BOARD00587

• Board Meeting Date: 7/26/1999
• Description: CF Section - Proposed Policies
• Board Meetings - Doc Type: Memo

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Page 2 - Policy # 4
Creditworthiness

Where appropriate a current credit report or other
documentation from financial institutions that the project
sponsor has done business with,

CWCB staff will review these submittals, to determine the
following:

The project sponsor's assets, liabilities, net equity and net
Income,

The extent to which revenues will be available to offset all
anticipated expenditUres over the period of debt retirement.

Total long-term debt of the entity at the present time and
over the period of debt retirement.

Number of water users or shareholders to participate in debt
repayment.

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The financial ratios in the following table (the rating system
is suggested only as a guideline for the analyses),

Ratio Weak Average Strong
Operating Ratio (1) <100% 100-120 % >120%
Debt Service Coverage Ratio (2) <120% 120-170% > 170%
Debt per Tap (3) >$5,000 $2,500-$5,000 <$2,500
Cash Reserves to Current Expense <50% 50-100% >100%
Annual Cost per Acre-Foot (Agric,) >$20 $10-$20 <$10
Monthly Resid. Water Bill (Munic.) >$60 $30 ,

(I) Operating revenue/operating expense
(2) (Total eligible revenues - operating expenses)/total debt service
(3) Total long-term debt/number oftaps

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The analysis of creditworthiness will be based on all of the
available preceding indicators as interpreted by the CWCB staff.
Should the analysis indicate that a potential borrower may not be
creditworthy, staff will prepare a recommendation for measures
that could improve the prospects for loan repayment. The project
sponsor, prior to entering into a loan contract with the CWCB,
must adopt share assessments, and/or water rates, necessary to
establish adequate ability to repay the loan.