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Huerfano County Water Conservancy District September 13, 2013 (Updated September 26, 2013) Page 2 of 5 Agenda Item 30c Background Within Huerfano County there are many domestic wells that are at risk of being curtailed due to either being out of priority or due to failing (or failed) augmentation plans. The users include schools, and domestic, commercial, and agricultural users. The District has utilized a Substitute Water Supply Plan (SWSP) and a Regional Rule 14 Replacement Plan from 2009 to 2013 to provide augmentation water to five entities in danger of having water use curtailed due to out of priority pumping. The entities were: Huerfano County Road and Bridge, Malachite Spring, Co 61 Water Association, Gardner Water and Sanitation District, and Paradise Acres Homeowners Association. The District believes that other water users will find it necessary to join the regional augmentation plan and the Division Engineer has indicated an urgent need for such a plan. Loan Feasibility Study Tom Dea, P.E. of TZA Water Engineers Inc., prepared the Loan Feasibility Study, titled "Loan Feasibility Study for Huerfano County Regional Augmentation Project," dated July 2013. 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 determination of the total Project cost. Borrower - Huerfano County Water Conservancy District The District is a Title 37 Water Conservancy District. Its boundaries encompass almost all of Huerfano County (less a few parcels of land in the northeast corner of the County). The District is governed by a five- member board of directors. District revenues come from an ad valorem property mill levy. In November 2012, the District received voter approval to increase the mill levy from 0.128 mills to 2.128 mills. Based upon the 2012 assessed valuation, this will generate approximately $243,600 in annual tax revenues. The District also received voter approval to borrow up to $3 million dollars for the purposes of acquiring and developing water rights and water storage facilities and to develop a regional augmentation plan to benefit the water users of Huerfano County. Currently the District is limited to 15 years of debt service. The board of directors has approved a ballot question for placement on the November 2013 election ballot to allow a 30 year borrowing term. A CWCB loan contract will not be executed until the results of the election are known. Water Rights The District does not currently own any water rights. It has relied on leases to maintain the SWSP for the past five years. See Table 1 for further information on the water rights being purchased as a part of this Project. Project Description The purpose of the Project is to provide a reliable source of water and infrastructure to develop an efficient and permanent regional augmentation plan. Alternatives considered by the District included: Alternative I — Do Nothing: Because the Huerfano River is over appropriated, doing nothing will result in curtailment of junior water users within the District's boundary.