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<br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br /> <br />System Development and Construction Financinct <br />ARProach <br /> <br />"Development will pay its own way." This philosophy is common among municipalities <br />and special water districts. When land is developed the cost of utilities is typically paid <br />for by the development rather than the municipality or current customers, The Highland <br />Ditch Board of Directors proposes to use this same philosophy for the development of <br />the conceptualized Highland Ditch Secondary Supply system. The company does not <br />intend to provide up-front financing to pay for the development and construction of the <br />secondary supply system. Rather, the developments that want the secondary supply <br />service will pay for these initial costs. This section examines the approach to having <br />developers pay for the construction and implementation of the Highland Ditch Secondary <br />Supply system, <br /> <br />Under this approach, developers will pay for the preliminary and final design of the <br />secondary supply system. Highland Ditch Company will contract with the engineering <br />firm to conduct the design work and will be paid directly by each of the developers. <br /> <br />Upon completion of the final design process, Highland Ditch Company will bid the <br />construction project to local contractors. The construction contract will be between the <br />company and the contractor. The developers will pay the company for all costs <br />associated with the construction of the complete secondary supply system from the point <br />of storage through the service point-of-connection to the development. <br /> <br />Each developer will be responsible for the design, construction, and payment of the <br />secondary supply distribution system within their development. The Highland Ditch <br />Company will provide design and construction standards for these developments. <br /> <br />The developer will pay for Construction Observation services during the construction <br />process, which will be performed by the Highland Ditch Company and their engineers. <br />Record drawings will be produced for the company based on the observations made by <br />the engineers in the field. The costs for record drawing documentation will also be paid <br />by each developer. <br /> <br />All construction work and materials will be required to carry a two year warranty. Upon <br />completion and approval of construction, the Highland Ditch Company will assume the <br />ownership, operation, and maintenance of all secondary supply systems, from the water <br />source through to the point-of-connection at each home. <br /> <br />For secondary supply service, the Highland Ditch Company will charge a fee to each <br />end user, or point-of-connection. The water rate structure will be determined by the <br />company prior to final design of the transmission system, <br /> <br />A legal service agreement will be developed by the Highland Ditch Company for <br />acceptance by each developer in order to bind the two parties to the intended <br />responsibilities. The service agreement will include the means by which developers may <br />be reimbursed for system over-sizing expenses as new developments occur in the <br />system. <br /> <br />Aqua Engineering, Inc. <br />November 8, 2004 <br /> <br />Canal Modernization Feasibility Study <br />- 33- <br /> <br />