BOARD00837

• Board Meeting Date: 9/13/2004
• Description: CF Section - New Loans - Bull Creek Reservoir, Canal & Power Company - Bull Creek Reservoir Nos. 1, 2 and Rehabilitation and Enlargement
• Board Meetings - Doc Type: Memo

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Bull Creek ReselVoir, Canal & Power Company
September 7. 2004
Page 3 of 5

Agenda Item 4d

Water Riahts

The Bull Creek Reservoirs hold the senior storage rights on Bull Creek and tributaries to Bull Creek.
Many of the senior rights on the creek are also owned and used by shareholders of the Company.
Other senior water rights of significance are irrigation rights owned by the Grand Valley Irrigation
Company on the Colorado River near Palisade, however these senior rights seldom need to place a
call during winter and spring snowmelt when the reservoirs fill. Table 1 shows a summary of existing
reservoir capacities, water rights owned by the Company and the potential loss of the rights if corrective
action is not taken.

Table 1 Reservoir Summary

Reservoir Capacity Storage Right Potential Loss
I ac-ft) . (ac-ft) lac-ft)"
Bull Creek NO.1 80 154 74
Bull Creek NO.2 75 120 45
Bull Creek No.3 59 59 0
Bull Creek NO.4 203 313 110
Bull Creek NO.5 247 204 0
Total 664 850 229

" Potential loss figures are taken from the Stipulation and Agreement dated 10/31/03

Proiect Description

Three alternatives were analyzed in the feasibility study:

1) No action alternative
2) Rehabilitate only Bull Creek Reservoir No.4
3) Enlarge Bull Creek Reservoir Nos. 1 & 2 and rehabilitate Reservoir NO.4

The Company chose alternative 3 since it provides the best value to the shareholders and retains the
Company's valuable senior water rights. Access to all three of the reservoirs is difficult and the timing of
construction will be critical to maintain the use of the water during irrigation season.

Total Project cost estimate is:

1.
2.

Pia nn ing/Permitting/Eng ineeri ng
Construction

$182,900 (28% of Const. Cost)
477.100
$660,000

TOTAL

The engineering design and construction related services are provided by Water Resource Consultants
of Rifle. Construction is expected to begin mid 2005 and to be completed by October 31,2005. '

Financial Analvsis

Table 2 shows a summary of the financial aspects of the Project. A cwes Loan of $594,000 would
have an annual debt service obligation of $31 ,218 ($28,380 for annual loan payment and $2,838 for the
10% reserve account) for the loan terms of 2.5% for 30-years. The debt service obligation represents a
cost of $136 per acre-foot to protect the 229 ac-ft of senior water right from abandonment.