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South Metro Water Supply Authority Agenda Item 14b <br />March 10, 2009 (UPDATED March 18, 2009) <br />Page 5 of 8 <br />Alternative No. Z- The Authority evaluated construction of its own dedicated transmission line. Capital <br />costs for the pipeline alone were estimated to be $122.2 million. The size of the pipe evaluated was a 42- <br />inch line with a capacity of 31.8 mgd, which equates to a unit cost of $3.8M/mgd. <br />Selected Alternative No. 3- The Authority evaluated acquiring space in the existing ECCV Northern <br />Supply Pipeline. Individual members of the Authority cunently own 5.73 mdg of firm capacity in the <br />pipeline. The Authority is negotiating acquiring an additiona18.25 mgd firm capacity and 18.00 mgd <br />variable capacity at a cost of $25.7 million. <br />This price was based on escalated constzuction costs (to 2008 dollars) for building the ECCV Northern <br />Supply Pipeline, which were calculated to be $70 million for the 48-inch line that can deliver 47.0 mgd. <br />This equates to $1.5M/mgd for firm capacity. The Authority negotiated a rate of $0.75M/mgd for the <br />variable capacity. Combining the space to be purchased and the previously purchased space, members <br />of the Authority will have a maximum capacity of 31.98 mgd with 13.98 being firm capacity and 18.00 <br />mgd being variable capacity in the pipeline. Additionally, this alternative will not require any <br />permitting and will be easier to implement than the other options. <br />The water in the pipeline will be of potable quality but will have relatively high total dissolved solids <br />(TDS); therefore, the water will be blended to reduce the TDS prior to delivery to end users. Water will <br />be delivered to participating members of the Authority based on available capacity in the pipeline. <br />When there are demands at the time of delivery out of the pipeline, a portion of the water will be <br />delivered directly to potable demand points. Terminal storage will be required to manage the difference <br />between water deliveries and peak demands. Based on the Authority's master plan projections, at full <br />utilization of the ECCV Northern system, it is estimated that 60% of the water will be delivered to <br />members' systems directly and approximately 40% will be delivered to raw water surface storage for <br />later delivery and treatment. <br />The Authority is in the process of negotiating the final terms of the purchase agreement and the <br />operating agreement. General conditions of the operating agreement will specify how ECCV is going to <br />manage the delivery, and what the monthly pro-rata operating costs will be (including a 5% <br />administrative fee). The Authority will bill participating members and make payments to ECCV. It is <br />expected that these negotiations will be complete by Apri12009. <br />The Authority will also enter into participation agreements with all members participating in the Project <br />in order to collect the fees to pay to ECCV. The CWCB will require that this agreement include a step <br />up provision in the event that one of the borrowers is unable to cover its debt service. <br />In the immediate term, the pipeline capacity will be used to convey and exchange existing water rights <br />owned by Authority members. In the future, the pipeline will be used to convey consumable retum flows <br />(members' own or purchased), acquired water rights from agricultural transfers, or new junior storage. <br />Table 3 provides a summary of the pipeline capacity and costs to the four members that will be using <br />CWCB financing. <br />