C150040 Feasibility Study

• Contract/PO #: C150040
• Contractor Name: Otero Ditch Company
• Contract Type: Loan
• Water District: 17
• County: Otero
• Bill Number: EIA
• Loan Projects - Doc Type: Feasibility Study

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increase from $16 per share, up to $18 per share with an Emergency Loan of
$155,000. This represents an annual assessment increase of $2, or $0.48 per acre-
foot, based on average annual diversions 20,687 acre-feet. This increase will stay in
effect throughout the duration of the loan and will bring in the extra revenue needed to
cover the CWCB payment. Below is a summary of the financial aspects of the project:

Table 3. Financial Summary

Project Construction Cost $616,409
Loan Amount (75% of Project Cost) $155,000
CWCB Loan Payment Amount, including 10% loan reserve $9,860
Number of Shareholders 66
Number of Shares of Stock 4975
Current Assessment per Share $16
Future Assessment per Share $18
Annual Project Cost per acre-foot $0.48
(Average annual diversions: 20,687 acre-feet)

Since all other funding for the project is in the form of grants, the Company would have
no other debt service on this project. Operation and maintenance costs are expected to
decrease with the new diversion structure, and can be accommodated by the
Company's existing budget.

Credit worthiness: The ODC has no existing debt. Table 4 shows the Financial Ratios
for the ODC and, with the exception of cash reserves, indicates average to strong
ability to repay with the project in place.

Table 4. Financial Ratios

Financial Ratio Without the project With the project
Operating Ratio (revenue/expense) 108% (average) 121% (average)
Debit Service Coverage Ratio No debt (strong) 164% (strong)
(revenues-expenses)/debt service
Cash Reserves to Current Expense 13% (weak) 26% (weak)
Annual Cost per Acre-Foot $ 3.84 (strong) $4.33 (strong)

Alternative financing considerations: The Company actively sought alternative
financing. They were able to obtain a grant to cover project planning and design
through the NRCS ($41,600 estimated value), and a grant for 75% of the construction
costs through the Federal Emergency Watershed Protection Program. The ODC also
requested a loan from their bank (The First National Bank), and were approved for an
amount up to $180,000 at an interest rate of 10.08%. The bank loan payment on

Otero Ditch Company
Diversion Structure Feasibility Study
February 2000

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