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While the construction of the Compact Compliance Pipeline is clearly necessary to comply with the Compact, diversions by surface water rights on the North Fork result in approximately 2,500 acre-feet of consumptive use per year charged to the State of Colorado. Leasing these water rights and leaving the water in the river reduces the amount of water that will need to be delivered by the Compact Compliance Pipeline during the term of the lease. This in turn will prolong the life of the aquifer at the location where the wells for the Pipeline project will pump and will contribute to the settlement of a lawsuit that would threaten the ability of some well owners in the District to pay use fees that are the source of revenues that will be pledged to repay the CWCB loan for the Compact Compliance Pipeline. This Loan Feasibility Study addresses the need for and the feasibility of the North Fork Lease to supplement the Compact Compliance Pipeline. 1.2. Project Sponsor -The Republican River Water Conservation District (RRWCD), acting by and through its Water Activity Enterprise (WAE) The Republican River Water Conservation District (RRWCD) was established by Senate Bill 04-235 in 2004 to assist the State of Colorado to comply with the Republican River Compact. A copy of §§ 37-50-101 through 142 is attached. The RRWCD is managed and controlled by a 15-member board of directors comprised of one member appointed by the county commissioners of each of the seven counties wholly or partially within the RRWCD, one member appointed by the boards of the seven ground water management districts within the RRWCD, and one member appointed by the Colorado Ground Water Commission. See § 37-50-104. The RRWCD Board of Directors is authorized to establish a water activity enterprise pursuant to article 45.1 of title 37 of the Colorado Revised Statutes and established the RRWCD Water Activity Enterprise (WAE) in October 2004. The general powers of the board of directors are set forth in section 37-50-107. A copy of the resolution establishing the RRWCD WAE is attached. The RRWCD Board of Directors is authorized to impose a use fee on the diversion of water within the district and recently increased the annual use fee on diversions of ground water for irrigation use by post-compact wells within the District to $14.50 per assessed irrigated acre. There are currently 495,000 assessed irrigated acres in the basin irrigated by post-compact wells. Use fees on the diversion of ground water for irrigation will generate approximately $7 million in revenues annually for the RRWCD WAE. The RRWCD Board of Directors also increased the use fee on post-compact diversions of ground water for municipal and commercial use to $11.60 per acre-foot. Municipal and commercial diversions within the District are small, but use fees on diversions for municipal and commercial use are expected to generate approximately $118,000 in revenues for the RRWCD WAE in 2009 and future years. To date, the RRWCD WAE has used revenues from use fees primarily to provide local cost-sharing for federal programs designed to retire irrigated acreage in the basin, including the Republican River Conservation Reserve Enhancement Program (CREP) 2