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Owl Creek Supply and irrigation Co. Agenda Item 10d. January 14, 2000. I .- Water Riahts - The Company owns no water rights. The Company operates the Owl Creek Diteh as a earrier .- ditch to deliver water owned by its stoekholders, and stoekholders of the West Cut Diteh. In 1998, a total of 30,000 acre-feet was transported. 20,000 aere-feet was delivered to OCSIC shareholders, or about 2 aere-feet per aere based on the 10,000 aeres eurrently irrigated. Proiect Description Four alternatives were analyzed in the feasibility study: 1. The no-aetion alternative. 2. Continue a level of minimum maintenanee. 3. Rehabilitate the hydraulic structures ($500,000). Alternative 3 was seleeted, sinee it is eonsidered to be a reliable, long-term approaeh. The no- action and the minimum maintenanee alternatives were eonsidered unaeeeptable sinee both would eventually result in partial or total failure of the hydraulie structures and inability of the OCSIC to deliver water. Seleeted Alternative 3 involves reconstruetion or replaeement of 14 major struetures, 55 flumes, 10 meter gates, and 30 head gates. All major struetures will be engineered and eonstructed with 8-inch and 12-ineh thiek reinforeed eonerete floors and walls, and proteeted with hand placed riprap. e The implementation schedule calls for eompletion of finaneing arrangements in 1999/2000, with formal approval and resolution by the OCSIC shareholders in early 2000. The projeet will be eonstrueted in two phases with the Control Struetures eonstrueted in the fall of 2000 and the flow measuring structures in the fall of 2001. Engineering design for the first phase will be eompleted in June 2000 with the engineering eompleted for the seeond phase in June 2001. Finaneial Analvsis The total estimated eost of the projeet is $500,000. Staff is reeommending a loan of $450,000 (90 percent of the estimate eost.) CWCS poliey allows for 90% loans to agrieultural and munieipallow ineome borrowers (poliey set at the November 24-25, 1997 CWCS meeting.) Agrieulture has not been a partieipant in the reeent economie boom. The OCSIC has inereased their assessments for 1999 through 2001 by $20 per share to raise their 10% share of the project. Alternative financing sources: The Company sought alternative finaneing for the projeet. The only source, other than the CWCS, was commercial banks. The terms offered were an adjustable rate loan at prime, with a 20-year term. Prime rate is eurrently 8.5% and rising. Table 1 shows the added cost of bank financing at prime rates ranging up to 12%, and indicates that bank financing would generally double the annual cost of the project. Adjustable bank financing has the potential of increasing annual eosts to the point that the Company runs into financial trouble, and must return to the CWCS for fixed rate finaneing. e 2