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<br />Memorandum <br />June 7, 1996 <br />Page Four <br /> <br />e <br /> <br />e <br /> <br />Dividing the estimated loan balance of $1,877,640 by 4,140 acre-feet results in an implied <br />value of about $450 per acre-foot of consumptive use for the remaining water rights which <br />appears quite favorable. Another way of looking at it is that, in the event of a default on the <br />loan after the partial release of collateral, we would have about $1,130,000 in the escrow <br />account and about 4,140 acre-feet of consumptive use on the remaining water rights against a <br />principal amount of $3,007,640. The consumptive use of the water rights would have to be <br />liquidated at about $450 per acre-foot to avoid a loss on the loan. <br /> <br />The analysis does not include sales commissions or interest charges since almost all amounts <br />are approximate at this time. <br /> <br />TABLE 2. LAWMA COLLA TERAL ANALYSIS <br /> <br />Estimated Receipts <br />Sale of South Ranch <br />Conserv. Easement on So. Ranch <br />Sale of North Ranch <br />Total <br /> <br />$130,000 <br />$60,000 <br />$940,000 <br />$1,130,000 <br /> <br />Remaining Liability on the Loan <br />Loan for X-V Lands and Water Rights <br />Less Receipts from Sale of Lands and Water <br />Remaining on Loan <br /> <br />$3.007.640 <br />($1.130,000) <br />$1.877.640 <br /> <br />Remaining Consumptive Use (acre-feet) <br />Original Estimated <br />To Remain with the Land <br />Remaining Consumptive Use <br /> <br />RECOMMENDATION. <br /> <br />. 4.880 <br />(738) <br />4.143 <br /> <br />With the conditions approved by the Board on May 14, 1996 and with the assumption that <br />LA WMA receives a reasonable bid for the lands to be sold at auction on June 7, 1996, we <br />recommend (1) the partial release of the deeds of trust for the approximately 4,600 acres of <br />lands on the North and South Ranches and for the water rights needed to continue some <br />limited agricultural operations by the DOW on the North Ranch, and (2) the substitution of <br />the proceeds from these sales as collateral on LA WMA's existing Construction Fund loan. <br /> <br />cc: Bill Stanton <br />Linda Bassi, AGO <br />William Grasmick, LA WMA <br />Don Higbee, LA WMA <br />Duane Helton, Helton & Williamsen <br />Mely. Whiting, Moses, Wittemeyer, Harrison and Woodruff <br /> <br />WEG/vt <br /> <br />(5.1 )1:\wctrans\secb\chuck2.mem <br />