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. (72,600 acre-feet) and for Naturita Reservoir (9,200 acre-feet). A preliminary evaluation of these water rights indicates that they could yield about 31,700 acre-feet annually of new water for the proposed project. However, due, to probable structural restrictions, only about 20,800 acre-feet of water will be available on the average for project purposes. A preliminary estimate of the cost of the project is $15,000,000. This cost includes $ 1 million for detailed feasibility studies for the various components of the project, which studies must be done to confirm the technical and financial feasibility of the project before the final design work and construction is initiated. Proposed Financing The proposed funding for this project is as follows: San Miguel WCD (bonds or commercial loans) $ 7,500,000 CWCB funds (to be repaid by user charges) Total 7,500,000 $15,000,000 . Under this financing arrangement payments to CWCB would be $437,100 per year at 5% interest for 40 years for a total repayment of $17,484,000. When the retirement of a bond issue for the entity's 50% share is included, it is estimated that the District would have to pay an additional amount of $954,720 per year (assuming an $9.0 million bond issue, which would include interest during construction and reserve accounts at 10% per year, to be repaid in 30 years). Adding $20,000 per year for operation and maintenance cost increases and $43,710 per year for the CWCB required reserve fund, the total annual expenses for the project are $1,460,530. With annual charges of $1,460,530, the water made available by the project (estimated at 20,800 acre-feet) would have to sell at $70.25 per acre-foot. This compares with an estimated value of $65 per acre-foot for new water under the Lone Cone Reservoir system. Estimates of the value of water throughout the project area have not yet been made. Recommenda tion The San Miguel Water Conservancy District Project is unique in that it consists of several interconnected sub-systems. The overall financial feasibility of the project will be a function of how these component parts are fit together. In order to be able to maximize the efficiency of the overall project and integrate the several sub-systems into the best possible financial package, the entire project needs to be moved forward as a whole at this time. . -4-