C150332 Approval Letter 3/23/12 - Laserfiche WebLink

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Terrace Irrigation Company Agenda Item 162 March 9, 2012 (Updated March 23, 2012) Page 2 of 6 Background The Company, located in Monte Vista, Colorado, owns and operates Terrace Reservoir. The reservoir was constructed in the early 1900's as a mainstem reservoir along the Alamosa River. The Company utilizes the reservoir for raw water storage of winter flows and peak runoff to supplement flows in the Alamosa River throughout the later part of the irrigation season. In the early 1980's the SEO issued the gage height restriction on the reservoir due to inadequate size and the general condition of the dam's spillway. The restriction reduces the reservoir capacity by approximately 2,000 AF. The combination of loan and grants will fund the replacement of the spillway; thereby, removing the restriction and restoring the Company's right to store at its full capacity of 15,182 AF. This Project is part of the second phase of a two- phased effort known as the Alamosa River Instream Flow Project (ISF Project). The ISF Project is intended to restore flows and replace natural resources damaged by mining operations at the Summitville Mine in the upper Alamosa River watershed. The ISF Project is a community -based effort spearheaded by Alamosa Riverkeeper (ARK) and the Terrace Irrigation Company. Phase I, currently underway, includes purchasing senior irrigation water rights, transferring the water rights to the CWCB, changing the use in water court to ISF use by CWCB, and designing the spillway improvements to Terrace Reservoir. Phase II involves reconstructing the reservoir spillway, storing the acquired water rights, and the release of water rights to offset natural drop -offs in Alamosa River flow rates during the late summer, fall and early winter months. In addition, the Company has three current loans, all with the CWCB. The Company has requested the remaining principal on the loans be consolidated with the Project loan in consideration for its participation in the ISF Project, and particularly, the offering of 2,000 AF of storage rights in Terrace Reservoir be dedicated to instream flow storage. The proposed loan will thereby be structured to include the $1,000,000 associated with this Project, in addition to the outstanding principal balance of $1,724,721 from the three existing CWCB loans. The result would be a single loan for $2,724,721 with a 30 -year term at the agricultural restricted reservoir interest rate of 1.75% per annum. Loan Feasibility Study The Loan feasibility study, titled "Feasibility of Spillway Replacement of Terrace Reservoir," and dated January 2012, was prepared by Rodney Reinhardt, Project Manager for Terrace Irrigation Company. Engineering and technical support was provided by Ed Toms from URS Corp. The study was prepared in accordance with CWCB guidelines and includes preliminary engineering and an engineer's estimate of probable cost that were used in the determination of total Project cost. Terrace Irrigation Company The Company was formed July 11, 1941. The Company is a nonprofit irrigation corporation with approximately 24 shareholders and 832 shares. The Company supplies its shareholders with water for irrigating 9,300 acres of farmland across Rio Grande and Conejos County. The service area is centrally located in the Rio Grande Basin, Water District 21. The Company owns and operates Terrace Reservoir and two irrigation canals totaling eighteen miles in length. Both canals, the Terrace Main Canal and Alamosa Creek Canal, are concrete -lined ditches with diversion structures located downstream of Terrace Reservoir, along the northern bank