BOARD01641

• Board Meeting Date: 3/21/2006
• Description: CF Section - Construction Fund and Severance Tax Trust Fund Perpetual Base Account New Loans - Abbott Ranch - Well Replacement Project
• Board Meetings - Doc Type: Memo

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Abbott Ranch
March 21-22, 2006

Agenda Item 17b

The total estimated cost of the revised project is $54,388. The Ranch qualifies for the Agricultural
interest rate, and staff is recommending a maximum loan amount of $48,950 (90% of the estimated
project cost) for 10 years at an interest rate of 2,00%. The Ranch will pay the 10% local share
($5,438) of the project cost from existing reserves. The Ranch will cover any costs that exceed the
estimated project cost.

Table 1 is a summary of the financial aspects of the project. A CWCS Loan of $48,950 would have
an annual payment of $5,994 (including the 10% reserve requirement) at the loan terms of 2.00%
for 10 years.

Table 1. Financial Summary

Pro'ect Cost
Number of Acres Irri ated
CWCB Loan Amount
CWCB Loan Pa ment (includes 10% reserve) - Be in 2007
Annual Loan Cost per Acre-Foot (based on aver. 400 ac-ff. delive

$54,388
150
$48,950
$5,994
$14.99

Creditworthiness: The Ranch has one existing vehicle loan with Wells Fargo. The remaining
balance is $10,019, with an annual payment of $3,744 through 2009. The Ranch did investigate
funding for the project from its long-time banker, Sunflower Bank in Colby, Kansas, but found that
the proposed project did not meet their funding guidelines,

Table 2 shows the Financial Ratios and indicates overall strong ability to repay the $48,950 CWCB
loan, with the increased revenue from hay sales, With the smaller project scope, and the Ranch
operating with only the one replacement well, it is anticipated that hay production increases would
reduced somewhat to 5 % tons per acre (825 tons), At this level, projected future average Ranch
revenues (including cattle sales) would be $145,900, with corresponding projected future expenses
at $72,050.

Table 2. Financial Ratios

Financial Ratio Without With project
the project Future Years
(Aver. 2003-04) 2007+
Operating Ratio (revenue/expense)
weak: less than 100% 131% 203%
average: 100% - 120% (strong) (strong)
strong: greater than 120%
Debt Service Coverage Ratio
(revenues-expenses)/debt service 488% 758%
weak: less than 100% (strong) (strong)
average: 100% - 125%
strong: greater than 125%
Cash Reserves to Current Expense
weak: less than 50% 15%' 15%'
average: 50% - 100% (weak) (weak)
strono: areaterthan 100%
Annual Operating Cost per Acre-Ft. (400 AF)
weak: greater than $20 $146 $204
average: $10 - $20 (weak) (weak)
strong: less than $10

, This information is an estimate.

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