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Town of Dillon May 12, 2009 (UPDATED May 23, 2009) Page 2 of 6 Background Agenda Item 17b The Town has always recognized the value of its water rights associated with the Old Dillon Reservoir (Reservoir) and the Dillon Ditch. The Town felt that the Reservoir would serve as an alternate source of supply for the Town and be of benefit to other governmental entities in Summit County. The Town entered into Inter-governmental Agreements (IGA) with Summit County and the Town of Silverthorne (Participants) to make the enlargement economically feasible. Through the various studies done since 1995, the option of enlarging proved to be the most economical altemative. In 2004, the Participants solicited the assistance of the Colorado River Water Conservation District (River District) with permitting and design. The 46 AF Reservoir will be enlarged by 240 AF for a total of 286 AF. The enlarged Reservoir will provide the Town additional storage capacity and a back-up water supply. The Town's current water supply from Straight Creek is susceptible to contamination from several sources, including potential wildfire due to massive pine beetle kill and potential contamination from hazardous material spills on I-70 in the watershed. Original construction of the Reservoir and the Dillon Ditch was completed in 1939 to provide domestic water supply to the Town. The 46 AF Reservoir is filled by the Dillon Ditch, which diverts from Salt Lick Gulch (Gulch). The Reservoir sits in a saddle with a north and south dam each about 7 feet high. On July 17, 2008, the SEO issued an order to the Town to drain the reservoir due to concerns over safety of the north dam. The reservoir will remain empty until the proposed enlargement is approved. If approval of the enlargement is not obtained, the Town will begin design and permitting to repair the existing dam to its pre-restricted capacity. Loan Feasibility Study The Loan Feasibility Study, titled "Feasibility Study for Old Dillon Reservoir Enlargement Project", dated March 2009, was prepared by Town of Dillon staff Eric Holgerson, Public Works Director and Carri McDonnell, Finance Director. The submittal included several past studies and recent engineering reports related to the cunent permitting efforts. The study included audited financial statements for years 2005 through 2007. The application was signed by C. Devin Granbery, Town Manager. The study was prepared in accordance with the CWCB guidelines. The Town of Dillon The Town of Dillon, Colorado was incorporated on January 26, 1883. The Town relocated in 1956 when the Denver Water Board began the process of building Dillon Dam. The Town is located 70 miles west of Denver in Summit County along I-70 with a population just over 800. Eighty percent of the housing units are second homes, which increases the population to approximately 5,000 in the peak seasons. The service area is primarily within the Town boundaries and is a mix of residential, multi-family residential and commercial uses. The Town is cunently limited in growth by the capacity in the sewer treatment plant of 2,100 EQRs. (EQR = Equivalent Residential unit)