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<br />" <br /> <br />The Board approved several loans in the last few years for acquisition of water rights on <br />the Arkansas and Purgatoire Rivers by the Lower Arkansas Water Management <br />Association (LA WMA). The price per acre-foot of consumptive use for LA WMA's water <br />rights acquisitions ranged from $475 to $675. (Highland Irrigation Company shares on <br />the Purgatoire River were acquired at $675 per acre-foot of consumptive use.) <br /> <br />If we assume, on a conservative basis, 5,970 acre-feet of consumptive use at $475 per <br />acre-foot then the total value of the Model water rights would be $2,835,750. Ifwe add to <br />this a conservative estimate for the land of $200,000, the total value of the collateral <br />would be $3,035,750. <br /> <br />One consideration here is that these water rights may be difficult to transfer to other uses <br />or locations since they are subject to the terms of the contracts with the PR WCD thus <br />possibly reducing the market value. Also it should be noted that we will have a security <br />interest in the water rights but not in the two conveyance contracts between the Company <br />and the PRWCD. <br /> <br />I recommend that we accept a security interest in the 2,627 acres of irrigated and non- <br />irrigated land owned by the Company as well as a security interest in the water rights <br />owned by the Company as described in the attached listing as adequate collateral for the <br />$335,000 loan to the Model Land & Irrigation Company. <br /> <br />Attachments <br /> <br />Cc: Dan McAuliffe <br />J an Illian <br />Linda Bassi, AGO <br /> <br />2 <br /> <br />/ <br />