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<br />Town of Paonla - Water Rights Purchase
<br />November 25-26. 2002
<br />
<br />Agenda Item 201
<br />
<br />CWCB Loan Basis - Sased on a value of $1,500,000 and considering that the Town will be re-
<br />acquiring 317 of the 400 original watertaps an adjusted "water right" value would be $1,188,750
<br />(317/400 x $1,500,000). However, based on the tap valuation method, the value of the taps could
<br />be as high as $2,694,500 (317 x $8500). While Staff supports the amount of the loan request at
<br />$1,710,000, and has evaluated the feasibility of loan payback at this level, we are recommending
<br />that the planned sale of the Ark Land Property (estimated to be $800,000) be used to pay down the
<br />CWCS loan. This would in effect bring the net loan to $910.000, and the cost oftap acquisition
<br />more in line with the adjusted "water right value" of $1,188,750.
<br />
<br />The Total Project cost is estimated to be as follows:
<br />
<br />1.
<br />2.
<br />
<br />Ark Land Purchase
<br />Acquisition Costs
<br />
<br />$1,800,000
<br />100.000
<br />$1,900,000
<br />
<br />TOTAL
<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 miscellaneous costs.
<br />
<br />Financial Analvsis
<br />
<br />The total estimated cost of the project is $1,900,000. The Conservation Fund is nearing completion
<br />of contract negotiations to purchase the Ark Land Property for $1,800,000 on or before July 31,
<br />2003, and anticipates having a signed purchase contract very soon. The property, including the
<br />associated water taps, will be conveyed to the Town in a single back-to-back closing involving all
<br />parties. The Town qualifies for the Municipal Low Income loan interest rate, and staff is
<br />recommending a maximum loan amount of $1 ,71 0,000 (90% of estimated project cost) for 30 years
<br />at an interest rate of 3.75%. The Town has budgeted $190,000, the 10 percent local match needed
<br />for their portion of the project, and the money is in place in Water Fund reserves for that purpose.
<br />The current water rates, discussed herein, will be increased to support the loan payment.
<br />
<br />Alternative financing sources: The Town of Paonia had originally considered a $1,000,000
<br />CWCS small project loan and $800,000 in bond funding for the project. They have now elected to
<br />request full financing from the CWCS.
<br />
<br />Table 1 is a summary of the financial aspects of the project. A CWCS Construction Fund Loan of
<br />$1,710,000 would have an annual payment of $105,501 (including the 10% reserve requirement) at
<br />the loan terms of 3.75% for 30 years.
<br />
<br />Table 1. Financial Summary
<br />
<br />Project Cost $1,900,000
<br />Number of Residents --.l1497 In-town/800 Out-of-town) 2,297
<br />Number of Water T~s (839 In-town/548 Out-of-town) 1387
<br />CWCS Loan AmountL30 vears) $1,710,000
<br />CWCS Loan Pavment(includes 10% reserve) $105,501
<br />Current Monthlv Water Rate (AveraQe- In Town) $10.50
<br />Future Monthlv Water Rate $16.50
<br />Monthlv per tap cost of the CWCS loan $6.34
<br />
<br />Page 5 of 8
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