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<br />Stieb Brothers, Inc. - Well Augmentation Project <br />March 25.26. 2003 <br /> <br />Agenda Item 24b <br /> <br />Table 1. Financial ~ummary <br /> <br />. <br /> <br /> <br />$ 202,000 <br />$151,500 <br />$10,690 <br />$1.78 <br /> <br />Creditworthiness: SBI has no long-term real estate or equipment debt. They do maintain a <br />$1.75 million operating Line of Credit at the Wells Fargo Bank in Sterling, which renews annually in <br />June. <br /> <br />Table 2 shows the Financial Ratios for the SBI and indicates, with the exception of cash reserves, <br />strong ability to repay the $151,000 CWCB loan. Ann\Jal operating costs per acre-foot, while shown <br />in the weak category, are representative costs of providing pressurized irrigation water to the land. <br /> <br />Table 2. Financial Ratios <br /> <br />Financial Ratio Without With project <br /> , the project Future Years <br /> fAver.2000-01J <br />Operating Ratio (revenue/expense) <br />weak: less than 100% 125% 121% <br />average: 100% - 120% (strong) (strong) <br />strono: areater than 120% <br />Debit Service Coverage Ratio <br />(revenues-expenses )/debt service' 3000% <br />weak: less than 100% N/A (strong) <br />average: 100% - 125% <br />strona:areater than 125% . <br />Cash Reserves to Current Expense <br />weak: less than 50% <10% <10% <br />average: 50% - 100% (weak) (weak) <br />strona: meater than 100% <br />Annual Operating Cost per Acre-Ft. <br />weak: greater than $20 $24 $22 <br />average: $10 - $20 (weak) (weak) <br />strona: less than $10 , <br /> <br />. <br /> <br />Collateral - As security for the loan the SBI will pledge a security interest in real estate, 220 acres of <br />sprinkler irrigated farmland owned by Stieb Land Company, LLP, located in Section 26, T9N, <br />R51W. Wells Fargo Bank in Sterling has indicated that the SBlland would be valued at <br />approximately $950 per irrigated acre. At this level ~he proposed collateral would be sufficient to <br />secure the $151,500 loan. During the contract proCjess supporting documentation of land values, <br />based on current land use, will be submitted by a Colorado Certified General Appraiser. The <br />collateral would be in compliance with revised CWC,B Loan Policy #5 (Collateral). <br /> <br />Recommendation <br /> <br />Staff recommends a CWCB Small Project Loan not to exceed $151,500 to Stieb Brothers, Inc. from <br />the Construction Fund to construct a system of wells and recharge ponds to replace out-of-priority . <br />irrigation well depletions. The recommended term of the loan is 20 years and the recommended <br />lending rate Is 2.5% per year. Security for the loaniwill be S81 real estate with a total collateral value <br />of $151,500. The real estate value will be supported by documentation from a Colorado Certified <br />General Appraiser, and all necessary permits and easements must be obtained. <br />Page 4 of 6 <br />