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<br />Delta Canal Company <br />May 20.21. 2002 <br /> <br />Agenda Item 12a. <br />(Updated May 23, 2002) <br /> <br />Water is used for agricultural purposes and the Staff is recommending a Small Project loan in <br />maximum amount of $75K during construction, reducing to about $40,000 once construction is <br />complete. The recommended loan terms are 30 years at 2.75%. <br /> <br />Alternative financing sources: The Company actively sought alternative financing. They <br />were able to get an in-kind grant from the NRCS to cover project planning and design (value <br />about $11,600), as well as an NRCS cost share grant in amount of $92,800 for construction. <br /> <br />Table 2 is a summary of the financial aspects of the project, assuming a $75K CWCS Loan. <br />The annual payment would be $3,704 (including the 10% reserve requirement) at the loan <br />terms of 2.75% for 30 years. This represents $2.30 per acre-foot, based on average annual <br />diversions of 1620 acre-feet. <br /> <br /> <br />Table 2. Financial Summa <br /> <br />$144,200 <br />15 <br />202 <br />$75,000 <br />$3,704 <br />$7.43 <br />$27.60 <br />$2.30 <br /> <br />Credit worthiness: The DCC has no existing debt. Table 3 shows the Financial Ratios for the <br />DCC and indicates, with the exception of cash reserves, average to strong ability to repay a <br />$75K CWCS loan with the project in place. <br /> <br />Table 3, <br />Financial Ratio <br /> <br />Financial Ratios <br />Without <br />the ro 'eet <br />100% <br />(average) <br /> <br />With <br />The ro'ect <br />100% <br />(average) <br /> <br />Operating Ratio (revenue/expense) <br />weak: less than 100% <br />average: 100% - 120% <br />sIron : realer lhan 120% <br />Debit Service Coverage Ratio <br />(revenues-expenses)/debt service <br />weak: less than 100% <br />average: 100% - 125% <br />sIron : reater than 125% <br />Cash Reserves to Current Expense <br />weak: less than 50% <br />average: 50% - 100% <br />stron : reater than 100% <br />Annual Cost per Ac-Ft (1620 ac-ft diverted) <br />weak: greater than $20 <br />average: $10 - $20 <br />stron : less than $10 <br /> <br />No Debt <br />(strong) <br /> <br />110% <br />( average) <br /> <br /> <br />L~ <br /> <br />$ 2.16 <br />(strong) <br /> <br />$3.44 <br />(strong) <br /> <br />As security for the loan the DCC will pledge assessment revenues backed by assessment <br />covenant and the project itself. This security Is in compliance with CWCS Loan Policy #5 <br />(Collateral). <br /> <br /> <br />3 <br />