<br />Town of Paonla - Water Rights Purchase
<br />January 22.23, 2003
<br />
<br />Agenda Item 1911
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<br />associated water taps has been initiated by The Conservation Fund, and will be completed before
<br />February 10, 2003. It is intended that the property, including the associated water taps, be
<br />conveyed to the Town, or to the Town and a suitable buyer of the land component, in a single back-
<br />to-back closing involving all parties.
<br />
<br />Pro Dosed Water Rlahts/Water TaD Purchase
<br />
<br />Costs for land and water rights acquisition are eligible for CWCB funding under Policy #8, which
<br />states: The costs of land and water rights acquisition, are eligible for CWCB funding as part of an
<br />authorized project. When no project is proposed, the' cost of water right acquisition is eligible for a
<br />CWCB loan if the purchase satisfies an existing water need or shortage. Acquisition of water rights
<br />that promote growth will not be eligible for a CWCB loan.
<br />
<br />In requesting a loan for the water tap buy-back, the Town states that by repurchasing the water taps
<br />at this point in time, the Town will finally be paying for the German Creek Springs water rights, in
<br />essence the owner having held the water taps as collateral since 1976. Staff did support the
<br />previous loan request using this rationale of "substitu~e consideration" for water rights acquisition.
<br />With the proposed CWCB loan, the Town would be '~redeeming" those unused water taps for cash.
<br />In essence, the Town would be providing cash for water rights.
<br />
<br />The attached opinion from the Attorney General further clarifies the Board's authority to make a
<br />loan for the purchase of the water rights/water taps under Sec. 37-60-119 (1), CRS. (2002), "if the
<br />CWCB finds that the proposed loan will promote the general welfare of the citizens benefited by the
<br />retired water taps by reducing demand and making the Town's water supply more reliable."
<br />
<br />Based on the current cost of out-of-city water taps the value of 317 water taps could theoretically be
<br />as high as $2,694,500 (317 x $8500). However, as 'part of the previous loan consideration, staff
<br />requested a valuation of the German Creek Springs water rights in present day dollars. This was
<br />addressed in a letter from Mr. Gary Thompson, P.E., W.w. Wheeler and Associates, Inc., dated
<br />August 30, 2002. Based on the analysis, as well as the unique value of the water rights to the
<br />Town because of their excellent water quality, seniority, and year-round usability, it is the opinion of
<br />Mr. Thompson that the original German Creek water: rights are worth about $1,500,000.
<br />Accordingly, based on a value of $1,500,000, and cqnsidering that the Town will be re-acquiring
<br />317 of the 400 original water taps, an adjusted "wat~r right"/tap value would be $1,188,750
<br />(317/400 x $1,500,000).
<br />
<br />Using the above adjusted "water right" value of the taps, a calculated project cost breakdown is as
<br />follows: '
<br />
<br />1.
<br />2.
<br />3.
<br />
<br />Ark Water Taps Purchase
<br />Ark Land Purchase
<br />Acquisition Costs
<br />
<br />$1,188,750
<br />, 611,250.
<br />100,000
<br />$1,900,000
<br />
<br />TOTAL
<br />
<br />. Note - The land value shown is calculated based on the total project cost of
<br />$1,900,000, not based on the appraisal being conducted by The Conservation Fund.
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<br />Acquisition costs related to the property transaction ,include The Conservation Fund's staff time,
<br />transactional costs such as appraisal costs and attorney's fees for contract review and negotiations, -
<br />as well as other related closing costs.' ·
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