PROJ02070

• Contract/PO #: C150233
• Contractor Name: Tom Hill
• Contract Type: Loan
• County: Grand
• Loan Projects - Doc Type: Feasibility Study

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Executive Summary

This application and report are for the reconstruction of McElroy Dam. The owners of the
reservoir are Tom and Linda Hill (Hills). This report collectively refers to the owners of the land
and the water rights as the Hills, however, legally the land and water rights are all in the name of
Tom Hill. McElroy Reservoir is on land owned by the State Land Board and they operate and
maintain the reservoir based on a long-term lease (2016). A copy of the lease is in Appendix D.

On June 17, 2006 the outlet works failed and the embankment of the reservoir began piping
through the outlet works. Fortunately, the embankment filled the outlet works and the piping
process stopped. However, the outlet works was unusable and there was no way for the stored
water to be released. The Hills received a verbal breach order from the State Engineer's Office
(SEO). The Hills hired URS Consultants to file a breach application with the SEO, develop
plans and specifications, file an application for a SEO Dam Safety Permit and assist in the
CWCB Loan Application. The Hills also hired Pryor Excavating to breach the dam. On August
24, 2006, Pryor Excavating completed breaching the dam.

The recommended alternative is to replace the dam in-kind. The earthen embankment is 35-feet
high with 2.25: 1 upstream slopes, 18- foot wide crest and 2.3: 1 downstream slopes. The
recommended alternative includes the replacement of the failed 18-inch CMP outlet with a 24-
inch concrete encased steel pipe discharging into a USBR impact basin.

This study has been prepared in conformance with requirements for funding of the Colorado
Water Conservation Board (CWCB) and the dam safety regulations of the Colorado State
Engineer's Office (SEO). This study examines the feasibility of non-structural and structural
alternatives; and demonstrates the technical, financial, environmental, and institutional feasibility
of rehabilitating the existing dam.

The Hills have expended $154,000 in engineering and construction for the breaching of the
reservoir. Total capital expenses for the in-kind reconstruction, including construction and
construction engineering with 10 percent contingency is $700,000. The estimated total for
breaching and reconstruction is $854,000. The Hills are applying for 90 percent of the
construction cost through the CWCB Small Project Loan Program and will finance the remaining
10 percent. The Hills loan request is for the amount of $768,600. The Hills are requesting a 30-
year loan at 2.5 percent interest (agriculture). The 1 percent loan origination fee is $7,690 will
be paid for by the Hills. The annual payment will be $36,722, assuming a 3D-year loan at a rate
of2.5%

The design is presently under review by the SEO. Bidding for construction is expected in March
2007, construction is scheduled to begin in July 2007 with completion by October 2007.

'URS

T:\PROJECTS\22238900_MCELROY _DAMlCWCB LOAN FEASIBILITY REPORT DRAFT.DOC\11-OCT -06\22238900IDEN ES-l