BOARD00385

• Board Meeting Date: 7/28/2003
• Description: CF Section - New Loans - Town of New Castle- Clolorado River Raw Water Transmission
• Board Meetings - Doc Type: Memo

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Town of New Castle - Colorado River Diversion
July 28-29, 2003

Agenda Item 211

Table 2 is a summary of the financial aspects of the project. A CWCS Small Project Loan of
$700,000 would have an annual payment of $47,271 (including the 10% reserve requirement) at the
loan terms of 4.5% for 30 years.

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Table 2. Financial Summary

$1,006,900
2,628
1001
$700,000
$47,271
$24.50
$28.50
$3.94
. $118.18

Creditworthiness: The Town's Utility Funds currently has two outstanding loans. One is a 1999
loan for $917,076 with the Colorado Water Resources and Power Development Authority for
wastewater treatment plant improvements. This loan has a remaining amount of $418,427, ending
in 2019, with an annual payment of $36,200. The second is a 1995 loan for $65,000 with the
Colorado Department of Local Affairs for a water tanK, pumping and distribution lines. This loan
has a remaining amount of $17,261, ending in 2004 with an annual payment of $9283. CWCS
will require parity of pledged water revenues with these loans.

Alternative financing sources: The Town has received a $15,000 grant from the Colorado River .
Water Conservation District for design assistance. In addition, a grant of $200,000 has been
awarded from the Colorado Department of Health SEP (Supplemental Environmental Project.) for
the project. Also, in April 2003, the Town applied to the Department of Local Affairs (DOl,.A) for a
$300,000 grant (Energy Impact Assistance Program). Grant funding from DOLA through the federal
minerai lease program would be applied toward the total construction project cost and thereby
reduce tap fees. A decision on the grant request is not expected until August 2003. If awarded
the Town states that they would liKely decrease the amount of the requested loan of $700,000.
Staff recommends that any DOLA grant funds that might be obtained be used to reduce the amount
of the CWCS loan principal, and that the loan re-amortized to reduce the annual loan repayment.

Table 2 shows the Financial Ratios for the Town and; indicates average to strong ability to repay the
$700,000 CWCS loan, assuming that the Utility Fund receives at least $110,000 in annual water
and sewer tap fee revenues.

The Town's tap fee revenue history has been as follows:

2003 - $200,000 (Assumed 2003 budget) 2001 - $407,539
2002 - $545,125 2000 - $450,795

At the $110,000 level, tap fees would constitute less than 15% of total Utility Fund revenues. In the
"worst-case" scenario, assuming that the Utility Funq would receive no tap fees in a given year, the
water rates would need to be raised an additional $9.50 per month per household, to approximately
$38 per month. to cover the shortfall. Staff feels that this would still be a reasonable water rate,
and that the assumed level of tap fees In the financial analysis could be justified.

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