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Bankers say irrigation decline is manageable in many cases but shortens loan horizons and affects land value
Summary
A regional ag banker told the task force lenders incorporate well capacity and remaining economic life into appraisals and loan terms; when irrigation becomes uneconomic banks and borrowers typically plan shorter amortizations, rely on dry-land valuations, or otherwise restructure debt.
Jay Meyer, president of Centerra Bank (based in Sublette, KS), told the task force that banks underwrite farm loans with an eye to irrigation capacity and the likely remaining economic life of wells.
Meyer said lenders generally rely on professional appraisals that verify water-right records and describe well yield (gallons-per-minute) and expected useful life. When…
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