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Last modified
8/16/2009 3:10:25 PM
Creation date
10/4/2006 7:08:32 AM
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Board Meetings
Board Meeting Date
9/13/2005
Description
CF Section - New Loans - High Line Canal Company - Smith Arroyo Siphon Replacement Project
Board Meetings - Doc Type
Memo
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<br />j <br /> <br />e <br /> <br />. <br /> <br />. <br /> <br />High Line Canal Company <br />September 6. 2005 <br />Page 3 of 4 <br /> <br />Agenda Item 12c <br /> <br />from water leaking from the siphon. The Project is extremely important to the 15,000 acres of <br />irrigated land downstream of the siphon. If the siphon were to fail, the impact would create severe <br />hardship to the shareholders and the community. The Company has a 100 foot wide easement in <br />the area of the siphon replacement. <br /> <br />The Company has evaluated a 'do nothing' alternative and determined that the risk of a siphon <br />failure is too high and repair is needed. The Company evaluated four different pipeline materials for <br />use in the replacement. This selection was based on hydraulic capacity and installation costs. The <br />material types evaluated were: <br /> <br />1. Welded Steel <br />2. Elliptical Reinforced Concrete Pipe (ERCP) <br />3. Circular Reinforced Concrete Pipe (RCP) <br />4. High-density Polyethylene Pipe (HOPE) <br /> <br />The selected product is a 72-inch reinforced concrete pipe. The RCP was determined to be most <br />cost effective for the siphon replacement. The plastic pipe alternatives were eliminated due to the <br />possible damage to the pipe from an out of control ditch burn. <br /> <br />Total Project cost estimate is: <br /> <br />Construction <br />Contingency (10% of Const. Est.) <br />Planning/Permitti ng/Eng inee ri ng <br />Total <br /> <br />$350,000 <br />70,000 <br />85.000 <br />$505,000 <br /> <br />Financial Analvsis <br /> <br />Table 1. shows a summary of the financial aspects of the Project for the loan request. A CWCB <br />Loan of $454,000 will have an annual debt service obligation of $31 ,284 ($28,440 for annual loan <br />payment and $2,844 for the 10% reserve funding) for the loan terms of 2.25% for 20-years. The <br />interest rate is based on the standard agricultural interest rate of 2.5% for a 30-year loan. The rate <br />is reduced by 0.25% for a 20-year loan. The Company will use cash available for the remaining <br />10% of the Project costs that are not financed by CWCS. The total debt service obligation for this <br />Project represents an annual cost of $0.31/ac-ft of water delivered to Company shareholders. <br /> <br />Table 1. Financial Summary of Project <br /> <br />Total Proiect Cost $505,000 <br />CWCB Loan (90% of Total Proiect Cost) $454,000 <br />CWCS Annual Loan Payment $28,440 <br />CWCB Loan Obliaation (includina 10% debt reserve fundinQ) $31,284 <br />Annual Assessment for Project Only (based on 2,250 shares) $13.90Ishare <br />Annual Project Cost per Acre-Foot delivered (based on 100,000 AF) $0.31/ac-ft <br /> <br />Creditworthiness: The Company has no other debt. Repayment of the loan will be accomplished <br />by increasing share assessments as necessary. <br /> <br />Table 2. shows the Financial Ratios for the Company to be Average and Strong with the exception <br />of cash reserves. The share assessment increased in 2003 in preparation for this project. The <br />current share price $215/share and is comprised of $201.1 O/share for operations and maintenance <br />and $13.90Ishare for debt service. <br />
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