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Smart Bros. Inc. July 20-21, 2004 Agenda Item 14a In 1998 SBI purchased the adjacent Hessler Farm, consisting of approximately 450 acres, 4 irrigation wells and one recharge pond. Subsequently they expanded the recharge area, now consisting of 4 interconnected ponds, that are fed through the South Platte Ditch. SBI (which includes the Hessler Farm and recharge area) is at the end of the ditch, and icing of the ditch poses a significant problem during the winter. This makes running recharge water impossible at times. SBI wants to develop a more flexible recharge system that will generate more augmentation water to be used to offset the depletions caused by their 12 wells. They currently generate credits to offset their charges, but are short in dry years, and are vulnerable because of the ditch icing. In 2002 they were 400 AF short of credits to offset depletions. The proposed project will add a recharge well at the river, 13,000 feet of pipe, and 3 new recharge areas. The project will diversify and enhance the existing recharge project by allowing operations under harsh winter weather conditions. SBI would continue to be covered in LWU's Plan for Augmentation, but by generating additional augmentation credits S81 can strengthen their own coverage and help strengthen the LWU. Feasibilitv Studies Brent M. Nation, P.E. of Fort Morgan has completed the feasibility study in accordance with CWCB guidelines. The study includes an assessment of alternatives to generate augmentation water for SBI. Smart Brothers. Inc. SBI is a Colorado corporation in good standing, incorporated in 1987, with the primary purpose of conducting a general farming, livestock, and agriculturalbusiness. The curr:ent officers are Austin Smart, President, Garrett Smart, Vice-President, and Carson Smart, Secretary/Treasurer. Each officer has 1/3 ownership of the corporation. Water Riahts SBI currently has decrees on the 12 wells used for their operations. SBI also own shares of the following water rights: South Platte Ditch Company -17.4 shares Davis Brothers Ditch Company - 50 shares Prewitt Reservoir - Logan Di,strict - 715 "acre rights" The proposed recharge well is already listed in the LWU plan for augmentation. Proiect Description A range of alternatives were considered on how to generate an augmentation supply for SBI, including: 1. The no-build alternative, continue to rely on LWU and the existing recharge area for augmentation. 2. Purchase a senior water right for augmentation. 3. Construct a new recharge well and pipeline and pump to existing and new recharge ponds. Page 2 of 6