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. . . . . Agenda Item 11 a November 18, 1996 Page Three The District would like to retire the USBR loan in order to be able to deal with only one federal agency rather than two (the USBR and the Federal Energy Regulatory Commission) which sometimes have conflicting requirements. Paying off the loan would also eliminate concerns as to whether some irrigators in the District may be irrigating surplus lands, as defined by the Bureau, in which case the District may be subject to an increased lending rate. Finally, the lending rate for a Construction Fund loan is likely to be significantly lower than the rate the District is now paying. DISCUSSION Staff has calculated a possible lending rate for a refinancing loan to the District based on the current allocation of water in the reservoir and on the recommended rate structure for 1997 (please see Agenda Item NO.5. for the recommended rate structure). The results of that analysis are shown in Table 2 and indicate a rate of 4.75 percent when rounded to the nearest one-quarter of one percent. TABLE 2. Calculated Lending Rate for Stagecoach Refinancing Water Capacity Percent Recommended Weighted Lending Use Acre-Feet Canaeitv Rate '97 Rate Industria! 9.000 30,00% 525% 1.58% MuniciDal 2,000 6,67% 4.75% 0,32% Aaricultural 4,000 13.33% 3.75% 0.50% Recreation 15,000 50.00% 4.75% 2.38% Total (1) 30,000 100,00% N/A 4.77% (1) Reservoir capacity total excludes inactive storage Since the District is applying for a 20-year loan, the weighted lending rate in Table 2 would be reduced by one-quarter of one percent to 4.50 percent. Annual payments then are estimated to be about $154,000 as opposed to $282,289 currently being paid on the USBR loan. This would reduce total debt service and improve the District's debt service coverage ratio. With a refinancing loan of$2.0 million and a balance on the existing loan of about $7.4 million, the Board's total lending for the Stageco'!,ch Project would amount to $9.4 million ' With regard to Amendment One considerations, the District indicated that it has formed an enterprise which could contract for the loan. Staff would review this issue again with the District prior to contracting. As security for the loan the District would offer a pledge of revenues and financial or physical assets equivalent in value to at least one annual payment.