The following message was sent via email to all Hondius water users for which we had an email address. If you did not receive this message via email, please send contact us so that we will have your current email address for future reference. Thanks. Jim
From: Jim Redman
Sent: Friday, May 06, 2016 12:43 PM
Subject: Update on Hondius Water Project
To: Hondius Water Users
I wanted to provide you all with an update on our project to replace the Hondius water line. Remember that you can also keep track of developments through the Hondius website.
Last October, we held a public meeting and provided the estimated cost of the project under the assumption that we would be requesting funds under the State Revolving Fund (“SRF”) program. However, a major change in this program occurred last year in that loans under the SRF program are no longer made immediately after the Preliminary Engineering Study (“PES”) is completed and a SRF required election indicates approval of the plan. Rather, the funding by the SRF would now be made after additional costs would be incurred for detailed engineering work; therefore, interim financing (or additional contributions by the owners) would be required to pay for those costs prior to the time when the funding would be available from the SRF.
As a result, we have been working with the Town of Estes Park (“Town”) and the United States Department of Agriculture (“USDA”) on a financing alternative, whereby the Town would be the party incurring the debt obligation (including any interim financing required) from the USDA and would repay the loan through its future billings of the Hondius water users, likely over a period of 40 years, the maximum term of loans under the USDA program. We have found that the USDA program is more attractive than the SRF program for several reasons including:
- The maximum repayment period is 40 years (vs. 20 years under the SRF program) with an interest rate only 1% higher than the SRF’s 20-year period – currently maximum USDA rate of 3.25%. This obviously has the effect of reducing our annual cost.
- No Local Improvement District (“LID”) is required under the USDA program. The LID required by the SRF program results in a required election (for which Colorado registered voters are eligible) to be held in November only. For the USDA program, all Hondius users will be allowed to vote for the project in a method to be determined by the Town, and not limited to a November election.
- The provisions of the Davis Bacon law are not required to be followed under the USDA program, while they are required under the SRF program. These requirements tend to increase the costs of construction.
I met yesterday with representatives of the USDA and the Town, as well as Ed Schemm from Larimer County and Rodd Harr, the engineer that has been working on our PES. This seemed to be a very positive meeting, and while we still need to have our engineer complete the PES, including a few additional considerations for the USDA that are different from the SRF, and have the Town complete the application to the USDA, this seems like a plan that can work for us. The USDA indicated that once the application (including the PES) is approved, they would commit to funding and at that point the Town could obtain interim financing so additional work – detailed engineering design and construction – could occur.
Prior to that point, of course, the Town would determine whether the Hondius users are in favor of the proposed project and will commit to repaying the Town for incurring the debt by agreeing to pay future water billings, which would include a line item for repayment of the obligation (a reasonable request – we would simply be paying off the debt in this manner instead of through a special billing similar to a property tax which we had discussed if the SRF program was used.)
Progress on this project continues, albeit not as quickly as I would like; however, I am hopeful that we can now timely complete the application process for the USDA and set a time for another public meeting to present to you the revised plan and estimated cost and determine once and for all if we can proceed with the project.
Also, we would like to allow those that aren’t currently Hondius water users to join the project (this would reduce the average cost for all of us), so feel free to promote this project to your neighbors that aren’t current Hondius users. While they would likely have to pay a Town tap fee, they would secure a long-term source of dependable water. Additionally, anyone that decides to join the line after the project would still be required to participate in the repayment of the financing costs until the payoff of the financing costs after 40 years.
Thank you for your support and I expect to be getting back to you in the near future with a time for the next public meeting.