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City of Lamar September 13, 2013 (Updated September 26, 2013) Page 2 of 8 Agenda Item29a Background The City is located in Prowers County in southeastern Colorado. It provides water service to a population of approximately 7,800 people in a four -mile service area. The water supply for the City comes from 29 active wells divided into three well fields: the North, Middle, and South. The North and Middle wells fields have total dissolved solids (TDS) concentrations above the Environmental Protection Agency (EPA) and Colorado Department of Public Health and Environment ( CDPHE) required limits. The South well field has higher quality raw water with TDS levels within the allowable range per EPA and CDPHE standards. Although the water quality is better, the South well field is the farthest from the City's treatment facility. The transmission line from the wells was constructed of cast iron in 1933 as a part of the Works Projects Administration. Recent testing of the line showed high amounts of scale build -up, pin -hole leaks, and pressure drops. Additionally, because of the build -up within the line, the amount of pumping energy has to be increased to overcome the friction losses. Currently, it is estimated that between 378 to 662 acre -feet (AF) of water will be saved annually once a new transmission line is installed from the South well field. By reducing the amount of wasted raw water, the City will be able to blend a larger quantity of water with the North and Middle well fields, thus reducing the amount of treatment necessary. Additionally, a new transmission line from the South well field will maintain desired redundancy to the water system. Loan Feasibility Study JVA, Inc., a consulting engineering firm in Boulder,CO , prepared the Loan Feasibility Study, titled "Loan Feasibility Study for Raw Water Transmission Line Replacement for The City of Lamar," dated July 24, 2013. The Study was prepared in accordance with CWCB guidelines and includes preliminary engineering and an engineer's estimate of probable costs that were used in determination of the total Project cost. Borrower - City of Lamar The City was founded in 1886. The water service is operated as a Water Activity Enterprise servicing 3,000 residential taps and 500 commercial taps. Enterprise revenues come from water sales, facility investment fees, and water leased to farmers. The average water bill is $60 per month. In a normal water year, 2,005 AF of water is delivered annually. Because the City delivers more than 2,000 AF annually, it is a covered entity as defined by the Water Conservation Act of 2004, requiring an approved Water Conservation Plan prior to executing a loan with the CWCB. The City's plan was approved in 2009. Water Rights The City owns a portfolio of both groundwater and surface water rights. The groundwater wells are primarily used for potable water and the surface water rights are used for City irrigation and aquifer recharge. Lamar owns 3,199.6 shares of the Fort Bent Ditch Company, 350 shares of the Lamar Canal Company, and 293 shares of the Lower Arkansas Water Management Association. The City is also able to purchase Fryingpan- Arkansas Project water from the Southeastern Colorado Conservancy District.