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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 />· If the mutual irrigation company forms a new subsidiary entity to manage the <br />secondary supply system, the CWCB wouldn't have a concern as long as the <br />loan is made to the mutual irrigation company. <br /> <br />· If the loan application were to come from a new entity directly, then the CWCB <br />will likely be concerned with: 1) the lack of a financial record from a new entity <br />and 2) the source of loan collateral. It is possible that water shares, either owned <br />by the parent company and/or a new entity may be used as a source of <br />collateral. In the case of a secondary supply project, the CWCB is not likely to <br />take the project itself as collateral. <br /> <br />· Service contracts with the town, city, or the development (improvement district) <br />for the provision of secondary supply would be important to CWCB. <br /> <br />· The CWCB would likely be concerned if loan repayment were heavily based on <br />continued urban growth in the area. Projects under consideration are anticipated <br />to be phased in such a way as to build infrastructure delivery elements that are <br />correlated with the immediate needs of the development. The costs associated <br />with future growth and development could be limited to the over sizing of key <br />components such as intakes, wet wells, and pump buildings. Even the pumps <br />themselves could be delayed until future phases warranted the expense. <br /> <br />· All loan applications are due the 1st of the month prior to the CWCB board <br />meetings. <br /> <br />· CWCB would like the loan to be associated with a specific service area within the <br />project. This is likely related to phasing, in the sense that each phase would <br />identify specific development projects that are to occur. The CWCB would like to <br />be aware of the full cost of the project at build-out, even though loan applications <br />would be approved on a phase-by-phase basis. <br /> <br />System Development and Construction Financintl Approach <br /> <br />This section explores another possible funding approach for a secondary supply system. <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 water user. It is possible for a <br />ditch company to also use this same philosophy for their secondary supply system. This <br />approach would be appropriate for a ditch company that does not desire to provide up- <br />front financing for the development and construction of the secondary supply system. <br />Rather, the developments that want the secondary supply service will pay for these initial <br />costs. <br /> <br />Under this approach, the development would pay for the preliminary and final design of <br />the secondary supply system. Upon completion of the final design process, the ditch <br />company would bid the construction project to local contractors. The development would <br />pay the company for all costs associated with the construction of the complete <br />secondary supply system from the point of storage through the service point-of- <br />connection to the development. The ditch company would also provide design and <br />construction standards for these developments. <br /> <br />Aqua Engineering, Inc. <br />November 17, 2004 <br /> <br />Canal Modernization Study <br />-12 - <br />