C150172 Feasibility Study - Laserfiche WebLink

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I I I I I I I I I I I I I I I I I I I Land Acquisition Union has notified all owners whose land has been identified as a potential recharge location. Currently, Union holds a draft agreement with Ms. Nancy Mercure to enter into an Easement Agreement that provides for the specific terms of use for recharge on the Mercure #1 and Mercure #2 sites. This agreement is found in Appendix C. Financial Analysis The Union Ditch Company is applying for a loan from the CWCB for a maximum amount of $309,500, which would accommodate financing for 90% of the project. Based on both the low and high side probable cost estimates, Union would be expected to cover 10% of the total direct expense of the project, which would be between $26,100 and $34,2252. The Union Ditch Company will cover any costs that exceed the estimated project cost. Union is requesting a 30-year loan from the CWCB. The standard agricultural lending rate would be 2.5%, resulting in annual payments of approximately $14,8003. Table 3 is a typical year future year budget for the Union Ditch, including the annual loan repayment. In order to cover the cost associated with the annual loan repayment, Union does not plan to significantly increase shareholder assessments unless necessary; rather Union proposes to charge an annual well surcharge to the 40 wells that are a part of the augmentation plan. Table 3 assumes that annual assessments will either stay constant at $225 or will increase marginally $265 on the high side. Annual well surcharges are estimated to be between $450 and $500 per well for the 40 wells in the plan. This estimate for well surcharge is acceptable. Collateral As security for the CWCB loan, the Union Ditch Company can pledge future annual assessment income and the Union Ditch diversion head gate structure on the South Platte River. Economic Analysis 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 through 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), Union Ditch Company would have to purchase just over 3 shares of the Union Ditch for a total investment of $343,000. In addition to the cost of purchasing these shares, the Company would also have to file for a change of use of these shares to augmentation purposes, which includes attorney and engineering fees. The market value for Union shares is not unlike the price for most other water that is available for purchase in the South Platte River basin. Therefore, the cost of developing the recharge project is likely less per unit of water developed when compared to the cost of acquiring new water sources. 2 The Union Ditch has already contributed $23,000 towards work on their augmentation plan application, which may contribute to the 10% participation requirement. 3 Annual loan obligation will include a 10% loan reserve per annual payment for the first 10 years, for a total annual payment of $16,265. Union Ditch Company Recharge Project Feasibility Study March 2004 Page 12