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59% $3.19 54% $19.47 Alternative financing sources: The Company actively sought alternative financing. They were not able to obtain a grant from the NRCS to cover project planning or construction costs. The TWC also requested a loan from their bank, the First National Bank of Ft. Collins, but was turned down because the bank does not provide long-term fixed rate financing for agricultural projects. (The Bank letter of denial is included in Appendix G.) The bank will be able to provide short-term bridge financing for the period May 1 through July 1, 2001. Collateral: As security for the loan the TWC will pledge assessment revenues backed by assessment covenant and Company property at least equal in value to the loan amount. Economic Analysis The economic benefit of the project is considerable. The Tunnel provides an average annual volume sufficient for a full supply on approximately 6,000 acres of agricultural land (15,085 acre-feet /2.5 acre-feet per acre.) If the project is not completed the annual production of these lands would drop. Assuming the average net yield per acre with water is $60, compared to a net yield of $25 as dry land, there would be a loss of $35/acre x 6,000 acres = $210,000 per year. This loss would continue each year until the tunnel was repaired or replaced (an additional cost of $4.1 million.) Clearly a major economic benefit of the project is avoiding the economic crop loss. The cost of the "No action" Alternative No.1 also relates to the value of the water right itself. The average water delivery of 15,085 acre-feet is non-native water to the South Platte basin, and can be used to extinction. Colorado Big Thompson shares are non- native, average 0.7 acre-feet delivery, and are currently valued above $10,000 per share. Valuing TWC deliveries at $10,000 per acre-foot yields a water right value of $150 million (15,085 acre-feet x $10,000 per acre-foot.) This value would be lost if the project were not completed. Social and Physical Impacts The project will have no significant social impacts, since it will assure the continued operation of a currently existing water delivery system. The project will have minor physical impacts, once construction is complete. All work will be performed on the interior of the Tunnel, and the construction access road and mobilization area will be reclaimed in accordance with the USFS permit requirements. Tunnel Water Company Laramie-Poudre Tunnel Feasibility Study September 2000 (Updated December 2000) Page 14 of 15