PROJ02008

• Contract/PO #: FS0073FX
• Contractor Name: Lamar, City of
• Contract Type: Grant
• Water District: 0
• Loan Projects - Doc Type: Feasibility Study

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Figure 2 shows the conceptual phasing sequence for the secondary supply system.

Socio-Economic Considerations in Proiect PhasinQ

There are several considerations to review in assessing the most optimal steps in
initiating the secondary water system for the City of Lamar. The first is ensuring
adequate revenue from the system in order to meet the costs of capital improvements
over time. Since this revenue will come from water rates charged to the properties
receiving the service, it is important to examine the type of property that will be asked to
bear the initial costs of project development.

The second consideration is to ensure affordability to homeowners in developing the
secondary system over time. It would seem inequitable, and probably not very
economical, to require those with below median incomes to shoulder an equal part of the
initial development costs of the system. Although revenue from these properties will be
important to the development of the secondary system for the entire community, it would
appear more reasonable to bring these customers into the system once the main
infrastructure is in place and economies of scale have been achieved.

The third consideration is to plan for water use in a way that matches the timetable for
developing water supplies for the secondary system. Since it is unlikely that all of the
physical plant of the secondary system will be built initially, but rather phased in over
time, it is important that the potential problems of both excess capacity and inadequate
capacity are avoided during the construction of any given phase.

The water rate should be sufficient to assure adequate revenue to cover the costs of this
capital project, with perhaps a modest sinking fund. A water rate structure has been
modeled in another section of the study. It is believed that the most optimal approach to
ensuring adequate revenue is to: 1) include the larger secondary water users in the
initial phasing of the project, and 2) institute secondary service for those most able to
afford the service initially. In order to achieve these two objectives, a phasing of the
project has been recommended.

There are six proposed phases to the project. Part of Phase 1 would begin in a
residential area of high owner-occupancy (suggesting a greater ability to pay for the
service) and large lots (suggesting a more guaranteed initial use of the secondary
system). Such an area has been identified, and is located in the east-central quadrant of
the city, near Willow Creek Park. Phase 1 also includes an area north of the railroad
tracks in the vicinity of Escondido Park.

It is suggested that Phase 6, located in the far north quadrant of the city, between the
Burlington-Northern and Santa Fe Railroad and U.S. Highway 50, would represent an
independent stage of the project. From a socio-economic standpoint, Phase 6 is an area
where owner-occupancy tends to be the lowest and where the residential lots are on
average the smallest; more or less the exact opposite conditions of the area near Willow
Creek Park in Phase 1.

The intermediate phases, Phase 2 through 5, correspond to quadrants of the city that
combine relatively higher water usage with median income levels. The proposed

Aqua Engineering, Inc.
and Colorado State University
May 19, 2004

Secondary Supply Feasibility Study
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