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<br />e <br /> <br />e <br /> <br />" <br />... <br /> <br />Since it will not have an immediate need for the entire 6,000 acre-feet of storage capacity for a <br />number of years, the City anticipates leasing a portion of the capacity to agricultural water users <br />in the Loveland area. A very preliminary estimate is that 2,000 acre-feet might be leased to <br />agricultural interests over the next ten to twenty years. <br /> <br />e <br /> <br />The Loveland staff will initiate consultant selection this month for the Phase III feasibility study <br />which is expected to be completed this year. The feasibility study will provide a detailed analysis <br />of the selected alternative, a complete financial program for the project and an analysis of <br />institutional issues such as permitting. (An Environmental Analysis will be required for the use of <br />C-BT facilities by the project.) <br /> <br />Over the last ten years, the City has established a significant reserve fund for the project so that it <br />will have to seek only $10.0 million in outside financing. The feasibility study will include an <br />exploration of alternative means of financing in addition to the Construction Fund. (In December <br />1996, the City staff and the CWCB staff met with the staff of the Colorado Water Resources and <br />Power Development Authority to discuss th~ project and potential joint financing arrangements). <br /> <br />The City has submitted an acceptable water conservation plan to the CWCB Office of Water <br />Conservation in accordance with the requirements ofHB 1154. <br /> <br />DISCUSSION <br /> <br />o <br /> <br />While the feasibility study is not yet underway, Loveland has done a substantial, amount of very <br />exemplary planning work for this project. Staff is of the opinion that the concept of the reservoir <br />expansion is sound and is consistent with the Phase I and Phase II study recommendations. <br /> <br />e <br /> <br />The exact reservoir capacity and associated costs should be reviewed again in the Phase III <br />feasibility study to make a final detennination of investment costs over time and of cost <br />effectiveness but at this time the 6,000 acre-foot expansion appears credible. The City's Water <br />Fund financial information in Table 2 indicates that the Fund's current status is quite strong. <br /> <br />With respect to a lending rate, the City is requesting a blended rate for agricultural and municipal <br />projects assuming that approximately one-third of the project water supply will be used for <br />agricultural purposes over the next ten to twenty years. Staff is of the opinion that this <br />assumption should be documented in the feasibility study and that, in the meantime, a standard <br />income municipal rate of4.75 percent be applied to this $2.0 million increment of financing. <br /> <br />Finally, it should be noted that the City hopes to apply for additional increments of Construction <br />Fund financing in 1998 and 1999. As much as $5.0 million to $10.0 million may be requested <br />altogether. The City understands that future funding may depend upon the funds available for <br />lending in those years and the needs of other borrowers. <br /> <br />C-.:.: <br /> <br />4 <br /> <br />e <br />