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,.......~ s . . . . . Agenda Item 18 January 23, 1995 Page 3 the District's primary source of supply with the capacity to provide about 1,380 acre, feet per year. The Hay Gulch wells are leased by the District from the Northern Trust Company of Chicago, lI1inois as Trustee for the F Quarter Circle Ranch, The draft feasibility study describes six alternatives for developing water supplies for the District. It is not clear if the alternatives are comparable (if they all accomplish the same objective) and there is no side-by-side quantitative comparison of alternatives, The recommended alternative, participation in the SWSP pipeline and use of a groundwater aquifer in the area, apparently was selected primarily because of the high cost of purchasing the Hay Gulch wells and because of concerns with reportedly falling groundwater levels and possible contamination of the Hay Gulch source. Other groundwater sources in the area were considered to be inadequate in quality or quantity. ,The MCQWD and the Trustee forth.e F Quarter Circle Ranch entered into unsuccessful \ negotiations for purchase of the Hay Gulch wells in 1992, On January 17th and on January 18th, the Board staff received written communications from David Brown of Moses, Wittemeyer, Harrison and. Woodruff of Boulder, the local representative for the Northern Trust Company, outlining the history of the negotiations and expressing the willingness of the Trustee and the owners of the Hay Gulch wells to reopen negotiations with the MCQWD (please see Attachment C), The correspondence also includes a letter from Paul McDill, the president of the District, expressing an interest in reopening negotiations, Financial Feasibility The staff has reviewed the financial information and the 30-year cash flow projections prepared by the consultant and has obtained a: credit report from the Division of Local Government (Attachment D). A discussion of each follows, Cash flow projections were prepared by Underwood under two scenarios: (I) property taxes would remain at current levels and funding for 75 percent of the costs of the project, at 4,0 percent interest, and the bond refinancing, at 5,5 percent interest, would be obtained from the CWCB, (2) property tax revenues would be reduced to about 10 percent of total revenues, user charges would be increased to offset the decrease in property taxes, and the entire bond refinancing as well as $1.0 million in project costs would be obtained through the Small Water Resources Projects Program of the Colorado Water Resources & Power Development Authority with the remainder of project costs financed by a Construction Fund loan at 4,0 percent. Cash Flow Scenario I indicates that existing revenue sources would be sufficient to repay project costs without an increase in water rates, (The consultant did recommend