C150365 Increase Approval Letter

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Santa Maria Reservoir Company Consent Agenda Item 4b January 26-27,2015 Board Meeting(Updated January 28,2015) Page 2 of 4 Guidance At the May, 2005 Board Meeting, the Board authorized staff to present increases to existing loans less than 20%of the original loan as Consent Agenda Items. The Santa Maria Reservoir Company loan increase presented below is approximately 16%of the loan amount. Background The Company provides irrigation water to approximately 70,000 acres in Rio Grande, Saguache, Conejos, and Alamosa Counties, in the San Luis Valley. The Company owns and operates two reservoirs: Santa Maria and Continental. The reservoirs are located in Hinsdale and Mineral Counties, about 20 miles southwest of the Town of Creede. Santa Maria receives regulated discharges from Continental through a century old conveyance system comprised of a pipeline, siphon and an open ditch. Continental was designed in 1910 and was constructed between 1925 and 1928 with a design capacity of 27,000 AF; however, due to seepage and spillway deterioration, it has been limited by the SEO to a storage capacity of 15,000 AF for the past 20 years. The objective of this Project is to rehabilitate the Continental dam and restore the full storage capacity of the reservoir by repairing the spillway and installing a filter blanket to address seepage. Project Update The Project was bid in March of 2014. Moltz Constructors, Inc. of Cody, Wyoming was awarded the construction contract. Construction began on the spillway rehabilitation at Continental dam in May of 2014. Most of the spillway work was completed in the summer of 2014. The filter blanket work is scheduled for the 2015 construction season. The contractor's bid was higher than the estimate used for funding purposes. The Company chose to move forward with the Project and agreed to work with the contractor and engineer (URS, Inc./AECOM) to further investigate the site conditions to see if a more cost-effective approach could achieve the desired result of addressing seepage, thereby allowing the Company to store its full water rights decree. Table 1 summarizes the increased construction cost estimate. The current Project estimate is based on numbers provided by the contractor. TABLE 1: UPDATED PROJECT COST SUMMARY Task Original Current Project Project Estimate Estimate Engineering/Construction Management $431,000 $431,000 Construction $3,584,000 $5,200,000 Admin $40,000 $40,000 Total $4,055,000 $5,640,000 Schedule: Construction will resume as soon as weather permits in 2015 with completion anticipated by the fall of 2015.