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I I I I I I I I I I I I I I I I I I I The PRCC will be the lead agency for the financing, design, and construction of the project and will be the entity entering into contracts and agreements with the various entities for the services provided by each, The PRCC is applying to the Colorado Water Conservation Board (CWCB) for a Construction Fund loan for a portion of the costs ofthe project. The Company will contract directly with the Board for repayment of the loan, Financial Analysis Several entities will be involved in financing the total project cost of $325,550, The PRCC is presently applying for a loan from the CWCB, The actual or estimated amounts by entity are given in Table 3, Table 3. Sources of Funding Entity Grant Loan Percent Participation CWCB $243,700 75% Pine River $55,250 17% Canal Co. NRCS $26,550 8% Totals $81,800 $243,700 $325,550 The PRCC will cover any costs that exceed the estimated project cost. For the CWCB portion of the financing, the PRCC is requesting a 20-year loan for $243,700 from the Construction Fund at a lending rate of3,5%, resulting in annual payments of$17,147, To this would be added $1,715 per year for the first 10 years to fund the emergency reserve account, for a total cost of $18,862, As of 12/28/1998, the Company had $56,282 on hand, A "tunnel fund" has been set up and at present receives $O,50/share annually. This brings the total assessed amount per share by the Pine River Canal Company to $3, I 5/share. Upon approval of the CWCB loan request the "tunnel fund" assessment will be increased by $0.80/share annually bringing the total "tunnel fund" assessment to $ I. 3 O/share annually. This will bring the total share assessment to $3,95/share annually and is, in the opinion of the Company Board of directors, still very reasonable to the shareholders, The assessment for the "tunnel fund" alone will bring in $17,878 annually which, with addition of only $1,000 from general assessments receipts, is sufficient to service the CWCB loan and reserve account. 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 be minimal. This would include periodic inspection of the inlet trash rack and annual inspection of this section of the canal by the Board of Directors of the PRCC. Pine River Canal Company Tunnel Hill Project Feasibility Study January 1999 Page 13 of 15