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<br />.' ... <br />.. <br /> <br />Mr. Mike Cook <br />January 26 2006 <br />Page 2 <br /> <br />specifically st~ltes that no informalities in conducting such election shall invalidate the election if <br />it has been otherwise fairly conducted. <br /> <br />The statute requires a very simple ballot question, i.e., "Contract -- Yes" or "Contract -- <br />No", or words equivalent thereto. If a majority ofthe legal electors voting at the election vote <br />"Contract -- Yes", the board of directors shall immediately cause the contract to be executed by <br />the president and the secretary of the district. C.R.S. ~37-41-117(3). <br /> <br />It is my understandin.g that Riverside is complying with these requirements by placing <br />, the matter of the loan agreement for water rights purchases up for an election and that the <br />election will comport with all of the statutory requirements described above. Accordingly, <br />assuming a favorable outcome of the election, it is my opinion that the Bank's loan to Riverside <br />based thereon will be binding and enforceable. <br /> <br />I <br /> <br />The second issue is whether Riverside is a tax exempt entity. First, a disclaimer: I am <br />not a tax attorney and the Bank should obtain independent tax advice on this issue. Having said <br />that, the Colorado Supreme Court has held that irrigation districts are not exempt from taxation <br />as municipal or quasi-municipal corporations, per se; but that the Colorado constitution exempts <br />from taxation "ditches, canals and flumes" owned by individuals or corporations (including <br />irrigation districts). Furthermore, the Court read the exemption broadly and held that irrigation <br />district property that is tax exempt includes such items as a caretaker's house and other buildings <br />and such lands that are integral parts of reservoir system as a whole and are used arid necessary <br />for proper operation and maintenance thereof, including reservoirs, bed of reservoir, headgates <br />, and dams. Logan Irrigation Dist. v. Holt, 110 Colo. 253, 133 P .2d 530 (Colo. 1943). Therefore, <br />although it appears that an irrigation district is not a tax exempt entity, per se; the water rights, <br />buildings, and lands that it owns or acquires that are integral parts of the Riverside system as a <br />whole and are used and necessary for proper operation and maintenance of the Riverside system <br />are tax exempt. <br /> <br />If you have any questions, or wish to discuss this matter further, please contact me. <br /> <br />cc: Riverside Irrigation District <br />Board of Directors <br /> <br />