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C150081 Approval Letter
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C150081 Approval Letter
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Last modified
1/31/2014 4:24:37 PM
Creation date
10/6/2006 12:19:25 AM
Metadata
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Template:
Loan Projects
Contract/PO #
C150081
Contractor Name
Victor, City of
Contract Type
Loan
Water District
12
County
Teller
Bill Number
HB 95-1155
Loan Projects - Doc Type
Approval Letter
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<br />'. <br /> <br />. <br /> <br />year repayment at 3,75 % and the CWCB loan numbers in the projection are based on <br />that. <br /> <br />I also calculated the financial indicators, per Board Lending Policy No.4, for the years <br />1998 to 2000 and for a future year when CWCB debt repayment begins as shown in <br />Table 2. The numbers for 1998 to 2000 are from the City's financial statements and <br />conversations with the City's accounting firm. The "Future" column indicators are based <br />on the projection in Table 1. <br /> <br />The financial indicators are in the average to strong categories for each year in the table <br />with the exception of the cash reserves to current expense ratio, which is very weak for <br />1998 to 2000. I did not estimate cash reserves to current expense for future years since <br />it's difficult to predict what cash reserves may be after completion of the project. <br /> <br />Conclusion <br /> <br />Based on my review of the feasibility submittals and the information in the attached <br />tables, I believe that the project is feasible and that the City has the ability to repay the <br />loan. There are, however, a couple of important considerations regarding loan repayment. <br /> <br />The City needs to increase cash reserves in the Water and Sewer Fund. A cash reserves to <br />current expense ratio in the neighborhood of 20 percent is not acceptable, especially <br />when construction of the dam project will be taking place soon and the City will be <br />incurring additional debt with the CWCB. <br /> <br />It's also important to note that about 50 percent of Water & Sewer Fund revenues come <br />from the Cripple Creek and Victor Gold Mining Company. The City recently entered into <br />a 24-year contract with the CC&VGC for the sale of water to the company and for <br />payment by the company to the City for operation of a City-owned pump station. <br /> <br />The ability ofthe Water & Sewer Fund to repay the CWCB loan is dependent upon a <br />continuing revenue stream from the CC& VGc. Without those revenues, a rate increase <br />for other water users may be necessary. <br /> <br />2 <br />
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