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<br />I" <br /> <br />, <br /> <br />. <br /> <br />. <br /> <br />. <br /> <br />Union Ditch Company <br />March 16,17,2004 <br /> <br />Agenda Item 251 <br /> <br />Creditworthiness: The UDC has no outstanding debt. <br /> <br />Table 2 shows the Financial Ratios for the UDC, and indicates average ability overall to repay the <br />$309,500 CWCS loan with the increased assessments, <br /> <br />Table 2. Financial Ratios <br /> <br />Financial Ratio Without With completed <br /> the project project (Future <br /> fAver. 2002-03) Year-2005+) <br />Operating Ratio (revenue/expense) <br />weak: less than 100% 94% (1) 119% <br />average: 100% . 120% (aver.) (aver,) <br />stronn: nreater than 120% <br />Debt Service Coverage Ratio <br />(revenues-expenses)/debt service 116% <br />weak: less than 100% N/A (aver.) <br />average: 100%.125% <br />stronn-: nreater than 125% <br />Cash Reserves to Current Expense ~~o/'D <br />weak: less than 50% 238% a <br />average: 50% ' 100% (strong) 1,weak7-5h " <br />stronn: nreater than 100% d' <br />Annual Operating Cost per Acre-Ft. (29,000 AF) <br />weak: greater than $20 $ 2,88 $4,07 <br />average: $10, $20 (strong) (strong) <br />stronn: less than $10 <br /> <br />(1 ) <br /> <br />Share assessment history: $180 (2002); $140 (2003); and $225 (2004), A Colorado <br />income tax refund of $58,546 received in 2002 was used to lower share assessments, <br />resulting in an average Operating Ratio of less that 100%, <br /> <br />As security for the loan, the UDC will pledge assessment revenues backed by an assessment <br />covenant and the Union Ditch diversion headgate structure on the South Platte River. The <br />diversion structure and headgate was completely re-built and modernized in 2001-02 at a cost of <br />about $700,000, Staff finds the project to be in compliance with CWCS Loan Policy #5 (Collateral), <br /> <br />Recommendation <br /> <br />Staff recommends a loan not to exceed $312,595 ($309,500 for project costs and $3,095 for the 1 % <br />Loan Service Fee in accordance with CWCS Loan Policy #16), to the Union Ditch Company from <br />the Severance Tax Trust Fund Perpetual Sase Account. to construct groundwater recharge facilities to <br />develop replacement water to offset out-of-priority depletions from well pumping, The recommended <br />terms of the loan are 30 years at 2,50% per annum, Security for the loan will be a pledge of <br />assessment revenues backed by assessment covenant and the Union Ditch diversion structure on the <br />South Platte River, <br /> <br />Staff further recommends that finai approval of the loan be conditioned upon all other standard <br />contracting provisions of the CWCS, <br /> <br />cc: Gary Alles, President, Union Ditch Company <br />Stephen Smith, Aqua Engineering, Inc, <br />Linda Bassi, AGO <br /> <br />Attachment <br /> <br />Page 5 of 6 <br />