BOARD01407

• Board Meeting Date: 7/20/2004
• Description: CF Section - New Loans - Henry Bolen Ditch Company - Ditch Pipeline Project
• Board Meetings - Doc Type: Memo

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Henry Bolen Ditch Company
July 20-21, 2004
Page 4 Of4

Agenda Item 14d

Creditworthiness: The Company was incorporated in June of 2003 for the purpose of undertaking
the Project and therefore has no financial history. The Company has no existing debt. Repayment
will be accomplished by member assessments according to the Company's Funding Agreement.

Table 3 shows the Financial Ratios for the Water Company and indicates, with the exception of
cash reserves, average to strong ability to repay the $128,750 loan.

Table 3. Financial Ratios

Financial Ratio Without With project
the project Future Years
Operating Ratio (revenue/expense) N/A 100%
I weak: <100% I-I averaQe: 100% - 120% , -I strong: >120%1 (average)
Debit Service Coverage Ratio
(revenues-expenses )/debt service N/A 100%
I weak: <100% I. I averaoe: 100% - 120% 1- I strona: >120%1 (average)
Cash Reserves to Current Expense N/A 2%
I weak: <50% I-I average: 50% - 100% I-I strong: >10004 (weak)
Annual Operating Cost per Acre-Ft. (2505 AF)
I weak: >$20 1- I average: $10 - $20 I-I strong: <$101 N/A $0,12
(strong)

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Collateral: As security for this loan the Company will pledge 1) assessment revenues backed by an .JV
assessment covenant; 2) the Project including diversion structure #534 and all associated access
easement rights 3) a Certificate of Deposit in the amount of two annual payments ($12,300), which
will be held by CWCB for 15 years, This security is in compliance with CWCB Loan Policy #5
(Collateral).

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Recommendation

Staff recommends an initial loan, not to exceed $515,000 for construction costs, to the Henry Bolen
Ditch Company from the Severance Tax Trust Fund Perpetual Base Account, for the Henry Bolen
Ditch Pipeline Project. The staff further recommends a post-construction loan not to exceed $133,900
($128,750 for project costs and $5,150 for the 1% Loan Service Fee) to the Company with terms
based on the current agricultural rate (30 years at 2,50% per annum). Security for the loan will be a
pledge of 1) assessment revenues backed by assessment covenant 2) the Project including diversion
structure #534 and all associated access easement rights 3) a Certificate of Deposit in the amount of
two annual payments ($12,300), which will be held by CWCB for 15 years.

Staff further recommends that final approval of the loan be conditioned upon the following:

1. Executed USDA Conservation Program Contract
2. All standard contracting provisions of the eWCB Loan Program

cc:

Raymond Keith, President, Henry Bolen Ditch Company
Tim Ouellette, Engineering and Technical Support, NRCS Cortez Service Center
Linda Bassi, AGO

Attachment: (Water Project Construction Loan Program - Project Data)

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