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Southeastern Colorado Water Conservancy District Agenda Item 13a
<br /> July 20-21, 2016 Board Meeting(Updated July 22, 2016)
<br /> Page 2 of 6
<br /> Background
<br /> The District's boundaries extend along the Arkansas River from Buena Vista to Lamar, and along
<br /> Fountain Creek from Colorado Springs to Pueblo. The District was created to develop and administer
<br /> the Fryingpan-Arkansas project (Fry-Ark), a multipurpose, transbasin water diversion and delivery
<br /> project built between 1964 and the mid 1980s by the federal government. The purpose of Fry-Ark is to
<br /> supply water for irrigation, municipal, domestic, and industrial uses; generate and transmit
<br /> hydropower and energy; control floods; provide recreational opportunities; and maintain or improve
<br /> fish and wildlife habitats. The Fry-Ark system includes Pueblo Reservoir, Twin Lakes Reservoir,
<br /> Turquoise Reservoir, and a West Slope collection system. The AVC project, along with the Fountain
<br /> Valley Authority Pipeline, was originally proposed as a part of Fry-Ark. The Fountain Valley Authority
<br /> Pipeline was completed in 1985 and delivers water to Colorado Springs and its surrounding areas.
<br /> However, AVC has not yet been built because the lower Arkansas River basin communities have been
<br /> unable to afford the project cost. The existing $60,060,000 CWCB loan approval is a part of the local
<br /> cost share for AVC. The District is diligently pursuing the permitting, design, and construction of AVC
<br /> but it is currently anticipated that the earliest it could be completed is 2028.
<br /> Pueblo Reservoir is impounded by Pueblo Dam. The dam was constructed from 1970 to 1975 as a part of
<br /> Fry-Ark. The reservoir is capable of storing 357,678 AF of water and is owned and operated by the US
<br /> Bureau of Reclamation (Reclamation). A 2011 Hydropower Resource Assessment report prepared by
<br /> Reclamation identified Pueblo Dam as the most favorable site for hydropower development out of all of
<br /> Reclamation's facilities in Colorado. In 2011, Reclamation issued a Lease of Power Privilege (LOPP)
<br /> solicitation for the development of hydropower on Pueblo Dam. Based on a proposal and evaluation
<br /> process, a partnership consisting of the District, Board of Water Works of Pueblo, and the Colorado
<br /> Springs Utility, was awarded a preliminary LOPP in 2012. The preliminary LOPP allowed for continued
<br /> evaluation of the feasibility for hydropower on Pueblo Dam.
<br /> Hydropower profits will be directed into an AVC reserve fund within the District's enterprise and be
<br /> restricted to be used only for the repayment of hydropower debt and to offset the annual expenses of
<br /> the AVC project. The Project is not eligible for the Colorado Water Resources Et Power Development
<br /> Authority's Small Hydropower Loan Program as it will exceed 5 MW.
<br /> Loan Feasibility Study
<br /> Kevin Meador, P.E. of the Southeastern Colorado Water Conservancy District, prepared the Loan
<br /> Feasibility Study, titled "Pueblo Dam Hydroelectric Project Loan Feasibility Study," dated June 1,
<br /> 2016. Other studies used in the preparation of the Feasibility Study include the "Hydropower Feasibility
<br /> Update, Pueblo Dam Hydroelectric Project," dated March 21, 2014 by CH2M, the "Draft Design
<br /> Documentation Report Preliminary Design, Pueblo Dam Hydroelectric Project," dated June 2014 by
<br /> CH2M, and the "Design Proposal, Pueblo Dam Hydroelectric Project," dated May 2, 2016 by Mountain
<br /> States Hydro, LLC. The feasibility study was prepared in accordance with the CWCB guidelines and
<br /> includes an analysis of alternative, preliminary engineering design, and construction cost estimates.
<br /> Borrower - Southeastern Colorado Water Conservancy District
<br /> The District is a quasi-municipal entity and a political subdivision of the state of Colorado organized
<br /> under the Water Conservancy Act, C.R.S. 37-45-101 et seq. The District was created on April 29, 1958
<br /> by decree of the District Court of Pueblo. A 15-member Board of Directors manages the District.
<br /> Revenues of the District's Government Fund are primarily generated through an ad valorem mill levy
<br /> applied against property in the District and contract revenue from Fountain Valley Authority.
<br /> In 1995, the District created a water activity enterprise for the purpose of pursuing, establishing, and
<br /> continuing water activities as a business, separate and distinct from the District's governmental
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