PROJ00543 App Letter

• Contract/PO #: C153725
• Contractor Name: Windsor Reservoir and Canal Company
• Contract Type: Loan
• Water District: 3
• County: Larimer
• Bill Number: HB 95-1155
• Loan Projects - Doc Type: Approval Letter

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for the Company by Smith Geotechnical of Fort Collins. The program would be implemented over a
period of 15 years and is estimated to cost $3,438,000. The Company is intending to request a series
of Construction Fund loans for approximately an additional $2,0 million (in addition to the existing
$500,000 authorization) to be funded at three- to four-year intervals over the next 10 to 15 years.

The entire rehabilitation program from the Smith report is shown in Table I with estimated costs in
1995 dollars, The WRCC is requesting funding at the present time for the first two projects listed;
lining and installation of conduits in two sections of the Poudre Valley Canal in 1996 and 1997, and
replacement of the outlet pipeline from Cobb Lake in 1999 and 2000, The canal project is needed to
prevent leakage from the canal and the pipeline project would replace an existing pipeline which is in
very poor condition.

TABLE 1, WRCC REHABILITATION PROGRAM
Year Project Estimated Cost
1996 Poudre Valley Canal $938,795
1999 Cobb Lake Pipeline $663,585
2002 Cobb Lake Outlet $663,295
2005 Cobb Lake Inlet $288,275
2008 Res. NO.8 and No. B Annex $646,295
2011 Elder Res, Outlet $238,225
Total $3,438,470

The total estimated cost for the two initial projects is $1,602,380. The Company is therefore
requesting an increase in its existing authorization from $500;000 to $1,202,000 which represents 75
percent of the total costs for these two projects.

As security for the loan, the Company is offering a pledge of revenues and physical assets associated
with the Poudre Valley Canal and Cobb Lake.

ECONOMIC ANALYSIS

The following economic analysis for the entire 15-year rehabilitation program was prepared by the
CWCB staff based on the infonnation in the Smith Geotechnical report:

In the absence of the program, as much as 10,500 acre-feet of the average annual yield
of the WRCC system could be lost. Using an estimated annual value of $45 per acre-foot,
the annual loss would amount to approximately $473,000, Preventing this loss is the main
benefit of the rehabilitation program.

The annualized capital cost for the program amounts to about $205,000 per year including
CWCB financing and the Company's 25 percent contribution, The benefit/cost ratio then is
estimated as $473,000/$205,000 or 231 which is quite favorable.

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