BOARD01814

• Board Meeting Date: 3/16/2004
• Description: CF Section - New Loans - Union Ditch Company - Well Augmentation/Recharge Project
• Board Meetings - Doc Type: Memo

Union Ditch Company
March 16-17. 2004

Agenda Item 251

The engineering cost of $18,000 is broken down into: 1) Feasibility Study $4000; 2) Recharge .
Potential Study $9000; and 3) Project Design $5000,

Union plans to begin and complete the construction on the Mecure #1 Site during the Spring of
2004, In order to allow time for monitoring and evaluation, Union does not expect to begin
construction of addition recharge sites until the fall of 2004 and spring of 2005, Union has notified
all owners whose land has been identified as a potential recharge location, and Union holds a draft
agreement with Ms, Nancy Mercure to enter into an Easement Agreement on the Mecure #1 Site,

Financial Analvsis

The total estimated cost of the project is $344,000, and UDC water is used exclusively for
agricultural purposes, Staff is recommending a maximum loan amount of $ 309,500 (90% of the
estimated project cost) for 30 years at an interest rate of 2,50%, UDC will fund its $34,500 share of
the project through cash reserves and an increase in its assessments, The Union Ditch Company
will cover any costs that exceed the estimated project cost.

Table 1 is a summary of the financial aspects of the project. A CWCS Construction Fund Loan of
$309,500 would have an annual payment of $16,266 (including the 10% reserve requirement) at the
loan terms of 2,50% for 30 years, The CWCS loan will be repaid from increases in the base
assessment rate from $225 to $265 per share. plus a well surcharge of $500 per individual well
augmented, The annual loan cost for the project will be $ 78,96 acre-foot of consumptive use,
based on 206 acre-feet of historical average well depletions for wells in the augmentation plan,

Table 1. Financial Summary

.

$344,000
57
250
$309,500
$16,266
$225
$265
$500
$78.96
$407

Economics: The economic benefit of the project is considerable, It is estimated that one share of
the Union Ditch has a market value of approximately $110,000, which is expected to yield a total of
66,1 acre-feet consumptive use credit based on a historical analysis (1950-2002). In order to
replace historical average well depletions for wells in the augmentation plan (206 acre-feet per year
based on 1975 through 2002), UDC would have to purchase just over 3 shares of the Union Ditch
for a total investment of $343,000, In addition to the cost of purchasing these shares, the UDC
would also have to file for a change of use of these shares to augmentation purposes, The market
value for Union shares is not unlike the price for most other water that is available for purchase in
the South Platte River basin, Therefore. the cost of developing the recharge project is likely less per
unit of water developed when compared to the cost of acquiring new water sources, It is possible
that UDC can provide excess credits for lease to other entities, Also, it is likely that the recharge .
pond will serve as a wetland attracting wildlife to the area, an added community benefit.

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