PROJ00091

• Contract/PO #: C153706
• Contractor Name: Lower Arkansas Water Management Association
• Contract Type: Loan
• Water District: 67
• County: Prowers
• Bill Number: SB 96-124
• Loan Projects - Doc Type: Feasibility Study

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DISCUSSION

The CWCB staff has reviewed the Helton & Williamsen feasibility study of July 1995 with
the associated plan of augmentation and finds no reason why the proposed project would not
be technically feasible. The final decision on this matter rests with the State Engineer, the
Division 2 Engineer and, eventually, the water court.

It is estimated that the consumptive use credits will amount to about 4,900 acre-feet from the
x- Y surface rights and 1,500 acre-feet from the Manvel Canal rights. While a consumptive
use credit was not calculated for the X- Y Ranch wells, the elimination of pumping from these
wells will reduce depletions to usable stateline flows.

The greatest percentage, by far, of the LA WMA well depletions to be offset by the plan of
augmentation will be for mainstem irrigation pumping which amounts to about 79,000 acre-
feet per year. To assess the economic feasibility of the project, three scenarios were evaluated
using a total project cost of $3,712,200 and 79,000 acre-feet per year in mainstem irrigation
well pumping. The three scenarios involved 4.0 percent financing for 30 years and for 40
years as well as a 2.0 percent 40-year scenario suggested by LA WMA. The results of the
analysis are displayed in the following table and indicate annual per acre-foot costs ranging
from $3.38 to $4.36.

ECONOMIC EVALUATION OF LAWMA PROPOSAL
Rate Tenn Annual Annual Total Annual Cost Est. Assessment
Years Debt Service Operating Expense Dollars Per Year Dollars Per Acre-Feet(l)
4% 30 $214,677 $130,000 $344,677 $436
4% 40 $187,540 $130,000 $317,540 $4.04
2% 40 $135,718 $130,000 $265,718 $3.38

(I) Based on assumed pumping of 79,000 acre-feet per year

With respect to fmancial feasibility, it should be noted that the proposal before the Board at
this time is a one-year loan of approximately $714,000. In the event the Association does not
close on the purchases, the option agreements will be structured so that the entire amount
would be refunded. All loan proceeds would be placed in escrow and would, in effect, serve
as collateral for the loan.

Finally it should also be noted that it is the intent of LA WMA to fully meet all of the
requirements of the Arkansas River Loan Account authorization in HB95-1155 (C.R.S. 37-60-
130) before requesting the entire loan amount with long-term financing.