C153808 Approval Letter 2

• Contract/PO #: C153808
• Contractor Name: Arkansas Groundwater Users Association
• Contract Type: Loan
• Water District: 14
• County: Pueblo
• Bill Number: ARA
• Loan Projects - Doc Type: Approval Letter

Financial Analvsis
Rocky Mountain Consultants has submitted a detailed 40-year projection of revenues and
expenditures for AGUA over the assumed period of CWCB debt retirement. AGUA is
requesting a 40-year loan at a 3.0 percent lending rate. Table 3 gives AGUA's current fee
structure and the projected fee structure after a $650,00 loan. The augmentation cost per
acre-foot of water pumped, using 19,452 acre-feet, amounts to about $10 per year in
current dollars.

Table 3. AGUA Fee Schedule

Item Current Future
Total Fee per Well, Active Wells ($/welllvear) $205.00 $225.00
Total Fee per Well, Inactive Wells ($/well/year) $50.00 $60.00
Water Fee ($/acre-footlyear) $9.44 $10.68

Discussion
The Excelsior Ditch is not a senior water right but does have a good record of diversions.
The Ditch has diverted water in all but one year (1977) since 1909 FROM 1908 TO
1985. The 1,007 shares proposed for purchase should provide a reliable average yield of
about 750 acre-feet.

Staff has reviewed AGUA's financial statement for 1996 and detailed budget projections
for 1997 and 1998. All of these items (along with the 40-year projection described
above) indicate that revenues are or will be sufficient to provide for operating expenses
and debt service on the loan. The increase in well fees and water charges in Table 3
appear reasonable and appropriate to cover expenses plus debt service.

As collateral for the loan, AGUA will pledge the 1,007 shares in the Excelsior Ditch and
revenues from membership fees. Staff has requested that AGUA submit an appraisal of
the Excelsior water rights prior to entering into a loan contract.

AGUA's articles of incorporation give the Association the powers to establish and collect
charges for all costs incurred in doing business and providing augmentation water. In
addition, the application and membership agreement signed by each member includes a
commitment to abide by the Rules and Regulations of the State Engineer's Office for
groundwater use in the Arkansas Basin as well as an agreement to cease pumping in the
event of failure to pay membership fees.

Staff finds the AGUA proposal to be economically, financially and technically feasible. In
addition, the proposal and the Association appear to meet all of the requirements for the
Arkansas River Augmentation Loan Account as set forth in c.R.S. 37-60-130(3) provided
that the collateral is adequate based upon the results of the appraisal.

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