BOARD01897

• Board Meeting Date: 3/10/1998
• Description: CF Section - Groundwater Appropriators of the South Platte - Approval of a Construction Fund Authorization in Amount of $1.7 M for Construction of the Sedgwick Augmentation Reservoir
• Board Meetings - Doc Type: Memo

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Agenda Item 22,
March 10, 1998

Page 2

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the compact calls for curtailment of junior water rights in Water District 64, within Colorado,
(During the period April 1 through October 15 colorado is required to deliver 120 cfs to the
gage at Julesburg, or curtail water rights junior to June 14, 1897,)

The project will cost approximately $1.7 million to build, The cost per acre-foot of storage would
be $772, based on the 2200 acre-foot size of the reservoir,

LOAN TERMS

GASP has requested a 4O-year loan at 1 %, These terms are more favorable than any recent
financing provided by the CWCB, with the exception of grants for projects that resolve issues of
State concern, (For example, $2M for the fish hatchery in the San Louis Valley, and $1.25M for
the GVIC to improve flows in the 15-mile reach,) Although efforts to meet our compact
obligations on the South Platte River are an issue of State concern, GASP is NOT requesting a
grant.

In November 1997, the CWCB set standard CWCB terms for agricultural loans at 4% for 30
years, If the entire project ($1.7 mi1lion) were financed at these terms (4% for 30 years), the
annual loan payment would be $97,546, or $44.34 per acre-foot, per year, Operation and
maintenance costs would add between $7 and $16 per year, so that the [mal cost per acre-foot per
year would range between $51 and $61. (A similar analysis with loan terms of 4% for 40 vears
yields a cost of $46 to $55 per acre-foot per year, See attached Feasibility Study, page 18,) The
financial feasibility of the project is in question at these costs,

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GASP provides augmentation water for junior wells in the South Platte River basin, in much the
same way that LA WMA provide augmentation water for junior wells in the Arkansas basin, The
CWCB has made loans to LAWMA at 3% for 40 years, primari1y because litigation concerning
the Arkansas Compact has made well augmentation in the Arkansas a matter of State interest.
Part of the solution was to provide financing at a rate below the standard Agricultural rate, In
addition, the loan to LA WMA allows a lower payment during the first 10 years of the contract
(roughly equivalent to the payment for a 4O-year, 1.5% loan), with the net total return to the
Board remaining equivalent to a 3 %, 40-year loan, If these terms were applied to this project,
the cost per acre-foot, per year would be about $32,59 for the first 10 years, and between $49
and $59 thereafter,

The following added issues should be considered when setting terms for this loan:

. GASP has been in existence for about 25 years. During that time it has spent approximately
$8 million of its own funds to augment junior wells in the South Platte basin, GASP has
never before requested or received a low interest loan from the CWCB,

. When GASP was formed, the decision Was made that the basis of operation was to fully
augment all junior wells, 7 days a week, There has been no protracted litigation, at State

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