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I I I I I I I I I I I I I I I I I I I 6.2 PROPOSED FINANCING Of the methods of financing investigated, the most likely source of funding would be a combination of a Colorado Water Conservation Board loan and revenue bonds issued by the Colorado Water Resources and Power Development Authority. Each source would finance half of the construction cost or $4,581,200. The annual payment on the CWCB loan would be $298,015 assuming five percent interest and a thirty year term. The size of the bond issue would be $5,933,460 with an annual payment of $629,417 at 10 percent interest over the 30 year term. If the bonds were issued over a 30 year period at 8 percent interest, the size of the bond issue would be $5,659,012 with an annual payment of $502,676. The size of the bond issue was determined by assuming a two year construction period with the Authority providing the debt reserve. The interest payable on the bonds was examined at eight percent and ten percent. The interest earned on investments was assumed to equal the interest payable on the bonds. Table 6.1 details the determination of the two bond sizes. The earnings on investments during construction and payout during construction are contained in Tables 6.2 and 6.3. Tables 6.4 and 6.5 show the financial program and payout schedule. TABLE 6.1 - Cost of Bond Issue Item 8 Percent Interest 10 Percent Interest $4,581,220 Construction Cost Less interest on construction funds Less interest on capitaliza- tion fund Net construction fund Capitalization fund (Interest during construction for 3 years) Bond Discount (2%) Expenses (0.85%) 292,255 149,398 4,139,567 1,358,163 113,180 48,102 $5,659,012 Amount of Bond Issue $4,581,220 352,145 244,755 3,984,320 1,780,039 118,670 50,435 $5,933,464 Normally a water project of this magnitude would be paid for by water tap fees and/or an increase in the charges for water. Establishing tap 6-4