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" ,~, . . , Agenda Item 18 January 23, 1995 Page 5 Power Authority funding as well as TABOR amendment revenue requirements would amount to an increase in average residential water rates of about $10 per month. Regional Considerations The SWSP involves a total of nine entities (Berthoud, Broomfield, Erie, Fort Lupton, Fort Morgan, Hudson, Longmont, Louisville, and Superior) as well as the MCQWD. Phase I of the MCOWD project involves all of the SWSP participants, Phase II involves Fort Morgan and the District. (Erie, Fort Lupton, Fort Morgan and Hudson have final or conditional authorizations for Construction Fund loans to participate in the SWSP.) The District's financial participation in the SWSP is estimated to amount to about $3.5 million. Should the District choose not to participate in the SWSP, there may be an impact on all participants but the City of Fort Morgan is likely to be most impacted by such a decision. Fort Morgan has a conditional authorization for $5.5 million from the Construction ,Fund and has recently submitted several studies to the CWCB staff for a final determination of feasibility. The City is expected to request funding for SWSP participation at the March 1995 Board meeting, . RECOMMENDA nON . It is the opinion of the Board staff that the proposed project is technically and financially feasible, Both the Division of Local Government credit report and the analyses in the draft feasibility study by Underwood indicate that the financial condition of the District is generally sound and that the proposed project may result in substantial but not unreasonable rate increases, The question of the "enterprise" status of the MCQWD may require a change in the District's existing revenue structure or an election to incur debt but the issue would have to, in any case, be resolved before the District and the Board could enter into a contract. With regard to alternatives to the proposed project, it is the opinion of the staff that more analysis would be useful to clearly justify the $5,7 million investment. A less expensive alternative might result should the District again enter into negotiations for purchase of the Hay Gulch wells, The District's concerns, however, with regard to possible contamination of the source by nearby oil wells and agricultural activity may be a genuine reason for developing another, more expensive, source of supply, Regarding refunding of the existing water bonds, it is the staff s opinion that such refinancing would best be accomplished through the Small Water Resources Projects Program of the