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~ MOSES, WITTEMYER, HARRISON AND WOODRUFF, P.C. Rod Kuharich, Director March 15, 2006 Page 2 Highland Canal for use by the Remaining Shareholders. Under the Agreement, when the Highland Canal water rights owned by the Remaining Shareholders are not sufficient to allow them to divert 3.8 cfs into the Highland Canal, LA WMA would rotate, and allow them to divert, up to that amount of LA WMA's Highland Canal water rights that is needed for the Remaining Shareholders to divert 3.8 cfs into the Highland Canal. The Agreement, therefore, contractually encumbers, at most, 6.8% of LA WMA's Highland Canal water rights (3.8 cfs of LA WMA's 55.95 cfs) that are part of the collateral for the CWCB Loan Contracts. For the following two reasons, it is my opinion that the CWCB' s collateral in LA WMA' s Highland Canal water rights under the CWCB Loan Contract will not be impaired by the Agreement. First, by 1998, LA WMA had acquired most of the Highland Canal water rights that are collateral for the CWCB Loan Contracts. From 1998 through 2005 the consumer price index - all urban consumers for Denver-Boulder-Greeley, Colorado increased by 17.9% and I believe that LA WMA's Highland Canal water rights have increased in value by at least that same amount over that same period of time. Taking a conservative approach, since the Agreement would contractually encumber, at most, 6.8% of LA WMA's Highland Canal water rights, the value of those water rights would also be diminished by the Agreement, at most, by 6.8%. However, a 6.8% reduction in the value of LA WMA's Highland Canal water rights would not impair the CWCB' s collateral in the water rights under the CWCB Loan Contracts because the water rights have increased in value from 1998 through 2005 by at least a net amount of 11.1% (17.9% - 6.8%). Second, in my opinion, the CWCB' s collateral in the Highland Canal water rights would in fact be enhanced by the Agreement. This is so because the Agreement would give LA WMA, and the CWCB for that matter, additional certainty that the value of LA WMA's Highland Canal water rights would not be diminished due to the illegal diversion of more water into the Highland Canal by the Remaining Shareholders than they are entitled to divert based on their ownership interests in the Highland Canal water rights. Therefore, due to the increase in value of LA WMA's Highland Canal water rights since their acquisition in 1998 of at least 17.9% and the increase in their value due to the operational certainty provided by the Agreement, LA WMA's Highland Canal water rights that are collateral for the CWCB Loan Contracts will not be impaired by the Agreement. Accordingly, LA WMA requests that the CWCB provide its consent to the Agreement, as required by the provisions of the CWCB Loan Contracts, by signing this letter in the space provided below and returning a signed original of this letter to me. I have enclosed two signed originals of this letter so you can keep an original for the CWCB's files.