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Background The District was organized in 1904 and became a part of the Federal Grand Valley Project in 1922. The District serves 5,040 customers and irrigates approximately 9,200 acres of land known as the Orchard Mesa. District facilities include the Colorado River Siphon, the Power Canal, two pump stations, supply canals and pipelines. The District operates their system by diverting water from the Colorado River into the Government Highline Canal at the Grand Valley Project Diversion Dam (Roller Dam), about 23 miles northeast of Grand Junction. Water is then diverted into the Power Canal (capacity of 800 cfs) from the Government Highline Canal approximately five miles downstream of the Roller Dam. This water passes under the Colorado River in a siphon via the Power Canal to the District's pumping plant. The Stokes Gulch Siphon is located on the Power Canal, between the Colorado River and the pumping plant. The Siphon was originally installed in 1920 as part of the Power Canal construction. Given the poor condition of siphon and its critical link to their operation, the District elected to pursue the replacement of the structure in 2005. The original loan feasibility study for the project was completed by Water Management Consultants and the District in March of 2006, identifying a total construction cost $600,000. The District received bids from two contractors in June 2006 to complete the work, with a low bid of $795,000. These bids were rejected by the District due to the excessive cost of structural concrete. The project was re-bid in August of 2006, at which time Palisade Construction, Palisade, Colorado, submitted the low bid of $553,168. Given complications with the gate operations to the canal and the inability to completely close down the system in the fa112006, the District elected to award the contract to Palisade Construction in 2006, with a start date of September of 2007. With the amended start date and refined bid quantities, the District negotiated a final contract price of $650,000 with Palisade Construction. Palisade Construction has completed the project at a total cost of $745,000. The main items that attributed to the increase in project costs were; increasing the siphon floor thickness from 12 inches to 15 inches, canal repair upstream and downstream of the siphon, and additional embankment material placed around the siphon. Discussion Due to additional work not programmed in the original cost estimate, the overall project cost has increased by $145,000. The District is requesting an increase of $60,000 ($59,400 for project costs and $600 for a 1% origination fee), to its current loan authorization $540,000, to cover a portion of these costs. The remaining $145,000 in project costs will be covered by the District. The total amended loan amount for the Company would be $600,000(594,060 for project costs and $5,940 for a 1% origination fee), at their original rate of 2.5 % for 30-years. The District's new annual payment will be $31,533, which includes the 10% reserve requirement. The Company's current loan of $545,400 has an annual payment of $28,380, which includes the 10% reserve requirement.