BOARD00894

• Board Meeting Date: 3/16/2004
• Description: CF Section - New Loans - Upper Surface Creek Domestic Water Users Assocation - Diversion Structure and Raw Water Pipeline Construction
• Board Meetings - Doc Type: Memo

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Upper Surface Creek Domestic Water Users Association
March 16-17.2004

Agenda Item 25h

USCDWUA's existing water supply facilities consist of about 100 miles of pipeline, three storage .
tanks, 40 pressure regulating stations, and 50 fire hydrants. Customers are rural residential,
consisting of farms and ranches, and a few subdivisions of 20 lots or less. In addition to domestic,
the water is used for livestock watering, fruit processing, and dairying. USCDWUA has historically
averaged about 30 new taps per year, but in 2003 only 16 taps were issued. For future growth they
project 20 taps per year (a 2% to 3% growth rate.)

Due to timing constraints and impending winter weather, the new intake structure and
approximately 800 feet of the raw water pipeline have been constructed using USCDWUA funds.
This was done in the Fall 2003. Therefore, the CWCB loan will provide construction funding for the
remainder of the raw water pipeline construction, as well as permanent financing for the whole raw
water portion of the project.

Feasibilitv Studies

USCDWUA, in conjunction with Ute Engineering & Surveying of Delta, has completed a feasibility
study in accordance with CWCB guidelines. The study includes an assessment of water supply
alternatives to meet current and future USCDWUA demands.

UDDer Surface Creek Domestic Water Users Association

USCDWUA is a non-profit corporation registered in the State of Colorado, incorporated in 1955.
The corporation has no capital stock, and the interests of its members are evidenced by their
Membership Certificates. There are 763 members holding 857 Membership Certificates. Each
certificate represents a domestic water tap issued. (The current tap fee is $8000, with .
approximately 10% of the taps issued but yet to be activated.) The business affairs of the
Association are conducted by a 7-member Board of Directors that has the power to establish water
charge rates, and to levy special assessments as necessary to meet the financial obligations of the
Association The Board is authorized to cut off water deliveries to members who fail to pay their
monthly water charges or levied assessments, and has the power to sell the memberships of
delinquent members, in accordance with the by-laws.

Water Riahts

The source of water for USCDWUA is a direct flow water right of 0.5 cis in Surface Creek
(attributable to 10 shares of the Alfalfa Ditch), and stored water in numerous reservoirs that drain
into Surface Creek. The direct flow right owned by the Alfalfa Ditch is for 20 cis and is a No.1
decree with an appropriation date of December 17, 1881, and an adjudication date of June 17,
1889. USCDWUA also owns 16 shares of Surface Creek Ditch and Reservoir Co., 41 shares of
Leon Lake Ditch and Reservoir Co., 43 shares of Cedar Mesa Ditch and Reservoir Co., and 57
shares of Park Reservoir Co. Stored water is used to supplement the flow right in case of drought
or heavy demand.

Proiect Description

The purpose of this project is to provide a means for USCDWUA to continue providing acceptable
domestic water service to existing shareholders while accommodating reasonable growth on the
system. The following alternatives were considered:

1. The no-action alternative.
2. Purchase additional capacity in the jointly owned Cedaredge system.
3. Build a new treatment plant using existing raw water collection system.
4. Build a new treatment plant and new raw water intake and pipeline.
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