Castle Pines North Approval Letter

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Castle Pines North Metropolitan District Agenda Item 29c May 9,2014(Updated May 23,2014) Page 3 of 7 Background The District is located between Denver and Castle Rock in the City of Castle Pines, Douglas County. The primary functions of the District are to provide water, wastewater, and parks and open space maintenance services for the benefit of the residents and users of the District's facilities. The District's water facilities include a groundwater treatment plant, non-tributary groundwater wells, storage tanks, pump stations, and a distribution network that includes over 45 miles of pipeline. The District's service area is approximately 85% developed from a demand perspective, with a projected average annual demand of 1,600 AF at full build out. Annual produced water demands have averaged approximately 1,300 AF. The District's water is primarily supplied from non- tributary groundwater, which is considered a non-renewable source. The District's Water Conservation Plan was approved by the CWCB in August 2006. Loan Feasibility Study Jim Nikkel, P.E., District Manager,prepared the Loan Feasibility Study titled"Castle Pines North Metropolitan District, Participation in the Chatfield Reservoir Reallocation Project,"dated March 2014, with support from Peggy Dowswell, CPA, District Finance Director and Joan Fritsche, Esq., of Collins Cockrel & Cole. The study was prepared in accordance with CWCB guidelines and includes an alternative analysis, cost estimates, and financial statements. The feasibility study relies on the FR/EIS prepared by the Corps, and the Fish, Wildlife and Recreation Mitigation Plan (FWRMP)prepared by the Reallocation Participants in accordance with C.R.S. 37-60-122.2. Borrower—Castle Pines North Metropolitan District The District is a Title 32 Special District organized by a court order on June 11, 1984, following an election by the property owners in the District. The District serves Castle Pines, which has approximately 9,600 residents with a total of 3,000 residential and commercial taps. District funds are divided into its General Fund and Enterprise Fund. General Fund revenues are primarily derived from property taxes and the Enterprise Fund revenues are primarily derived from fees charged from services. A five-member Board of Directors governs the District and is empowered to levy a property tax on real and personal properties located within its boundaries. The Board can authorize the District to contract and incur debt, and to set water rates as required to cover operating expenses. Water Rights The District's water rights portfolio includes surface water and non-tributary groundwater rights. Surface rights are comprised of storage rights in Reuter-Hess Reservoir, shares in several irrigation ditches, and non-tributary water from the Hock Hocking mine. The non-tributary groundwater rights include 12 active wells throughout the District's service area. In anticipation of the Project, the District, in conjunction with Castle Pines Metropolitan District, obtained a 1,000 AF conditional storage right in Chatfield in Case No. 04CW308. Additionally the District has filed Case No. 09CW279 which would allow for the exchange of water from rights on the lower South Platte River into Chatfield. CHATFIELD REALLOCATION DESCRIPTION THE GOAL OF THE REALLOCATION IS TO HELP ENABLE WATER PROVIDERS SUPPLY WATER TO LOCAL USERS IN RESPONSE TO RAPIDLY INCREASING DEMAND. THE STATEWIDE WATER SUPPLY INITIATIVE 2010 REPORT(SWSI 2010)HAS IDENTIFIED THE PROJECTED GAP IN MUNICIPAL&INDUSTRIAL(M&I) AND SELF-SUPPLIED INDUSTRIAL(SSI)USE IN THE METRO BASIN ALONE WILL BE BETWEEN 180,000 AND 280,000 AF PER YEAR BY THE YEAR 2050. THE CHATFIELD REALLOCATION PROJECT IS IDENTIFIED IN SWSI 2010 AS AN IDENTIFIED PROJECT AND PROCESS(IPP)FOR THE METRO AND SOUTH PLATTE BASINS. WITH THE COMPLETION OF ALL METRO BASIN IPPS,THE M&I AND SSI GAP