C150172 Approval letter

• Contract/PO #: C150172
• Contractor Name: Union Ditch Company, The
• Contract Type: Loan
• Water District: 2
• County: Weld
• Loan Projects - Doc Type: Approval Letter

Union Ditch Company
March 16-17,2004

Agenda Item 25f

The Total Project cost is as follows:

TOTAL

$ 81,000
111,000
111,000
23,000
18.000
$ 344,000

1. Mecure #1 Site - Construction
2. R. Alles Site - Construction
3. J. Alles Site - Construction
4. Construction Contingency (7.5%)
5. Engineering Fees

The engineering cost of $18,000 is broken down into: 1) Feasibility Study $4000; 2) Recharge
Potential Study $9000; and 3) Project Design $5000.

Union plans to begin and complete the construction on the Mecure #1 Site during the Spring of
2004. In order to allow time for monitoring and evaluation, Union does not expect to begin
construction of addition recharge sites until the fall of 2004 and spring of 2005. Union has notified
all owners whose land has been identified as a potential recharge location, and Union holds a draft
agreement with Ms. Nancy Mercure to enter into an Easement Agreement on the Mecure #1 Site.

financial Analvsis

The total estimated cost of the project is $344,000, and UDC water is used exclusively for
agricultural purposes. Staff is recommending a maximum loan amount of $ 309,500 (90% of the
estimated project cost) for 30 years at an interest rate of 2.50%. UDC will fund its $34,500 share of
the project through cash reserves and an increase in its assessments. The Union Ditch Company
will cover any costs that exceed the estimated project cost.

Table 1 is a summary of the financial aspects of the project. A CWCB Construction Fund Loan of
$309,500 would have an annual payment of $16,266 (including the 10% reserve requirement) at the
loan terms of 2.50% for 30 years. The CWCB loan will be repaid from increases in the base
assessment rate from $225 to $265 per share, plus a well surcharge of $500 per individual well
augmented. The annual loan cost for the project will be $ 78.96 acre-foot of consumptive use,
based on 206 acre-feet of historical average well depletions for wells in the augmentation plan.

Table 1. financial Summary

$344,000
57
250
$309,500
$16,266
$225
$265
$500
$78.96
$407

Economics: The economic benefit of the project is considerable. It is estimated that one share of
the Union Ditch has a market value of approximately $110,000, which is expected to yield a total of
66.1 acre-feet consumptive use credit based on a historical analysis (1950-2002). In order to
replace historical average well depletions for wells in the augmentation plan (206 acre-feet per year
based on 1975 through 2002), UDC would have to purchase just over 3 shares of the Union Ditch

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