BOARD00656

• Board Meeting Date: 11/19/2003
• Description: CF Section - New Loans - Orphan Wells of Wiggins, LLC - Well Augmentation Project
• Board Meetings - Doc Type: Memo

Oi'ph~nft Welis of VViggins I_L.C
NOVl:-l-f~t;';~i" ~9-2:. 2003

Agenda Item af

Credit worthiness: The OV\lW is a new company and has no debt or h,storv of income and
expenses. The Company has collected initial capital of $80,000 Irenl its shareholders. These
funds, as weil as luture assessments and CWCS lean proceeds will be used to construct the
project and pay O&M costs. (Note: Shareholders 01 the O\NW previously we;'e members of
GASP and paid 8 iota I of $100,000 for augmentation of their wells. These GASP dues can now
be used to pay assessments of the OWW,) Table 2 S~IOWS FIe Financial Ratios for the OWW
assuming the project is buiit, and indicates 2 ralios in trle average and 2 ratios in tile weak
categories "lith the $1,037,700 CWCS loan in place,

Table 2. Financial Ratios

Operating Ratio (revenue/expensej
weak: !eS.3 than 100%
8veragf:: 10QCl/O ,- 120%
_-..:; t ro ng~g r e~:! GJJt:~S~t~"~,?~~J~~~,,
Debt Service Coverage Ratio

(revenues-expenses)/debt service
'weak::ess than 100%
~ aV6tage:100%~ ~i 2'5'76
~ strOf:~'{; Qff?a:tnr ~han '125%
~.____...._._'_._~_.nnnnnnn._.__________.___........_________nn._............
% Cash Reserves t.o Current Expense
[ il""';;lW; f-eS$ than 50%
~ -2!v:e:'-%l:~: tWo/;; - 100%)
:[ $!tOf~~ qrea,tpr Ulan 1 OO~/'C
~ AnnlH:t1 Cost Der--Ac-~"F"C"(t;i~Ot1-(j-~-!-(-;--~ttn\:;i.~:~-rt~d-\
~ -... ....' ,
~ w~$!:k:gf$$ter U-Ian $20
~ 2Vi2'r~3Q{:~;$10 - $20
~ SHufi<j ~ I-€~~~; Hw n S 1 0

N/A

i 131t1;c
j (average)

"""~
With ~
__________u~-__f!J_if._P(gJ.~~f_________~
1 08~/C ~
( \ ~
avemge) !
~
~
~
----------------------"-------------~
~
~
~
~
~
~
~
~
~
~
!
.~
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~
~
~
~
~
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~
n...n_...nnnn_.n_nn~
~
l
l
l
l
l
l
l
,

(weakj

Financial Ratio

'N/A

Without
the projwf

N/A

i .,., 0;
i vol JQ

000000.000000000000000000000000
N/A

nnnnnnnnnnm...mm..nnm:n$2i(~9
. (weak)

As security fm the loan the OWiN wlli pledge assessment revenues backed by assessment
covenant and trle project itself. This security is in compliance witrl C\VC8 Loan Policy #5
(Collateral).

Recommendation
Staff recommends a cwes Small Project loan from the Construction fund In amount up to
$1,048.07'1 ($Hi37,700 for project costs and $10,377 for tile 1 % l.oan Service Fee, in
accordance wllIl CWCS Loan Policy #16) to the Orphans Wells of Wiggins l.l.C. TI'e loan is for
up to 90% of the cost to construct a well augmentation and groundwater recharge project. Trle
recommended loan terms are 30 years at 2.5% (2.58% Annual Percentage Rate.) Security for
the loan will be a pledge of assessment revenues backed by assessment covenant and other
Company pmperty adequate to assure repayment of the loan, In accordance with CWCS Loan
Policy #5.

Staff furtrler recommends that 1;nal approval of tile loan be conditioned upon standard
ciJnlracting provisions of the CWCS,

cc Chris MeHll::rc!, Orphan VVE:lls of \fJi~jgins, LLC
8rent NaHan, P.E.
Unda Bas~;i. !-\GO

A:.lachrnent

C:ProJ-NE:W\O\NW 1.] 03 memo:

L:\bOardmE:rn\NovU~1\ut - urpnan ;:ir10 'I'.':dDW wells LLC
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