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\ ,j I. I . . . DISCUSSION Due to additional work not programmed in the original cost estimate and unforeseen variations in cost for specific items during construction, the overall cost of the project has increased by approximately 14.2% or $65,517. Staff inspected the improvements in the field, reviewed the detailed cost summary provided by the owner, and finds that the additional expenses are justifiable and within the normal parameters for this type of construction. The amended loan amount for the Stromberger Land and Cattle Company wilI be $473,000 at the present interest rate of2.5% for 20 years. The new annual payment will be $33,376, which includes the 10% reserve requirement. The Strombergers' current loan of $414,000 has an annual payment of$29,213, which includes the 10% reserve requirement. Table 2 shows the combined Financial Ratios for the Stromberger Land and Cattle Company, and indicates, with the exception of cash reserve, a strong ability to repay the $473,000 CWCB loan. The annual operating cost per acre-foot, though shown as weak, represents the cost to provide pressurized irrigation water to the land. Table 2. Financial Ratios Financial Ratio With Amended the Droiect Droiect Operating Ratio (revenue/expense) 132% 132% weak: less than 100% (strong) (strong) average: 100% - 120% strano: areater than 120% Debt Service Coverage Ratio 170% 160% (revenues-expenses)/debt service (strong) (strong) weak: less than 100% average: 100% - 125% strono: oreaterthan 125% Cash Reserves to Current Expense 10% 7% weak: less than 50% (weak) (weak) average: 50% - 100% strona: areater than 100% Annual Cost per Ac-Ft diverted (8,000 ac-ft) $24 $24.40 weak: greater than $20 (weak) (weak) average: $10 - $20 strono: less than $10 As security for the loan the Stromberger Land and Cattle Company has pledged approximately 295 irrigated acres ofIand, together with all water, water rights appurtenant to the property for domestic, livestock, or irrigation use, including but not limited to the pro-rata interest in the water augmentation project equivalent to 2.5 acre feet per irrigated acre and seven shares of GASP associated with the two wells located on the property. The appraised value of the land and water is $525,000, per the Market Value Appraisal Report prepared by Gregory J, Nienhuser, dated April 15,2005, which exceeds the value of the amended loan amount. This security is in compliance with Colorado Water Conservation Board Policy No.5 (Collateral), which at the time of the original loan request in November of 2002 required 100% loan to collateral value. 3