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Agenda Item 9.a. September 27-28,1999 (Memo Updated October 8, 1999) DeWeese-Dye Ditch and Reservoir Co. Page 2 During demolition of the upper portion of the dam, and preparation for the new structure's foundation, it was discovered that a greater portion of the old dam needed to be replaced. In addition, a hole was found in the valve for the 36" outlet, and replacement is necessary. These problems resulted in additional engineering re-design costs, additional time-delay costs to the contractor, additional construction materials (concrete, reinforcing steel, and a new valve), and additional construction inspection costs. These costs added approximately $85,000 to the total project cost. The project is currently under construction with a November 15, 1999 completion date to assure all concrete placement before cold weather sets in. DDRC has requested an increase to their loan in the amount of $256,261 for a total loan amount of $990,261, or 90% of the new total project cost of $1,100,290. The Company's letter of request is attached. DISCUSSION This project development is considered a change in standard construction costs. It is also considered a change in field conditions and requires a change in the design plans and a "Change Order" to the original construction contract. The amount of the change is an estimate based on actual field observation of conditions. The extra costs are for design, construction, and construction engineering. Paragraph (2) of Section 1 of SB 97-008 allows that loans made by the Colorado Water Conservation Board may be increased or decreased as may be justified by "reasons of changes in the plans for a project if those changes are required by final engineering drawings and specifications". Final engineering of this project has required work that increases the total cost of the project and therefore justifies the DDRC's request for an increase in the loan amount. It will not be necessary therefore to go to the Legislature to authorize expenditures of additional funds for this project. The total amount requested from the CWCB would be $990,261 or up to 90% of the actual project costs, whichever is less. The DDRC would pay for the remaining costs with cash from the increased assessments collected for this project or with cash from other sources. The project feasibility study has been revised and approved by staff showing that assessments would need to be set at $15.50 per share per year to cover normal operating expenses and loan obligations (including an annual payment of $57,266 on the new $990,261 loan amount.). The current 1999 assessments are set at $12.00 per share; therefore, an increase in assessments of$3.50 per share would ordinarily be needed due to this increased loan request. However, staff recommends no assessment increase at this time because the DDRC will be obtaining additional funding from other sources, as described below.