BOARD00313

• Board Meeting Date: 11/25/2002
• Description: CF Section - New Loans - Stromberg Land & Cattle Company LLC - Groundwater Augmentation
• Board Meetings - Doc Type: Memo

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Stromberger Land & Caffle Company LLC
November 25-26, 2002

Agenda Item 20b

the South Platte River, would pump up to a combined rate of 35 cfs producing up to 6500 acre feet
annually. They would pump to the recharge ponds through 18" t021" underground piping. The
recharge ponds would use natural topography to minimize earthWork for containment. A single
augmentation well, drilled away from the river:would use some of the piping to return "stored" water
to the river when necessary. An added benefit of developing the recharge ponds would be wildlife
habitat enhancement.

The total project cost is estimated to be:

1.
2.

$ 5,000
455,000
$ 460,000

Planning and design costs
Construction (w/Contingency)
TOTAL

The project schedule, following CWCB approval, will be to complete design and start construction in
early December. The project is planned to be operational on January 1, 2003. In order to start the
project this winter, SLCC will obtain bridge financing to initiate construction from the Bank of
Colorado in Sterling,

Permits- SLCC expects to be exempt from Corps of Engineers 404 permitting, but will confirm this
with the Denver office, Seven well permits have been applied for and are under review,
Easements for right-of-way from neighboring properties for the wells and pipeline have been agreed
to verbally and formal agreements are in process.

Financial Analvsis

The total estimated cost of the project is $460,000, and water is to be used exclusively for
agricultural purposes. Staff is recommending a loan for a maximum amount of $414,000
(approximately 90% of estimated project cost) for 20 years at an interest rate of 2.5%. SLCC has
sufficient cash assets budgeted to cover its $46,000 share of the project. .

Alternative financing sources: The Company investigated alternative financing with the NRCS
and Ducks Unlimited, but the timing of available funds did not meet the urgency of the project due
to the severe drought. Local bank lenders did not want to grant a long-term loan,

Table 1 is a summary of the financial aspects of the project. A CWCB Small Project Loan of
$414,000 would have an annual payment of $29,213 (including the 10% reserve requirement) at the
loan terms of 2,5% for 20 years, This represents an annual loan cost of $4.49 per acre-foot, based
on an average annual recharge diversion of 6500 acre-feet. SLCC anticipates that its loan
payment can be offset with savings in GASP assessments and revenue generated from the lease of
excess augmentation credits from the project.

Table 1. Financial Summary

$ 460,000
$414,000
$29,213
$4.49

Creditworthiness: As of January 1, 2002., SLCC lists assets totaling $6.5 million and liabilities of
$2.3 million, and outstanding loans for real estate totaling $1,158,177, and farm equipment, totaling
$181,031, Annual debt payment on these loans total is approximately $125,000.

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