BOARD00671

• Board Meeting Date: 3/21/2006
• Description: CF Section - Construction Fund and Severance Tax Trust Fund Perpetual Base Account New Loans - Town of Keenesburg - Raw Water Pipeline and Well Purchase
• Board Meetings - Doc Type: Memo

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Town of Keenesburg
March 21-22,2006

Agenda Item 17c

Table 2. Financial Ratios

Financial Ratio Without With project
the project Future Years
(Aver. 2003-04) 2008+
Operating Ratio (revenue/expense)
weak: less than 100% 144% 141%
average: 100% - 120% (strong) (strong)
strana: areaterthan 120%
Debt Service Coverage Ratio
(revenues-expenses )/debt service 370% 100%*
weak: less than 100% (strong) (aver.)
average: 100% - 125%
strano: oreaterthan 125%
Cash Reserves to Current Expense
weak: less than 50% 750% 108%
average: 50% - 100% (strong) (strong)
strana: areater than 100%
Debt per Tap (461 taps)
weak: greater than $5000 $195 $3,465
average: $2500 - $5000 (strong) (aver.)
strano: less than $2500
Monthly Water Sill
average: $30 $22 $30
weak: greater than $60 (strong) (aver.)

*

Assumes an average of 2 taps per year for a total of $14,000.
Tap Fee History; 2002 $15,000
2003 $79,000
2004 $14,000

Creditworthiness: The Town's water enterprise has one outstanding liability, a bond issued in
1989, with a remaining amount of $90,000 and an annual payment of $18,560 through July 1,2010.

Alternative financing sources: The Town has applied to DOLA for a $500,000 grant (Energy and
Mineral Impact Assistance Program) to reduce the required loan amount to $1 ,008,000. A
decision on the grant request is not expected until July 2006. 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.

As security for the loan, the Town will pledge revenues from its water enterprise (Waterworks
Operating Fund), backed by a rate covenant and annual financial reporting. This is in compliance
with CWCS Loan Policy #5 (Collateral). CWCS will require parity of its lien on the pledged water
revenues with the existing bond.

Recommendation

Staff recommends a loan not to exceed $1,523,080 ($1,508,000 for project costs and $15,080 for
the 1% Loan Service Fee in accordance with CWCS Loan Policy #16), to the Town of Keenesburg,
acting by and through its water enterprise (Waterworks Operating Fund), from the Construction
Fund, to purchase an existing well and construct a raw water pipeline from the well to the Town, in
order to improve water quality. The recommended terms of the loan are 30 years at 3.75% per

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