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<br />. <br /> <br />~ <br />C\1 <br />N <br /> <br />Since the company only holds storage decrees for 2940 <br />acre-feet, new decrees will be needed for the proposed reservoir <br />enlargement. Alternatively, the San Miguel District holds <br />substantial conditional decrees for storage and direct flow rights <br />on the San Miguel River. The contemplated draft of a portion of <br />these decrees could be transferred to the enlarged reservoir. In <br />either event, it is not anticipated that the proposed reservoir <br />enlargement will have any problem obtaining sufficient rights to <br />assure a firm yield, although this is a question which will be <br />subject to a final determination before the project is started. <br /> <br />The staff's presently estimated cost of the project is <br />$2,025,000. This cost is the higher of two cost estimates <br />submitted by the consulting engineer and includes foundation <br />treatment of the present structure. The second cost estimate <br />submitted by the engineer was $1,807,500, which assumes that no <br />foundation treatment will be necessary. The staff believes that <br />the higher cost estimate should be utilized until it is <br />conclusively established that foundation treatment will not be <br />needed. <br /> <br />proposed Financing <br /> <br />The proposed funding for this project is as follows: <br /> <br />San Miguel WCD (bonds or commercial loan) <br />CWCB funds (to be repaid <br />by user changes) <br /> <br />Total <br /> <br />$1,012,500 <br /> <br />$1,012,500 <br />$2,025,000 <br /> <br />Onder this financing arrangement payments to CWCB would be <br />$59,008 per year for 40 years for a total repayment of $2,360,320. <br />When the retirement of a bond issue for the entity's 50 percent <br />share is included, it is expected that the entity would have to <br />pay an additional amount of $159,120 per year (assuming a $1.5 <br />million bond issue, which includes interest during construction <br />and reserve accounts, at 10 percent per annum to be repaid in 30 <br />years). Adding $5,000 per year for operation and maintenance <br />increases and $11,758 per year for the CWCB required reserve fund <br />increases total annual expenses to $234,886. <br /> <br />With annual charges of $234,886, the average annual yield of <br />the reservoir enlargement (est~ted at 5370 acre-feet) would have <br />to sell at $43.75 per acre-foot (or $43.13 per acre assuming that <br />all 4880 acres received a prorata share of the water supply) to <br />yield enough revenues to cover the required debt service, O&M, and <br />reserves. By comparison, the consulting engineer estimates that <br />an acre-foot of supplemental water would be worth about $65 per <br />acre-foot. <br /> <br />-2- <br />