C150336 Increase Approval Letter

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Left Hand Ditch Company Agenda Item 33a May 9,2014(Updated May 23,2014) Page 2 of 4 Background The Company, located in Boulder County, provides irrigation water to a service area of approximately 15,000 acres due north of Boulder. The service area follows Left Hand Creek from the Front Range foothills east to the Town of Niwot, and spans from the northern edge of Boulder Reservoir up to Foothills Reservoir. The Company owns and maintains five reservoirs used for storage and controlled release of the Company's water rights. Two of the reservoirs, Allen Lake and Lake Isabelle, were the subject of the original loan request. The work at Allen Lake was completed in 2013. Lake Isabelle is the subject of the request to increase the loan. At an elevation of nearly 11,000 feet, Lake Isabelle is the highest elevation reservoir in the Left Hand Ditch system. It lies within the Indian Peaks Wilderness which is operated by the U.S. Forest Service, and it is only accessible by foot or helicopter. At full storage, the capacity of the reservoir is 550 acre-feet. A rock tunnel is used to divert water through a mountainside to an outlet structure. The outlet structure consists of a gate valve located at the bottom of a 60-foot shaft. The gate valve is used to control release rates during the irrigation season and shut off releases to refill the reservoir during winter months. Project Update The Lake Isabelle outlet gate replacement was part of the original Project and was replaced in the 2013 construction season. Once the reservoir was drained for construction, the inlet structure to the outlet tunnel was inspected. The Company then discovered that additional repairs to the tunnel were necessary. Left Hand Excavating of Frederick, Colorado performed the construction at Lake Isabelle. With assistance from Smith Geotechnical, a plan to replace the inlet tunnel with a new 24-inch pipe was designed. The cost of the inlet tunnel repairs is estimated at$350,000. Schedule: Construction on Lake Isabelle is scheduled to resume in late summer of 2014,with completion expected by fall. Financial Analysis The Company qualifies for a blended (46% agricultural, 38%middle-income municipal, 16%high- income municipal) interest rate of 2.45% for a 30-year term. Table 1 provides a financial summary of the loan request.