BOARD02121

• Board Meeting Date: 7/24/2000
• Description: CF Section - Peoples Ditch Company
• Board Meetings - Doc Type: Memo

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Peoples Ditch Co.
July 24-25, 2000

Agenda Item 12a.

Table 1 is a summary of the financial aspects of the project. Annual assessments of $94.55 will
be needed to repay a CWCB Emergency Loan of $43,000. (The annual payment plus 10%
reserve requirement is $3,404.) This represents $2.84 per acre-foot, based on average annual
diversions of 1200 acre-feet.

Table 1. Financial Summary

Project Cost $75,000
Loan Amount (57% of Project Cost) $43,000
CWCB Loan Payment Amount, including 10% loan reserve $3,404
Number of Shareholders 6
Number of Shares of Stock 36
Current Assessment per Share $30
Future Assessment per Share $125
Annual Loan Cost per acre-foot $2.84
(Average annual diversions: 1,200 acre-feet)

Credit worthiness: PDC has no existing debt. Table 2 shows the Financial Ratios for the PDC
and indicates, with the exception of cash reserves, average to strong ability to repay with the
project in place.

Table 2. Financial Ratios

Financial Ratio Without the project With the project
Operating Ratio (revenue/expense) 79% (weak) 101% (average)
Debit Service Coverage Ratio No debt ( strong) 102% (average)
(revenues-expenses)/debt service
Cash Reserves to Current Expense 36% (weak) 23% (weak)
Annual Cost per Acre-Foot $ 1.14 (strong) $3.41 (strong)

As security for the loan the PDC will pledge assessment revenues backed by assessment
covenant and one payment in a certificate of deposit account to be held by the State. This
security is in compliance with CWCB Loan Policy #5 (Collateral), and is considered adequate
because of the small loan size and the relatively low cost of water with the project in place.

Recommendation

Staff recommends that the CWCB find that the Peoples Ditch Company is eligible for a loan
from the Small Project Loan Account. The diversion is in need of replacement and can not be
used for delivery of water. Delaying the project until summer or fall 2001 would result in undue
hardship on the borrower.

Staff recommends a Small Project Loan not to exceed $43,000 to the Peoples Ditch Company
to construct a new diversion and pipeline off the Bravo Ditch. The recommended term of the
loan is 20 years and the recommended lending rate is 3.75% (20-year loan rate for Agricultural
borrowers in 2000.) Security for the loan will be a pledge of assessment revenues backed by
assessment covenant and one payment in a certificate of deposit account to be held by the
State.

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