02000000008 Feasibility Study

• Contract/PO #: 02000000008
• Contractor Name: Lake Canal Reservoir Company
• Contract Type: Grant
• Water District: 0
• County: Larimer
• Loan Projects - Doc Type: Feasibility Study

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The analysis in Table 8 Column (8), includes payment of $2,690 to a Project Reserve Fund over
a ten year period to provide for one yearly payment in reserve. This payment will be placed in
a"certificate of deposit" and we have assumed a rate of return of 7% interest on the certificate
of deposit which is included in column (9) as income.
The yeazly payment to the CWCB, starting in 2004, is shown in Column (7) and the 10% payment
required of the Company during the first two years of the project are included in Column (6). The
total income and expenses are indicated in Columns (9) and (10) with the net income for each year
shown in Column (11). The cash balance is the sum of Column (10) and the cash balance from
the previous year. The assessment levels were set to maintain A CASH BALANCE of
approximately $13,000 due to past financial statements indicating this as their normal mode of
operation.
Table 8 is presented in current dollars as no inflation is included. Interest is included on the
certificate-of- deposit at a 7% rate and interest is included on the cash balance at a 2.5% rate.
Both rates are those currently being paid by banks in the area.
As indicated in Table 8, the assessments will have to be increased significantly over the current
$130 per share and will remain at nearly that level throughout the loan period. An assessment
level ranging from $175 to $245 per share will be required throughout the length of the loan
period. As can be seen from the table, the total assessments paid per share of stock from the year
2004 to 2033 will be $6,585 which is equal to an average of $194 per share of stock.
CREDIT WORTHINESS
The Company currently has only one outstanding loan which is to the Colorado Water
Conservation Board for the repayment of a loan to rehabilitate North and South Gray Lakes. This
loan has a balance of approximately $95,188 with a maturity date of July 2018 and a yearly
payment of $ 6,920.
The Company does have a relationship with and has conducted business with Centennial Bank of
Eaton, Colorado. However, they have not borrowed large sums of money in the past from the
bank.
ALTERNATIVE FINANCING CONSIDERATIONS
The Company has not investigated alternative financing at this time.
OPINION OF FEASIBILITY
There do not appear to be significant roadblocks which would keep the Lake Canal Reservoir
, Company from successfully completing this project. The project does significantly raise the
assessment level assessments from $130 per share to a high of $245 per share of stock. This
1 Gray Lake-Feasibiliry Study
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