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Sanchez Ditch and Reservoir Company tonsent Agenda Item Sa <br />May 17-t8, 2017 Board Meeting (Updated May 19, 2017) <br />Page 2 of 4 <br />Background <br />'ihe Company provides irrigatian water for users in Costilla County, southwest of the town of <br />San Luis. The tompany's primary storage reservoir is Sanchez Reservoir. The 103,155 atre- <br />foot reservoir was built in 1910 and is classified as a large, high hazard strutture. <br />In May of 2014, the Company bid the outlet tunnel portion of the Project with a construction <br />budget of $1.8M. The contracto�s' bids ranged from 52•5M to 53.7M. At the same time, the <br />Company and its engineer had conversations with the SEO Dam Safety Branch regarding <br />seepage issues at the Reservoir. Working with the low bidder (Moltz Constructors, Inc. ) and its <br />engineer, Duane Smith, P.E., af 5mith Geotechnical, Inc., the Company scaled back some of <br />the outlet tunnel repairs but added additional seepage controt work to the Project. This <br />resulted in the need for a S250,fl00 loan increase approved at the July 2014 Board meeting. <br />Construction of the new outlet tunnel was completed in February 2415. Since that time, the <br />seepage monitoring work has continued. <br />Project Update <br />in March of 2016 the Company hired AECOM to address seepage at the dam. AECOM proposed further <br />geotechnical inveskigations and is recommending installation of additional equipment, weekly <br />monitoring and data review, and will provide a final report to the Company. <br />TABLE 1: ADDITIONAL PR�JECT GOSTS <br />7ask Estimated Cost <br />Monitorin� Equipment 524,000 <br />Engineering ( including weekly data review, $76,000 <br />meetings, reportinq, and recommendations) <br />Contingency $20,000 <br />TOTAL $120,000 <br />Financial Anaiysis <br />At the time of the original loan approval, the CQmpany quafified for the agricultural interest <br />rate of 1.75� fo� a 30-year term. Due to the increased Project costs, the Company requested a <br />hardship exernption and asked for a 40-year loan term in orde� to keep the shareholder <br />assessments dose to the originally budgeted amount. This request was approved with the July <br />2014 loan increase. The Company's interest rate will remain 40-year5 at 2.096 with five years of <br />interest only payments foltowed by 35 years of principal and interest payments. <br />