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<br />Town of Paonla - Water Rights Purchase <br />January 22.23, 2003 <br /> <br />Agenda Item 1911 <br /> <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. <br /> <br />. <br /> <br />. <br /> <br />. <br /> <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.' · <br /> <br />Page 401 8 <br />