PROJ00283

• Contract/PO #: FS0009X
• Contractor Name: Swink, Town of
• Contract Type: Loan
• Water District: 0
• County: Otero
• Loan Projects - Doc Type: Feasibility Study

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AL At i == 1% R == $16,157.96 use $16,160/yr.
At i == 2% R == $18,619.01 use $18,620/yr.
At i~"= 3% R== $21,275.05 use $21, 275/yr.
At i == 4%,R == $24,115.15 use $24,120/yr.
At i == 5% R == $27,126.43 use $27,130/yr.

If Federal grants in~excess of 50% of the total project cost can be obtained,
then the amount of loan would be reduced. This would result in a decrease in
the amount of principal and interest payable on the loan and a~reduttmon in the
water rate schedule required to finance the system. Additional cash flow schedules
can be prepared when actual grant amounts are formalized and the State loan
interest rate is firmly established.

Cash shortages on this type of project will normally occur during the first
three to five year period. This is due to the income growth rate not being ade-
quate to overcome the high initial loan payments and reserve funds. It will
be noted on the cash flow schedule that the surplus carried forward each year
exceeds 15% of the projected income for the year.

9.2 RECOMMENDATIONS ON FUNDING

A number of different Federal programs exist for providing grant assistance
to communities for public works projects. However, it is believed that current
eligibility requirements by the different agencies would eliminate the ToWn of
Swink from receivigg Federal grant assistance under most of the existing pro-
grams. Three possible exceptions would be through the Farmers Home Administra-
tion, the Four Corners Regional Commission, and the Economic Development
Administration. Eligibility for grant assistance under Farmers Home Admini-
stration guidelines is normally considered only when the debt service portion of
the average annual residential user cost exceeds one percent of the median
income for the area served. The amount of grant is calculated by the Farmers
Home Administration to limit the users cost for,'debtsservice:. to-'one:JpercentJof
the median income and then the balance of the project may be funded on an
insured loan basis.

Four Corners Regional Commission can provide supplemental grants once the basic
Federal aid grant is made. These grants are administered through the basic
grant agency and are generally limited to a maximum of $100,000 per project.
When the basic grant agency has expended its program monies for a given year
but is willing to certify that a specific project could be approved if funds
were available, the Four Corners Regional Commission may provide all or any por-
tion of the Federal contribution to the project.

During the last legislature, Senate Bill 320l-Public Works & Employment Act .
of 1916 was passed into law over the President's veto. To date the appropriations
bill funding the Act has not been passed. The Act, when funded, will be administered
by the Economic Development Administration. Eligibility and priority of projects
will be based on the percentage of unemployment in the area as determined by the
Dept. of Labor. If unemployment in the countYJ for the past 3 consecutive months
exceeds 6~% of the work force, there is a good chance that a portion of the project
can be funded with 100% Grant Financing. If unemployment in the county is less
than 6~% of the work force there is still some possibility of financing under the
program

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