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<br />. <br /> <br />$1,107,000. The Company will finance its share of project costs through rate increases <br />and a short-term commercial bank loan, if necessary. <br /> <br />The recommended lending rate for the $1,107,000 is 4.04 percent based on a weighted <br />average for the middle income municipal rate of 4.50 percent and the agricultural rate of <br />3.50 percent for 20 years. The lending rate for the $500,000 is 4.28 percent as set at the <br />January 1998 Board meeting. <br /> <br />Thirty-six year financial projections included in the feasibility study indicate that <br />assessments will increase from the current level of$85 per share to $115 per share in <br />2000 and then gradually decrease over the next .35 years. <br /> <br />The only alternative source of funding for this project would likely be a commercial bank <br />loan involving a lending rate of about eight percent and a loan term of much less than 30 <br />years. <br /> <br />Economic Analysis <br /> <br />The economic analysis in the feasibility report indicates that the annual cost of the four <br />projects amounts to about $8 per acre-foot, assuming an average annual yield of 17,000 <br />acre-feet. Benefit/cost ratios were calculated separately for all four projects and all but <br />one project displayed a B/C ratio greater than 1.0. <br /> <br />. <br /> <br />Collateral <br /> <br />As security for the loan, the Company will offer a pledge of revenues from assessments <br />and a security interest in lands, storage sites and water rights at least equivalent in value <br />to the principal amount of both loans. In addition, the staffwil\ continue discussions with <br />the borrower to amend four of the existing loan contracts in order to provide for suitable <br />collateral, as described above. <br /> <br />Conclusion <br /> <br />Staff has not yet the opportunity to review the revised feasibility study in sufficient detail <br />to make a final determination of feasibility and will therefore request a conditional loan <br />approval for this application. <br /> <br />Recommendation <br /> <br />. <br /> <br />Staff recommends that the Board recommend to the General Assembly a Construction <br />Fund loan of$I,107,000 to the North Poudre Irrigation Company (NPIC) of Wellington <br />for the rehabilitation of those portions of the Company's water supply system as <br />described in this memorandum. The recommended lending rate is 4.04 percent for a term <br />of 20 years. Staff further recommends that the Board require, prior to execution of a loan <br />contract, that: <br /> <br />5 <br />