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<br />East Mancos Highline Ditch Company <br />July 12 2005 <br />Page 4 of 4 <br /> <br />Agenda Item 6c <br /> <br />Table 3. Financial Ratios <br /> <br />Financial Ratio Without Project With Project <br /> Previous Years * Future Years <br />Operating Ratio (revenue/expense) N/A 100% <br />I weak: <100% I-I averaQe: 100% - 120% I-I stronQ: >1200/~ (average) <br />Debt Service Coverage Ratio 133% <br />(revenues-expenses)/debt service N/A <br />I weak: <100% 1- I averaae: 100% - 120% 1- I strona: > 120%1 (strong) <br />Cash Reserves to Current Expense After first 3 years <br />I weak: <50% I-I averaQe: 50% - 100% I-I stronQ: > 1 OOo/~ N/A 200% <br /> (strong) <br />Annual Operating Cost per Acre-Ft. (869 AF) After first 3 years <br />I weak: >$201-laverage: $10 - $201-lstrong: <$1c:i N/A $26 <br /> (weak) <br /> <br />* Values are not applicable (N/A) since the Company is new and financial records do not exist. <br /> <br />Collateral: As security for this loan, the Company will pledge its assessment revenues backed by an <br />assessment covenant, which includes a security interest that assigns the Company's right to enforce <br />the "step-up" provision in the Funding Agreement to CWCB in the event of default, and the Project <br />including pipeline, diversion structure No. 522 and all associated access easement rights. This security <br />is in compliance with CWCB Loan Policy #5 (Collateral). <br /> <br />Staff Recommendation <br /> <br />Staff recommends an initial loan, not to exceed $904,000 for engineering and construction costs, to the <br />East Mancos Highline Ditch Company from the Severance Tax Trust Fund Perpetual Base Account, for <br />the East Mancos Highline Ditch Pipeline Project. The staff further recommends a post-construction loan <br />not to exceed $467,114 ($458,074 for project costs and $9,040 for the 1 % Loan Service Fee) to the <br />Company with terms based on the current agricultural rate (30 years at 2.50% per annum). Security for the <br />loan will be collateral in compliance with CWCB Loan Policy No.5. <br /> <br />Staff further recommends that final approval of the loan be conditioned upon the following: <br /> <br />1. Executed USDA Conservation Program Contract. <br />2. Company's Funding Agreement shall include a "step-up" provision. <br />3. All standard contracting provisions of the CWCB Loan Program including a revised Debt Service <br />Reserve Fund Provision that requires two annual loan payments (one payment set aside at the <br />time of first draw of funds and one third of an annual payment set aside at the time of each of <br />the first three annual loan payments). <br /> <br />Email copy: <br /> <br />Regina Williams, Secretary-Treasurer, East Mancos Highline Ditch Company <br />Raymond Keith, Mancos Conservation District <br />Marcel Orton, Engineering and Technical Support <br />Amy Stengel, AGO <br /> <br />Attachment: Project Data Sheet <br />