C150296 Feasibility Study - Laserfiche WebLink

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Gypsum Loan Feasibility Outline CWCB Water Project Loan Program Page 4 of 33 Executive Summarv The Town of Gypsum, a Colorado Home Rule Municipality, owns the LEDE Ditch and LEDE Reservoir, which is located in the headwaters of Gypsum Creek, south of Gypsum. The original ditch and reservoir water rights are decreed absolute for irrigation uses up to 947 acre feet of storage. The existing LEDE Reservoir capacity is 431 acre feet. Gypsum seeks to increase capacity to accommodate continued agricultural irrigation, and for future water supplies to Gypsum Creek and the Town. Further, the ditch and reservoir require upgrades for aging facilities and to ensure compliance with state dam safety regulations, which were updated in 2007. Irrigation in the Gypsum valley often depletes Gypsum Creek entirely, so that reservoir releases have become increasingly important for operating other water rights owned by Gypsum, and for irrigation use. The reservoir storage is expected to become more important as Gypsum's population expands over time. This study looks at available water supply in the Gypsum Creek headwaters, estimating approximately 1,160 acre feet will be available annually for storage in an average precipitation year. Demands for irrigation and increased population were also earamined, with a conclusion that expanding capacity in the ditch and reservoir is desired. Further, because the Town made a significant investment in the water rights for the ditch and reservoir, Gypsum seeks to preserve the full value of those water rights by ensuring maximum beneficial use. Four alterna.tives were assessed, including a no action alternative. However, given the reservoir maintenance required even in a no action alternative, the additional capacity determination from Alternative #3 was recommended from an engineering perspective. It may be that Gypsum will further assess Alternative #4, but mare engineering work will be required to do so. Costs for Alternative #3 are estimated at $3,162,000 for the entire project. Gypsum expects to contribute $500,000 (16%) from its existing enterprise reserve funds. Therefore, the expected loan request is for $2,662,000 in this analysis (84%). Gypsum seeks a 2.5% interest rate for the loan because the absolute water rights decreed to the LEDE Ditch and Reservoir are limited to irrigation uses. However, the feasibility study also examines a 4% rate. Based on the financial analysis, using very conservative water right dedication and tap fee revenue estimates, the Town's current water enterprise budget will easily cover the loan repayment costs. Therefore, a loan application has been submitted. The Town may further assess Alternative #4, but this feasibility study takes a more conservative overview with Alternative #3 as the basis for the loan request.