C153362 Feasibility Study

• Contract/PO #: C153362
• Contractor Name: Trinidad, City of
• Contract Type: Loan
• Water District: 19
• County: Las Animas
• Bill Number: SB 81-439
• Loan Projects - Doc Type: Feasibility Study

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A construction and financing program is outlined, which
calls for Colorado Water Conservation Board approval in
December, 1980; legislative approval during late spring,
1981; design work during spring and summer of 1981; finan-
cing arrangements in fall of 1981; and construction of
Phase I during winter and spring of 1982. Phase II would
be delayed 5 to 7 years at a cost escalation of 10 percent
per year until that time. The Phase I construction cost
will increase to $931,300. Proposed financing sources are
as follows:

state Loan
Energy Impact Funds
Municipal Bond Issue

$465,650
350,000
115,650

An analysis of the City's water utility system indicates
that the City can payoff the state loan for Phase lover
30 years at 4 percent, payoff the new municipal bond over
30 years at 9 percent, payoff an existing 1975 bond issue
(which is to be paid off by 1985), and operate the utility
with reasonable increases in water rates. The rates would
have to be increased 18 percent in 1981, 20 percent in
1982, 8 percent in 1988, 10 percent in 1989, and 8 percent
in 1990 to meet operating expenses and repayment of the
state loan and municipal bonds. The bulk of the rate
increases go into escalated operating expenses, due to
inflation.

Even with Phase II scheduled for development 5 years
later, the City can payoff the combined cost with a
modest increase in revenues of 7.6 per year.

RECOMMENDATIONS

The following recommendations are made:

1. The City of Trinidad's City Council should adopt
a program of water supply improvements as outlined
in this Feasibility Study, utilizing the phased
approach discussed.

2. Phase I of the water supply improvement project
should be submitted to the Colorado Water Con-
servation Board, with a request for 50 percent
financing through the Water Project Construction
Fund. The estimated loan requirement for Phase I
facilities is $465,650 based on 1980 cost estimates.
The requested repayment period should be 30 years
at a 4-percent interest rate.

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