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<br />VIII. FINANCIAL PROGRAM <br /> <br />',I <br />. 'I <br />, <br />..-:J <br /> <br />As presently envisioned, two methods will be used to <br />finance the development and construction of the Hyannis <br />Peak Reservoir. A private bond in the amount of $425,000 <br />will be acquired by the Meyring and Arapahoe Livestock <br />Companies. This bond will match the CWCB advance for <br />$425,000. Both notes will have forty-year terms which <br />will mature in the year 2024. The interest rate of the <br />private bond is anticipated at 12%, The CWCB advance will <br />be financed at 5%. This will result in yearly repayments <br />to ONCB of $24,768, and repayment on the private bond of <br />$51,554, or a total of $76,322, <br /> <br />Operating costs for the Hyannis Peak Reservoir are <br />estimates for minor maintenance and yearly inspections <br />by an engineer. The first year's operating cost is placed <br />at $10,000. This would allow for some repairs, road work, <br />reseeding, and any other work not completed during con- <br />struction. The second year's operation costs would decrease <br />by $5,000. These costs would be related to dam inspection. <br />All following years operating costs increase at 5%. It is <br />anticipated that in some years repairs will be needed while <br />in others only an inspection will be needed. Thus, the <br />average operating cost of $5,000 per year escalated at 5% <br />is used on the repayment schedule, Table IX, <br /> <br />, No emergency operating fund was included in the payout <br />schedule because the structure will have only one user and <br />it will be the obligation of the Meyring and Arapahoe Live- <br />stock Companies to repair any unusual damage. Prudent <br />business sense would dictate the user making arrangements <br />for future major repairs. However, with the companies <br />bearing all costs and receiving all benefits, it will be <br />their responsibility alone. <br /> <br />c' <br /> <br />Revenue from the reservoir will be from increased hay <br />production. This increased production will allow for direct <br />sales of baled hay in addition to increased herd size. <br />During the first year of operation, 1985, there is an anti- <br />cipated net loss of $44,370 on revenues of $41,952, all from <br />direct hay sales. During years 2 through 5, herd size will <br />increase due to the additional hay production which is to <br />be used as feed on the ranch. This rate is estimated to be <br />20% per year. In an attempt to give flexibility to hay and <br />cattle markets, Table IX shows revenues based on sales of <br />25% of the increased hay production in year 6 and the <br />remaining 75% used to support the increased herd size. <br /> <br />, , <br />,,' <br /> <br />-43- <br />