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CT2016-2005 Approval Letter
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CT2016-2005 Approval Letter
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Last modified
1/22/2016 10:41:51 AM
Creation date
9/24/2015 8:12:52 AM
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Loan Projects
Contract/PO #
CT2016-2005
Contractor Name
Lower Poudre Augmentation Company
Contract Type
Loan
County
Larimer
Loan Projects - Doc Type
Approval Letter
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Lower Poudre Augmentation Company Agenda Item 22b <br /> September 15-17,2015 Board Meeting(Updated September 18, 2015) <br /> Page 3 of 4 <br /> Project Description <br /> The goal of this Project is to provide additional augmentation water to the Company's well members by <br /> purchasing water rights for use in the Company's augmentation plan. Three alternatives were analyzed. <br /> Alternative 1 - Do Nothing: This alternative was considered unacceptable as it does not help the <br /> Company meet its long-term goal of allowing the full utilization of member wells. <br /> Alternative 2 - Locate and Purchase Other Water Rights: This alternative is not currently feasible as <br /> the Company is unaware of other water rights available for purchase that are also suitable for use in its <br /> augmentation plan. <br /> Selected Alternative 3 - Purchase Available Box Elder Ditch Shares: This alternative would purchase <br /> 0.5 Box Elder Ditch shares historically used on the Morrison Farm, and 1.5 Box Elder Ditch shares <br /> historically used on the Rigden Farm (Subject Shares). The land historically irrigated by the Subject <br /> Shares is now the site of an active gravel pit and will become a lined reservoir at the conclusion of <br /> mining. Therefore, dry-up associated with the Subject Shares has already occurred. <br /> Box Elder Ditch is a senior water right with a firm yield during dry years. Shares in the Box Elder Ditch <br /> have been changed in Water Court multiple times, including shares specifically related to the Subject <br /> Shares. The Company currently owns 3.5 Box Elder Shares that were used on the Morrison Farm and <br /> were successfully changed in water court Case No. 09CW030. Consumptive Use (CU) values from that <br /> change case were used for the 0.5 Morrison Farm shares in the Feasibility Study. Applegate Group <br /> provided a CU evaluation for the Rigden Farm shares as a part of the Feasibility Study. The Company <br /> will have to file a change of use application for the Subject Shares in water court which may result in <br /> slightly different CU values. It is expected the Subject Shares can be used in its augmentation plan as <br /> early as 2016 through a Substitute Water Supply Plan until the court issues a change decree. <br /> The Subject Shares were recently owned by Cottonwood Land Et Farms, a subsidiary of Flatiron Sand Et <br /> Gravel Company. Due to timing restrictions of the seller, closing for the Subject Shares was set for <br /> August 2015. The Irrigating Company agreed to purchase these shares using cash on hand, with the <br /> intent to sell them to the Company upon this CWCB loan approval. The Irrigating Company is selling the <br /> Subject Shares for the same price it bought them from Cottonwood Land Et Farms, which is $500,000. <br /> TABLE 2: SUBJECT SHARES ESTIMATED WATER YIELD AND VALUE <br /> Property #of Shares Historic CU Historic CU Appraised Value Appraised <br /> per share Credit per CU Value <br /> Morrison Farm 0.5 43.62 AF 21.81 AF $10,000 $218,100 <br /> Rigden Farm 1.5 44.07 AF 66.11 AF $10,000 $661,100 <br /> TOTAL 87.92 AF $879,200 <br /> Schedule: The Subject Shares are available for purchase immediately. <br /> Financial Analysis <br /> The Company qualifies for a blended interest rate of 1.85% for a 30-year term (Ownership: 94% <br /> Agricultural, 1 % Low Municipal, 4%Mid Municipal, <1% High Municipal, 1% Commercial). Table 3 <br /> provides a summary of the Project's financial aspects. The Company will raise its 10% Project cost <br /> share through its September 2015 assessment. <br />
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