PROJC01737 ‎(3)‎

• Contract/PO #: C153768
• Contractor Name: Lower Arkansas Water Management Association
• Contract Type: Loan
• Water District: 67
• County: Bent
• County: Prowers
• Bill Number: SB 96-124
• Loan Projects - Doc Type: Approval Letter

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Lending
Rate
2.00%
3.00%
3.75%

Table 3. Lendine: Rate Comparison
Payments
Years 1-10
$67.200
$67.200
$67,200

Payments
years 11-40
$ 87.650
$112 500
$134,700

It should also be noted that: (1) LAWMA's previous water rights loan was made at a 3,0 percent
rate of return, (2) the requested lending rate is 1.75 percent less than the Board's standard
agricultural rate for 1997, (3) the term of the requested loan is ten years longer than our standard
loan term, (4) the Board would be financing 100 percent of the acquisition costs, and (5) the
annual payments in the first ten years would be reduced at LA WMA' s request which procedure is
not typical of most of our loans.

We are sensitive to the sequence of expensive and frustrating requirements facing water users in
the Arkansas Basin as a result of decisions in Kansas v. Colorado. The Board has made extensive
efforts to be of assistance to Arkansas Basin water users under these circumstances and will
continue to be of assistance to other water user associations as they prepare augmentation
programs and apply for funding of these programs.

We are also concerned, however, that adequate resources be available in the Construction Fund to
provide similar assistance to other Colorado water users in the future. Our experience in the last
few years has been that the list of funding needs continues to grow and the cost of potential
projects continues to increase. The stafffeels very strongly that 3.0 percent is the minimum rate of
return needed to offset, to at least some extent, the long-term impacts of inflation on the principal
of this loan over a period of 40 years.

ECONOMIC AND FINANCIAL FEASffiILITY

Helton & Williamsens' letter report includes a projection of revenues and expenditures for
LAWMA from the present through the end of the period ofCWCB debt retirement in 2038.
Attachment B is our adaptation of the spreadsheet in the report with projections which include a
new 2.0 percent loan and a new 3.0 percent loan. In both scenarios, deficits begin occurring in
2004 but small to moderate rate increases would likely eliminate these.

Assuming total well pumping by LA WMA members of 85,000 acre-feet per year, these costs
would result in a cost per acre-foot pumped in the year 2009 of about $5.25 under the 2.0 percent
loan scenario and $5.54 per acre-foot under the 3.0 percent loan scenario.

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