PROJ00014

• Contract/PO #: C150011
• Contractor Name: Consolidated Mutual Water Company, The
• Contract Type: Loan
• Water District: 7
• County: Jefferson
• Bill Number: SB 99-173
• Loan Projects - Doc Type: Feasibility Study

FINANCIAL SUMMARY

The Company's financial condition appears strong at the present time. The Table below
summarizes some key financial indicators based on their updated cash flow analysis for historical
period 1998 to 2000 and for projected cash flows for the years 2001 through 2016. The cash flow
analysis provided indicates adequate funds in each year of CWCB loan repayment, which is from
2003 to 2012. All the indicators in the Table below are strong per the Board's adopted
creditworthiness policy, with the exception of the Cash Reserve to Current Expenses, which is in the
average or acceptable category.

Operating
Ratio (1)

Debt Services
Coverage (2)

Debt per
Tap (3)

Cash Reserve to
Current Expenses

140.6%
(Strong)

157.9%
(Strong)

$1,019
(Strong)

50.9%
(Average)

(1) Operating revenue/operating expense.
(2) , (Total eligible revenues-weratirrg-experrse)/total debt services.
(3) Total long term debt/number oftaps.

COLLATERAL

The Board's approval of the initial increment of financing for the Fortune Reservoir Project
was contingent upon a pledge of revenues by the Company and the conveyance of a security interest
in collateral that is equivalent in value to the principal amount ofthe loan. As security for the loan,
the Company's has pledged revenues from service charges and stock sales, the Company's shares in
the Agriculture Ditch on Clear Creek, and Company property at least equal to the value of the new
loan amount. The Company owns about 37 percent of the Agriculture Ditch. A recent appraisal
report for the Company's Agricultural Ditch holdings indicates a value of $16,200,000 based on
decreed diversions and $20,400,000 based on historic depletions. Additionally collateral will be
generated through obtaining interest in Company property.

CONCLUSION:

Based on our review of the original feasibility cost projections, the supporting
documentation provided by Consolidated Mutual Water Company of the additional cost occurred
to-date, inspection of the site, and overall financial strength of the Company, staff fmds the
requested loan increase of$4,333,000 to economically, financially, and technically sound.

STAFF RECOMMENDATIONS:

Staff recommends that the Board request an increase of $4,333,000 in the 2001 Construction
Fund authorization for the Fortune Reservoir Project of the Consolidated Mutual Water Company.
The additional $4,333,000 increment of funding would be for ten years at a lending rate of 5.5%.
The 5.5% interest rate is based on year 2001 municipal high-income rate, adjusted for a 10-year
term. The total Construction Fund lending for this project would amount to $20,600,000, not to