Arkansas - LAVWCD - Super Ditch Company_SOW

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Deliverable: Assessment of alternative pay-out methods and evaluation of their tax implications with respect to various lease structures. This subtask will assist the engineering effort in determining the optimal location and size of infrastructure desired to increase Program yield and marketability. Storage and pipelines in critical locations can increase reliable yield to the lease pool, and allow the ditch companies greater flexibility and control of their collective systems with respect to marketing their leases. As demonstrated in the previous phase of this study, the marginal benefits of storage capacity excesd the marginal cost for up to 27,000 additional acre-feet of additional capacity. Although conducted for illustration only, this demonstration showed the value of incremental analysis in determining the location and capacity of additional storage. In addition to storage, economic analysis can assist the engineering analysis in determining the location and size of potential delivery pipelines, considering pipeline construction and O&M costs, and potential water quality impacts to receiving entities. These economic trade-offs will be initially addressed with incremental analysis, although optimization will be used if the number of potential options are too numerous to evaluate individually. Deliverable: Economic optimization of additional storage facilities and pipeline ,configurations. The long-term success of the rotational fallowing program will depend on its financial viability, including the ability to manage a range of legal and fiinanciaf obligations while maintaining a positive cash flow. This task involves the development of a Financial Plan to manage these obligations while maintaining a positive cash flow, plus equitably distributing water lease revenues to their intended recipients. Over a 40-year period, the Financial Plan model would examine: • Future revenue generation and revenue allocation across participating ditch companies • Potential operating, maintenance, and administrative costs of a super agency • Program-related capital improvement projects and debt service, such as for storage and transmission facilities • Financial reserves and debt reserve requirements • Cash flow from year to year • Potential allocation of operation and capital improvement costs across ditch companies • Other variables to be defined It is the intention that the Financial Plan could support future bond feasibility studies, as needed, assuming the Super Ditch Company would have bonding authority. One of the primary benefits of having a comprehensive Financial Plan is its ability to incorporate all relevant assumptions and data underlying Program operations. It has the ability to quickly assess the financial impacts of a range of "what ifs?" with respect to participants, lessees, terms and conditions, capital improvements, and afl other potential options. January 22, 2009 6