C150379 Feasibility Study

• Contract/PO #: C150379
• Contractor Name: Wadley Farms Filing No. 3 Homeowner's Association
• Contract Type: Loan
• Water District: 7
• County: Adams
• Loan Projects - Doc Type: Feasibility Study

to 78.8 acre -feet in a dry year, this increase in water yield gained with ownership of 5 FHL
shares could make the difference in dry years between having no water for irrigation as well
as losing the capability of providing fire protection and having the ability to save
neighborhood trees and landscaping as well as meeting minimum fire- fighting needs.
Purchase of additional FHL shares will provide both the increase in water supply amount
and increase in supply reliability that the HOA is seeking. The current opportunity to
purchase two FHL shares is financially feasible, has no additional environmental impacts,
requires no new construction or operational changes, requires no permitting or Water Court
proceedings and meets the IIOA objectives.
Recommendations
It is recommended that the HOA purchase the two shares of Farmers' High Line Canal and
Reservoir Company (FHL) that is currently being offered for sale to the HOA at a price of
$800,000. The purchase price is fair, given that the market for FHL shares is highly
competitive and consists mostly of municipalities. 'therefore, even though the water is
being purchased for an agricultural use, the cost will be significant simply due to the
location of Wadley Farms No. 3 adjacent to highly urban and suburban areas that compete
for water rights with this level of reliability and quality. Though high, the cost of acquiring
additional FHL shares is more attractive than the cost of other available options for
increasing the HOA's water supplies. The FHL water is a known and reliable commodity
for the HOA, given the HOA's current ownership of three FHL shares and of reservoirs that
have been filled with water from the FHL Canal for over a century. The ability to use the
FHL water does not require any additional cost in infrastructure for the HOA and does not
require any change in use Water Court proceeding. These costs could be substantial for other
types of water that might be acquired.
It is recommended that the HOA obtain a loan from the CWCB for 90% of the purchase
price of the two FHL shares. The loan terms are favorable at a thirty -year term at 3% and
make this purchase very financially feasible for the HOA. The HOA has the legal capability
in place to assess its members for costs of providing water supply, but would not do so if the
assessment were exorbitant. In this instance, the additional costs associated with the
purchase of shares would bring the quarterly assessment for Wadley Farms No. 3
homeowners to $229 ($76.33 per month or $916 per year) for each lot for the first ten years
of the loan and would drop to $220 ($73.33 per month or $880 per year), up from the current
$125 per quarter. This is economically reasonable for residents to pay, particularly
considering what residents in surrounding suburban areas pay for irrigation water from
treated water systems.
The HOA presently has $80,000 of reserve funds available for payment of 10% of the
purchase price. The financial situation of the HOA is stable with no other debt. The HOA
is well situated to pay back the CWCB loan.
Wadley Farms No. 3 Water Supply CWCB Loan Feasibility Study Page 36