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<br />1839 <br /> <br />.. <br /> <br />The rental price during a normal year, or on mlllti-year contracts, is estimated to be $140/af <br />C.U. This is equivalent to a sale price of $1,7$0/af C.U. for a water right in the Ft. Lyon <br />area at an 8 percent interest rate. It is recogni~ed that the usual sale price for water rights <br />is $1,6oo/af C.U. in the Ft. Lyon area. However, Ft. Lyon by-laws prohibit the sale of water <br />I <br />for M & I purposes. Further, the sales of a mil\ority of ditch company shares often involve <br />difficulties, delays and significant legal costs, which would cause M & I users to prefer to rent <br />from the water bank. It should be noted that some Fry-Ark water is available in most years <br />to M & I users at $8/af C.U. Some users, particularly municipal water systems, may prefer <br />to rely on this much cheaper Fry-Ark water rat~er than the water bank, but they would need <br />to make provision for the years when Fry-Ark ~ater is not available by developing storage <br />reservoirs or perhaps by contracting for an alternative supply from some other source. For <br />most manufacturing firms, the cost of process "Vater is such a small factor in overall product <br />cost that their primary concern is reliability of supply and predictable water quality, not its <br />cost. <br /> <br />9. As discussed in Section 7.8, the water bank willi reimburse the FLCC for certain costs which <br />it imposes: (a) the expense of the FLCC consultIng hydrologist reviewing and approving each <br />aspect of the water bank; and (b) increases ijI FLCC costs caused by water bank use of <br />FLCC facilities, including increased water accdunting, headgate adjustments, and review of <br />water bank operations by the FLCC's legal consultant. These costs, which would be higher <br />in the initial year of the water bank than in subsequent years, have been estimated in this <br />analysis. The actual costs will be determined py an audit. <br /> <br />10. It is assumed that the water bank will need t~ go to water court and obtain a decree, or <br />possibly more than one decree. As discuss~d on page 8-3, the water bank will begin <br />operations under a temporary substitute supplY plan and delay obtaining a formal decree. <br />This makes it difficult to estimate the timing and cost of obtaining the decree(s). The legal <br />and engineering/hydrologic costs would be abopt $30,000 for a temporary water supply plan. <br />Some of the estimated $5,000 for the initial yeilr legal cost would be spent on the temporary <br />supply plan. When a water court decree is neefed in future years, the cost would range from <br />$20,000 to $200,000. This amount has not beell shown in the pro forma income and expense <br />I <br />statements, except by footnote. i <br /> <br />The pro forma income and expense statements in Tables 7.7 through 7.11 show the operating <br />revenue and expenses of the water bank under the assumptions listed above. There are five such <br />statements: one for the initial year of the water bank; one for Year 1, the first operating year; one <br />for a normal year, i.e., one with normal supply and demand for water during following years of water <br />bank operation; one for a dry year; and one for a wetJyear. All amounts are shown in 1994 dollars, <br />to eliminate the need to estimate the effect of futur~ inflation on revenues and expenses. <br />I <br />I <br />I <br /> <br />7-34 <br />