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<br />\< <br /> <br />East Fork Mutual Ditch Company <br />January 27. 2004 <br /> <br />Agenda item 14b. <br /> <br />Credit worthiness: EFMIC has no debt. Table 2 shows the Financial Ratios and indicates, with <br />the exception of Cash Reserves, average to strong ability to repay with the project in place. <br /> <br />. <br /> <br />Financial Ratio Without With <br /> the oroiect The oroiect <br />Operating Ratio (revenue/expense) 100% 106% <br />weak: less than 100% (average) (average) <br />average: 100% - 120% <br />strono: creater than 120% <br />Debt Service Coverage Ratio No debt 110% <br />(revenues-expenses)/debt service (strong) (average) <br />weak: less than 100% <br />average: 100% - 125% <br />strona: creater than 125% <br />Cash Reserves to Current Expense 40% 15% <br />weak: less than 50% (weak) (weak) <br />average: 50% - 100% <br />slronc: creater than 100% <br />Annual Cost per Ac-Ft diverted (8,000 ac-ft) $0.92 $3.45 <br />weak: greater than $20 (strong) (strong) <br />average: $10 - $20 <br />stronn: less than $10 <br /> <br />Table 2. Financial Ratios <br /> <br />As security for the loan, the EFMIC will pledge assessment revenues backed by assessment <br />covenant, the project itself, and the Company's headgate to assure repayment of the loan. This <br />security is in compliance with CWCS Loan Policy #5 (Collateral). <br /> <br />. <br /> <br />Recommendation <br />Staff recommends a CWCS Small Project loan from the Construction Fund in an amount up to <br />$259,860 ($257,287 for project costs and $2,573 for the 1 % Loan Service Fee, in accordance <br />with CWCS Loan Policy #16) to the East Fork Mutual Irrigation Company. The loan is for up to <br />75% of the cost to rehabilitate the Company's ditch system repay project costs already <br />incurred. The recommended term of the loan is 30 years and e recommended interest rate is <br />2.5% (2.577% Annual Percentage Rate.) Security for the loan ill be a pledge of assessment <br />revenues backed by assessment covenant and other Compan property adequate to assure <br />repayment of the loan, in accordance with CWCS Loan Policy 5. <br /> <br />Staff further recommends that final approval of the loa be conditioned upon standard <br />contracting provisions of the CWCS. <br /> <br />IA[ef5U~ <br /> <br />~~~CU) <br />Addl r/~ e1A <br />/V4J. <br /> <br />. <br /> <br />4 <br />