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<br />
<br />Item
<br />
<br />Cost
<br />
<br />1. Engineering and Planning
<br />2. l5,500L.F. (6-inch to 15-inchDiameter),
<br />and a Concrete Diversion Structure
<br />
<br />$58,500
<br />$195,000
<br />
<br />e
<br />
<br />Total:
<br />
<br />$253,500
<br />
<br />The engineering and planning cost presented above were in-kind services provided by NRCS. It
<br />was calculated by taking 30% of the estimated construction cost, and was not part of the Company's
<br />loan request.
<br />
<br />The project has been completed, at a total construction cost of $292,000. The $97,000 in project
<br />cost overruns can be attributed to 4 main construction items; increased pipe cost, increased pipe
<br />quantity, rock excavation not identified in the original estimate, and the adjustment in the number of
<br />flow measuring devices and their sizes. Given the spike in oil prices, the cost of supplying the pipe
<br />to the project increased by approximately $35,000. The increase in pipe quantity and rock
<br />excavation accounted for $25,000 in additional cost, and the field adjustment to the flow measuring
<br />devices was at an added cost of $27,000. These 4 items accounted for approximately $87,000 of
<br />the $96,000 increase in project cost.
<br />
<br />Upon completion of the project, the NRCS, as part of their Salinity Control Program, was to
<br />contribute 75% of the total construction cost to the Company. Based on the original estimate, this
<br />number would have been $146,250. This anticipated reimbursement of$146,250 from NRCS
<br />would tl}en be subtracted from the Company's approved construction loan amount of$195,000, for
<br />a fina110an amount $48,750 ($50,700 with the 1 % origination fee). This fina110an amount of _
<br />$50,700 was approved by the Board at the September 2004 Board Meeting. ..
<br />
<br />During the preliminary phase of construction, the Company discussed the anticipated project cost
<br />increases with NRCS, which were approved and assumed to be reimbursed at 75%. However,
<br />based on NRCS 's method of calculation, the fma1 payment actually received by the Company from
<br />NRCS was only 67.5% of the total project cost, or $196,892. This resulted in the Company having
<br />a current remaining loan balance of $94,366, which to-date they have paid down to $85,373. This
<br />balance is approximately $35,000 greater then the final loan balance approved by the Board.
<br />
<br />Based on the additional costs as presented above, Lower Bauer West Lateral is requesting an
<br />additional $35,000 in loan funds.
<br />
<br />DISCUSSION
<br />Due to additional work not programmed in the original cost estimate and unforeseen variations in
<br />cost for specific items during construction, the overall cost of the project has increased, resulting in
<br />a requested loan increase of approximately 59% or $35,000. Staff has inspected the improvements
<br />in the field and has reviewed the detailed cost summary provided by the owner and finds the
<br />additional expenses to be justifiable and the final loan amount reasonable, given the actual project
<br />payment received by the Company from NRCS.
<br />
<br />The amended loan amount for Lower Bauer West Lateral will be $86,050 ($83,750 for project costs
<br />and $2,300 for the 1% Loan Service Fee), at the present interest rate of 2.5 % for 30-years. The
<br />new annual payment will be $4,522, which includes the 10% reserve requirement. The -
<br />Company's current approved loan of $50,700 has an annual payment of $2,665, which includes the ..
<br />10% reserve requirement.
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