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<br />~ <br /> <br />. <br /> <br />. <br /> <br />. <br /> <br />The PRCC has investigated alternative financing sources. They have obtained an in-kind grant of <br />$26,550 from the Natural Resources Conservation Service for engineering design and construction <br />inspection. However, long term financing could not be attained elsewhere. USDA Rural Development no <br />longer makes loans to irrigation companies (unless the project involves domestic water supply.) The <br />Company's commercial bank (Pine River Valley Bank, Bayfield Colorado) offered financing at prime <br />plus 1/2% (8.25%) with 20-year amortization and balloon in 5 years. This loan would adjust annually <br />based on changes in the prime rate and is not considered a good long-term solution. The annual payments <br />would be $25,284, and at the end of 5 years a balloon payment of $213, 160 would be due, requiring the <br />Company to again seek long-term financing. <br /> <br />Table 1. Pine River Canal Company Financial Summary <br /> <br />Project Cost $325,550 <br />Loan Amount (75% of Project Cost) $243,700 <br />CWCB Loan Payment Amount $17,147 <br />Number of Shareholders 215 <br />Number of Shares of Stock 13,752.25 <br />Current PRCC Assessment per Share $3.15 <br />Future PRCC Assessment per Share $3.95 <br />Annual Project Cost per acre-foot (Annual diversions: 71,400 acre-feet) $0.25 <br /> <br />As mentioned above, water is used by the shareholders for agricultural purposes, The PRCC appears to <br />qualify for the CWCB Agricultuial Lending rate. <br /> <br />The PRCC has an existing debt in amount of $48,247,50 payable to USDA Rural Development The <br />annual payment amount is $4,599 and all payments have been made as agreed, It may be necessary for <br />the CWCB to attain parity with this RD debt as part of the loan contract with the PRCe. <br /> <br />As security for the loan the PRCC will pledge assignment of the tunnel hill project special assessment <br />income, a certificate of deposit in amount of one annual payment on the loan, and the structures <br />(pipeline) associated with the tunnel hill project <br /> <br />Recommendation <br />Staff recommends a loan not to exceed $243,700 to the Pine River Canal Company for 75% of the costs <br />to complete the tunnel hill project The recommended term of the loan is 20 years with a lending rate of <br />3.5%. As security for the loan, the Pine River Canal Company will pledge revenues from assessments, a <br />certificate of deposit in amount of one anriual payment, and the structures (pipeline) associated with the <br />tunnel hill project Stafffurtherrecommends that final approval of the loan be conditioned upon <br />acceptance of the project and the associated financial obligations by a vote of the shareholders of the <br />Company. ' <br /> <br />cc: James w. Sutton, Secretary, Pine River Canal Co., 1720 CR 329 Ignacio, CO 81137 <br />Gary Jennings, La Plata County NRCS, 31 Suttle St., Durango, CO 81301 <br />Linda Bassi, AGO <br /> <br />Attachment <br />C:\WP51\Proj-New\Pine River199memo <br />L\boardmem\jan99\13eJan99 <br /> <br />3 <br />