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<br />
<br />Owl Creek Reservoir Company
<br />Loan Increase
<br />
<br />Agenda Item 26b
<br />March 17,2004
<br />
<br />
<br />e
<br />
<br />Includes deduction)
<br />
<br />Design & Const. En
<br />Total:
<br />
<br />The difference in cost between Alternative No.2 and No.3 is $1,259,645, Therefore, the additional 550
<br />acre-feet of storage created ooder Alternative No.3, is at a cost of approximately $1,500 per acre-foot.
<br />
<br />SCHEDULE
<br />The final design for Alternative No.3 is complete and has been approved by the State Engineer's Office,
<br />R.E. Monk, from Colorado Springs, Colorado, the low bidder, has informed the Company that it will still
<br />honor their bid submitted in May of 2003. Upon obtaining Board approval for the loan, the project is
<br />scheduled to commence construction in April/May of2004 and to be completed by August of2004.
<br />
<br />FINANCIAL ANALYSIS
<br />The Owl Creek Reservoir Company currently has no existing debt. J. Gale Moody and Valerie A.
<br />Moody, however, currently own all interests in the Reservoir Company, Given the fact that all stock is
<br />non-assessable and currently owned by the Moody's, and no annual income is generated from the
<br />corporation itself, the credit worthiness of J, and Valerie Moody have been evaluated to ensure
<br />repayment of the loan,
<br />
<br />Currently, the Moody's have a number of outstanding loans for personal property, real estate, and farm e
<br />implements, The outstanding balances for these loans are $4,780,407 of which $3,352,727 of the debt
<br />is specifically for agricultural operations. All loan payments are current. The loan contract will be
<br />subject to an acceptable credit report from these lenders.
<br />
<br />The total estimated cost of the project is $3,000,000, The Owl Creek Reservoir Company is requesting
<br />a loan for $2,700,000 to cover 90% of the project costs, The Company's current loan of$I,125,000 has
<br />an annual loan payment of $61,113, which includes the 10% reserve requirement. The requested
<br />$2,700,000 loan increase will have an annual payment of $146,672, which includes the 10% reserve
<br />requirement.
<br />
<br />The Company's existing water decree allows up to 1,200 acres ofland to be irrigated, which is non-
<br />specific in location, Assuming the Company only puts 640 acres ofland in alfalfa hay production, its
<br />annual generated income would be in excess of $130,000, assuming $55 per ton for alfalfa hay and pivot
<br />sprinkler rental. Additionally, ifnecessary, the Company could develop a hooting and fishing club to
<br />offset the cost of constructing the reservoir, which is common on many existing reservoirs throughout
<br />the state. Assuming a 50 member club with an annual fee of$I,200 per member, an additional $60,000
<br />of annual income could be generated,
<br />
<br />Table 2. Financial Summa
<br />
<br />Pro'ect Cost
<br />CWCB Loan ArnOoot (90%)
<br />CWCB Loan Pa ent (Includes 10% Reserve
<br />Annual Loan Cost er Acre-Foot (1,750 acre-ft.)
<br />
<br />$3,000,000
<br />$2,700,000
<br />$146,672 a
<br />$84 .,
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