C150360 Increase Approval letter

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East Mesa Water Company Agenda Item 19c January 26-27,2015 Board Meeting(Updated January 28, 2015) Page 2 of 3 Background This Company is located in the Crystal River Valley in the western portion of Pitkin County, Colorado. It owns and operates the East Mesa Ditch system which diverts water out of the Crystal River. About one mile down ditch from the river diversion, the ditch enters a 650-foot long rock tunnel that is collapsing. The NRCS proposed a siphon to replace the failing tunnel, which was the supporting design for the original CWCB loan. After significant cost increases were realized due to an easement purchase and related delays, the Company has elected to maintain the existing alignment and apply the available funds to rehabilitating the existing tunnel. The Company has hired AECOM/URS to provide engineering support for the tunnel work and will continue to work with the NRCS to install pipe in the exiting ditch to solve the tunnel access and leaking ditch problems. Project Update The original realignment cost and complications with easement acquisition were determined to be too large to overcome. The Company has chosen to rehabilitate the existing tunnel. The Project now involves the installation of 1,100 feet of 48-inch high density polyethylene (HDPE) pipe in the existing ditch alignment to reduce ditch leakage and improve tunnel access. The tunnel work will include rock anchors and structural improvements to reduce future tunnel degradation. The pipe design was completed by the Glenwood Springs NRCS staff. The design of the tunnel improvements were performed by the Glenwood Springs office of AECOM/URS. An updated breakdown of the Project cost estimate is provided in Table 1. Table 1. Project Cost Estimate Administration/Engineering $140,000 Pipe Work (48-inch HDPE) $400,000 Tunnel Work $200,000 Approx. 10%Contingency $70,000 Total $810,000 Schedule:The design is complete and contractors have been selected. Construction is expected to start January 2015 and be completed before irrigation water is turned on in May 2015. Financial Analysis Table 2 shows a summary of possible funding sources for the Project. Table 2. Funding Sources Funding Source Amount Approval Dates NRCS Design Services In Kind Approved CWCB Loan Increase $757,500 January 2015 Colorado River District $25,000 April 2014 Colorado River BRT (WSRA) $60,000 March 2014 Pitkin County Grant $45,000 January 2015 NRCS Cost Share* $232,000 July 2013 * Funding received from NRCS will be disbursed after construction is complete. Table 3 shows a summary of the financial aspects of the Project. Since this is an NRCS funded project CWCB Financial Policy#11 allows funding 100%of the construction costs of the Project. The Company's interest rate will remain the July 2013 Agricultural interest rate of 1.75%for a 30 year term.