BOARD01162

• Board Meeting Date: 9/22/2003
• Description: CF Section - Board Meeting New Loans Arkansas Groundwater Users Association - Water Rights Purchase/Recharge Project
• Board Meetings - Doc Type: Memo

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AGUA - Water Rights Purchase/Recharge Projact
September 22-24, 2003

Agenda ltam 5c

The Total Project cost is estimated to be as follows:

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TOTAL

$ 863,500
20,000
164,000
25,000
9.608
$1,082,108

1.
2.
3.
4.
5.

EIC Water Rights Purchase
Acquisition Costs
Recharge Construction/Ditch Enlargertlent
Recharge Design Costs '
Loan Origination Fee (1%)

Financial Analvsls

The total estimated cost of the water rights purchase and recharge project is $1,082,108. AGUA
qualifies for a blended interest rate of 2.5%. Staff recommends that the Board consider a maximum
loan amount of $970,448 (89,7% of estimated project cost) for 30 years at an interest rate of 2.50%.
Table 1 Is a summary of the financial aspects of the project. A CWCB Loan of $970,448 would have
an annual payment of $51,022 (including the 10% reserve requirement) at the loan terms of 2,50%
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for 30 years. :

Table 1. EIC Water Rights/Recharge ~roJect Loan Financial Summary

Proiect Cost $1,082.108
Number of Active Members lWells) - Varies , 400
Number of In-active Members lWells) - Varies 50
CWCB Loan Amount 130 vears) : $970,448
CWCB Loan Payment (includes 10% reserve) - B~ain 2004 $51,022
Member Fee per Well - 2003 $290
Future (Increase Loan Fee from $46 to $60 per well) $304
Aug. Water Loan Assessment Fee in 2003 - (per aq..ft of well depletion) $5.00
Future, as needed $2.50 -7.50+
Aua. Water Cost to Members in 2003 - Iper ae-ft of well depletion) $34-60
Future, as needed : $12-60
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Annual Loan Cost per ae-foot laver. Consumptive use 703 ac-ft.) $72.58

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AGUA is proposing to repay the CWCB loans by rais(ng its loan/acquisition-related fees. AGUA
plans on increasing the member loan fee (per well) frpm $46 to $60, and the loan assessment fee
(per acre-foot) of replacement water to $7.50, or mor~ as needed. The Augmentation Water Cost to
members would not relate directly to CWCB loan rep~yment, as these charges are "pass-though"
costs to members of AGUA's lease expenses to secLjre replacement.
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Table 2 shows the Financial Ratios for AGUA and in~icates average ability to repay the $970,448
CWCB loan, with a new loan fee structure in place. IThe 2001 and 2002 ratios reflect annual
operating deficits of $52,475 and $42, 117 respectiv~ly, and do not reflect the $100,000 Emergency
Drought grant from CWCB. The operating deficits c~n in large part be attributed to the high
engineering costs incurred those years of $49,500 In :2001 and $108,500 in 2002, where $25,000 per
year is more typical of normal operations. The large bhange in Debt Service Coverage Ratio from
2001 to 2002 can be attributed to the deferred $25,500 CWCB loan payment, which magnifies the
ratio calculated in the formula. .

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