) average: 100% - 125% strono: creater than 125% Cash Reserves to Current Expense , weak: less than 50% , 5% 20% average: 50% - 100% , (Weak) (Weak) strono-: oreater than 100% Annual Operating Cost per Acre-Ft. (8428 AF) , weak: greater than $20 $4.75 $5.55 average: $10 - $20 I, (Strong) (Strong) strono: less than $10 I' The SCD & RC will maintain a cash reserve of about $10,000 in 2002. By maintaining the current assessment level at $70 the company hopes to build this level to $15,000 to $20,000 in several years. While this still places the ratio of Cash Res~rves to Current Expense in the weak category, it is fairly typical practice for ditch companies not to carry large cash reserves from year to year. . As security for the loan the SCD & RC will pledge assessment revenues backed by an assessment covenant and the project itself. This is in compliance with CWCB Loan Policy #5 (Collateral). Recommendation Staff recommends a CWeB Small Project Loan, from the Severance Tax Trust Fund - Perpetual Base Account, not to exceed $265,000 to the Surface Creek Ditch and Reservoir Company from the Construction Fund to rebuild the Hotel Twin dami The recommended term of the loan is 30 years and the recommended lending rate is 2.80%. Security for the loan will be a pledge of assessment revenues backed by assessment covenant and the project itself. Staff further recommends tHat final approval of the loan be conditioned upon all other standard contracting provisions of the CWCB, and that the loan be used to payoff the construction loan with the Surface Creek Bank, and other eligible construc~ion costs. cc: Ellis Fritchman, President, Surface Creek Ditch and Reservoir Company Chuck Richards, Secretary, Surface Creek Ditch 'and Reservoir Company Linda Bassi, AGO . Attachment Page 4 of 5