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Refinancing of Existing CWCS Loan The JID has formally requested that the existing CWCB for the Julesburg Reservoir be refinanced from a 5%, 40-year loan, to a 4%, 30-year loan. The CWCB may grant this request under conditions set forth in CRS 37-60-120, Contractual Powers of the board, which states: "(3) The board may adjust the authorized interest rate, extend the authorized repayment period for any project, and defer one or more annual payments if, in the board's opinion, the entity requesting such adjustment, extension, and deferment demonstrates that it has encountered significant and unexpected financial difficulties and that it has been duly diligent in its efforts to comply with the repayment provisions of its contract with the board." District's request includes the provision that the loan term be shortened (not extended). This is a benefit to the CWCB, since these funds are made available for other projects. In addition, the District is merely requesting the standard CWCB loan terms available for agriculture projects approved in 2000. The District has been diligent and has complied with the repayment provisions of both its CWCB loan contracts. There are several reasons that the District faces financial hardship: . In 1997 the Harmony #1 diversion washed out during a flood. The diversion was rebuilt at a cost of $700K, of which $51 OK came from an emergency loan from the CWCB. The remaining $190K plus $10K for interest during construction, was paid by the JID. The annual payment on the CWCB loan is $28,630 with first payment due February 1, 2001. Failure of the Harmony #1 diversion constitutes a "significant and unexpected financial difficulty." . In 2000 the District evaluated the Peterson-Lodgepole drop structure with technical assistance from the NRCS. The structure is in poor condition and could fail during a flood. The repair cost is $145K, of which $34K will be paid up-front by the District. If approved, the District will also be liable for a loan payment of about $6,300 for 30 years. This adds to the financial difficulty associated with the Harmony #1 diversion. . The JID has performed a preliminary evaluation of the Peterson Ditch diversion on the South Platte River. The Peterson Ditch is a critical structure for water management on the lower South Platte River. It is already being used for augmentation, and is being considered as a way to deliver water to a future "sustainment" reservoir. The Peterson Diversion was originally constructed over 100 years ago, and is at the end of its useful life. The District needs to replace the Peterson Diversion before it fails, creating an emergency situation. Replacement is tentatively scheduled within the next 10 years, at a cost of $1 million. With a CWCB loan, the District will need to fund approximately $120K, and then have a loan payment of approximately $50K per year. This will add to the financial difficulty of the District. . The JID has identified 7 check structures that need replacement over the next 10 years at a total cost of approximately $30K. The District will fund this work itself, which will add to the financial difficulty of the District. . There is a financial hardship based on the cost per acre-foot delivered to JID shareholders, when compared to other irrigation districts and companies on the South Platte. It costs the JID about twice the area average to deliver water to its shareholder's headgates. Julesburg Irrigation District Peterson - Lodgepole Control Structures November 2000 (Updated January 2001) Page 12 of 14