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Sanchez Ditch and Reservoir Agenda Item 23c September 18, 2012 (Updated October 4, 2012) Page 4 of 8 Water Supply Reserve Account Grant At the July 2012 Rio Grande Basin Roundtable meeting the Roundtable granted approval of the Sanchez Reservoir Phase II — Outlet Rehabilitation & Gate Tower Replacement Project application request for $55,000 in Basin Funds and recommended approval of $859,400 of Statewide Funds. Letters of support for the Project were received from the Natural Resources Conservation Service, Division of Water Resources (Division 3 office), the Town of San Luis, and the Costilla Conservation District. Source of Funds: $859,400 Statewide Funds, $55, 000 Rio Grande Basin Funds Matching Funds: $1,117,600 CWCB Loan Threshold and Evaluation Criteria: The application articulates how the project satisfies the Threshold and Evaluation Criteria as summarized below: Tier 1 • Promoting` Collaboration/Cooperation & Meeting Water Management Goals & Identified Needs: Sanchez Reservoir is managed for recreational use as a Colorado State Wildlife Area and is a popular fishing and boating destination, providing economic benefits to Costilla County. The project has the support of the county and local communities in addressing both consumptive and non - consumptive needs, including irrigation and maintenance of a fish and wildlife conservation pool of 2,500 AF. Sanchez Reservoir also provides flood protection for a number of historic communities, including San Luis. The Rio Grande Basin Roundtable has prioritized reservoir rehabilitation as an important IPP's to preserve critical storage in the basin. Tier 2: Facilitating Water Activity Implementation: The Company currently has two existing loans with the CWCB and has indicated that an additional assessment to cover the costs of the entire Project is not economically feasible for shareholders. The Company is working with CWCB to establish a repayment structure to retire existing debt early so the financial burden to shareholders can be addressed over a number of years rather than a large assessment increase all at once. _Tier 3• The Water Activity Addresses Issues of Statewide Value and Maximizes Benefits: This Project sustains agriculture by improving the Company's ability to store and distribute water. This Project helps meet environmental needs by ensuring the continued viability of the Sanchez Reservoir. Tourism, boating and fishing bring needed funds into one of the poorest communities of Colorado. This Project also reduces the risk of flooding in the area. Discussion: As identified in the SWSI findings, small agricultural water users often lack the financial ability to adequately address infrastructure needs without financial aid. The Company does not possess the financial resources to make the improvements to efficiently and safely utilize its existing water rights without the loan and grant funding. In addition, the SWSI Management Objectives, of the SWSI Phase II Report: Addressing the Water Supply Gap Technical Roundtable, includes the "sustainably meet agricultural demands," which is directly met through this activity. The proposed Project effectively meets the objectives of HB 1177 and the consumptive needs of the Rio Grande Basin by rehabilitating existing infrastructure to preserve agricultural water use.