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OWl Creek Supply and irrigation Co. Agenda Item 10d. January 14. 2000. (Updated February 4. 2000) Water RiQhts The Company owns no water rights. The Company operates the Owl Creek Ditch as a carrier ditch to deliver water owned by its stockholders, and stockholders of the West Cut Ditch. In 1998, a total of 30,000 acre-feet was transported. 20,000 acre-feet was delivered to OCSIC shareholders, or about 2 acre-feet per acre based on the 10,000 acres currently irrigated. Proiect Description Four alternatives were analyzed in the feasibility study: 1. The no-action alternative. 2. Continue a levei of rninimum maintenance. 3. Rehabilitate the hydraulic structures ($500,000). Alternative 3 was selected, since it is considered to be a reliable, long-term approach. The no- action and the minimum maintenance alternatives were considered unacceptable since both would eventually result in partial or total failure of the hydraulic structures and inability of the OCSIC to deliver water. Selected Alternative 3 involves reconstruction or replacement of 14 major structures, 55 flumes, 10 meter gates, and 30 headgates. All major structures will be engineered and constructed with 8-inch and 12-inch thick reinforced concrete floors and walls, and protected with hand placed riprap. The implementation schedule calls for completion of financing arrangements in 1999/2000, with formal approval and resolution by the OCSIC shareholders in early 2000. The project will be constructed in two phases with the Control Structures constructed in the fall of 2000 and the flow measuring structures in the fall of 2001. Engineering design for the first phase will be completed in June 2000 with the engineering completed for the second phase in June 2001. Financial Analvsis The total estimated cost of the project is $500,000. Staff is recommending a loan of $450,000 (90 percent of the estimate cost.) ewes policy allows for 90% loans to agricultural and municipal low income borrowers (policy set at the November 24-25, 1997 CWCS meeting.) Agriculture has not been a participant in the recent economic boom. The OCSIC has increased their assessments for 1999 through 2001 by $20 per share to raise their 10% share of the project. Alternative financing sources: The Company sought alternative financing for the project. The only source, other than the CWCS, was commercial banks. The terms offered were an adjustable rate loan at prime, with a 20-year term. Prime rate is currently 8.5% and rising. Table 1 shows the added cost of bank financing at prime rates ranging up to 12%, and indicates that bank financing would generally double the annual cost of the project. Adjustable bank financing has the potential of increasing annual costs to the point that the Company runs into financial trouble, and must return to the CWCS for fixed rate financing. 2