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Dolores Weter Conservancy District - Dove Creek Secondary Water Supply System July 28-29, 2003 Agenda Item 211 Currently, the cost of treated outside irrigation water for Town residents is $2.40 to $3.00 per 1000 gallons. DWCD will make available up 300 acre-feet of its municipal and industrial (M & I) water to meet the needs of the Town, and under the franchise agreement, will construct and operate the delivery system. The system will include pumping plants, a terminal storage facility, and initially up to 307 residential taps with flow meters. By utilizing a portion of the DWCD's excess M & I water supply, the outside irrigation can be provided at about $1.26 per 1000 gallons, including annual operation and maintenance. Actual water cost would be $0.33 per 1000 gallons. In addition to being a very important project for the community of Dove Creek, it will allow DWCD to make use of its M & I water supply for the benefit of the taxpayers that support the Dolores Project. The proposed system will be designed to serve only residential customers at this time, with possible expansion to commercial users in the future. ' . Analysis done by DWCD indicates that they can cash flow the project through tap fees over the next 10 years. DWCD will secure a minimum of 200 tap commitments before commencing the project. Taps sold at $3200 before the project begins, will be payable to DWCD over 5 years at the same interest rate as the CWCB loan. This will assure that 65% of the project costs are covered by tap fee commitments before the project begins. A total of 307 taps are required to generate enough revenue to fully repay the project cost (307 x $3200 = $982,400). DWCD will be assuming the funding risk that they will be able to secure the additional 1 07 taps, beyond the initial 200 taps. In addition to providing affordable water for outside irrigation needs to the residents of Dove Creek, the project allows the DWCD to utilize its M&I water supply. At the present time DWCD has a $108 per acre-foot repayment obligation for its M&I water from the Dolores project. If the project is . developed, the DWCD can reduce the tax burden ,on their constituents by the amount of water committed to the project-300 acre-feet. That will save the local taxpayers $34,000 per year in taxes, and the repayment obligation will be met with user fees generated from the annual lease of water. Feasibllltv Studies The DWCD, through Steve Avreschoug, General Manager, has completed a feasibility study in accordance with CWCB guidelines. Dolores Water Conservancy District The DWCD is the local sponsor and operator of the Dolores Project. The DWCD was formed in 1961, and in 1977 entered into a contract with the Bljreau of Reclamation to manage the water and maintain the facilities of the Dolores Project, and to make repayment to the Bureau for its construction costs. The DoloresProject, buill between 1979 and 1999, provides irrigation and municipal and industrial (M & I) water in Dolores and Montezuma Counties, providing irrigation supply to 92,500 acres, and providing M & I water for the City of Cortez, the Town of Dove Creek, Towaoc, and rural domestic water users throughout the DWCD service area. DWCD operates McPhee Reservoir (capacity of 381,000 acre-feet), 7, pumping plants with 36 separate pumps, 85 miles of open canals, 150 miles of pressurized pipeline lateral systems, 302 irrigation water delivery boxes, 102 M & I water taps and meters, and 3 hydro power plants. DWCD collects approximately $800,000 per year in revenue from property taxes, most of which is used to meet the annual repayment obligation to the U.S. government. This debt has a rernaining . amount of $9,100,801 with an annual payment of $650,000, expiring in 2046. The District also operates a Water Activity Enterprise fund budget to fund and manage the operation and maintenance function of the District. Page 2 of 6