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<br />" <br /> <br />" <br />-. <br /> <br />Alternative Sources of Fundinl?: <br /> <br />$ <br /> <br />As a private entity, Consolidated is not eligible for funding from the Colorado Water Resources <br />and Power Development Authority or from other agencies that provide funding to public entities. <br />The Company does not have taxing authority or the ability to issue general obligation bonds. The <br />most likely financing option would be a commercial bank loan, which the Company estimates <br />would increase the cost of project fmancing by about $3.4 million. <br /> <br />e <br /> <br />Collateral <br /> <br />As security for the loan, the Company will pledge revenues from service charges and stock sales <br />as well as the Company's shares in the Agricultural Ditch on Clear Creek. The Company owns <br />about 37 percent of the ditch. A recent appraisal report for the Company's Agricultural Ditch <br />holdings indicates a value of$16.2 million based on decreed diversions and $20.4 million based <br />on historic depletions. <br /> <br />Discussion <br /> <br />Consolidated is requesting an increase of$6.3 million to the Company's 1999 authorization of <br />$10.0 million, which would result in a total authorization of $16.3 million for the Fortune <br />Reservoir project. The $16.3 million represents about 75% of the total estimated project cost. <br />Staff recommends the municipal high-income lending rate based on the 1990 median household <br />income of $34,000 for the City of Lakewood. The lending rate for the additional $6.3 million <br />would be 5.00 percent, which is the year 2000 municipal high-income rate adjusted for a ten-year a <br />term. The overall rate of return on $16.3 million would be 4.85 percent for ten years. _ <br /> <br />The approximately $5.5 million of project costa not included in the requested Construction Fund <br />loan will be covered through a series of water rate increases averaging about 3.5 percent per year <br />between 1999 and 2001. <br /> <br />An updated IS-year financial projection prepared by BBC indicates that future revenues will be <br />sufficient to provide adequate debt service cov<::rage through the period of construction and <br />CWCB debt retirement. The average residential water bill is expected to increase from $32 per <br />month to about $35 per month over the next three years as a result of the proj<::ct. <br /> <br />Conclusion <br /> <br />Based on our review of the October 1999 feasibility report and the January 2000 update to the <br />feasibility report, staff finds the proposed Fortune Reservoir Project to be economically, <br />financially and technically feasible. <br /> <br />Recommendation <br /> <br />Staff recommends that the Board request an increase of $6,300,000 in the 1999 Construction <br />Fund authorization for the Fortune Reservoir Project ofthe Consolidated Mutual Water <br /> <br />e <br /> <br />4 <br />