PROJ00221

• Contract/PO #: FS0017X
• Contractor Name: Ouray, City of
• Contract Type: Loan
• Water District: 0
• County: Ouray
• Loan Projects - Doc Type: Feasibility Study

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E.

Feasibility

Construction Feasibilitv:

As noted under the discussion regarding alternative evaluation, the two selected
construction methods proposed for bidding are the most feasible and economic
approaches. On-site material will be utilized as much as possible to mitigate the difficult
access to the site, which requires helicopter transport of construction materials. Site
visits were conducted as discussed above to ensure the feasibility of the proposed project.
The no-action alternative is not considered feasible due to the safety risk and financial
loss in the event of failure of the existing diversion wall.

Benefit/Cost Analysis:

1. Damage Estimates: Mussetter Engineering prepared a damage estimate as part of
the CaE design project (see appendix: Skyrocket Creek Debris Flow Analysis). Costs
for repair to public facilities were considered under several failure scenarios. Estimated
damages for the lOO-year debris flow ranged from $435,795 to $716,095. The average of
$575,945 was used for the annual cost estimate. Damages did not include damages to the
highway and adjacent utilites.

2. Indirect Losses: Additional indirect losses will result from closure of the pools.
The monthly revenue generated from the Ouray City Hot Pools during July, August and
September averaged approximately $98,600 in 1999 and has increased every year since
1996. It is also anticipated that closure of the pools will have a direct impact on tourist
visits and sales tax income will be impacted. Monthly sales tax revenue for these same
months averaged $69,363 for 1999 and also shows an annual increase. For the 100-year
event we will asswne pool closure of 1 month and 50-percent loss in sales tax revenue for
the same month, although the true impact of a severe event and resultant pool closure
could extend well beyond one month. Indirect costs due to pool closure and loss in sales
tax is estimated at $133,300.

3. Annualized benefits: Total losses due to damage repair and indirect losses of
revenue and sales tax is estimated at $709,245 for the 100-year event. Asswning no
damage due to a 2-year event and using a standard forecast evaluation of cost of damages
for events between the 2 and 100-year debris flow, average annual damages for the
failure were calculated by plotting estimated damages against probability (see figure 3).
The area beneath the curve on this plot is the average annual benefits (avoided costs) and
is estimated at $32,000 based on this methodology. This asswnes damage costs for
events over the 100-year occurrence are the same as for the 100-year event. This does
not account for interest that will be paid by the City if money is borrowed to make
repairs.

4 Annualized Cost of Project: Annualized costs are based on a construction loan of
$90,000 to be paid back over 30-years with annual interest rate of 5%. Total costs for the
loan with interest and principal are estimated at $175,000. It is anticipated that this

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