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<br />Lower Bauer Reservoir <br />Outlet Pipeline Extensions <br /> <br />Introduction (Need for the Project) <br />The Bauer Lakes Water Company owns and operates the Bauer Reservoir NO.1 (capacity <br />320 Acre-feet) and the Bauer Reservoir No.2 (Lower Bauer, capacity 1550 acre-feet) <br />along with supply ditches, outlet works and associated water rights. The Lower Bauer <br />Reservoir serves 23 shareholders holding 87 shares of stock. Sixteen of these Members, <br />holding 62 shares of stock, formed the Lower Bauer West Lateral, Inc (the Company) to <br />improve, operate and maintain two irrigation laterals located west of the Lower Bauer <br />Reservoir. These sixteen Members jointly own the laterals and receive water from the <br />Lower Bauer Reservoir at the measuring box located near the outlet. <br /> <br />The_Lower Bauer West Lateral, Inc ditch, from the measuring box to a divider box, a <br />distance of approximately 2200 feet, was upgraded by the owners of the ditch in 1998 <br />from a concrete lined ditch to a PVC pipeline in order to eliminate leakage from the <br />deteriorated concrete liner. Bauer Lakes Water Company financed the upgrade and <br />members that benefit from the upgrade (the same sixteen members who formed the <br />Lower Bauer West Lateral, Inc) are assessed by the Bauer Lakes Water Company the <br />amount of $140 per year per share ($40 per year for the Reservoir project operation and <br />maintenance and $100 per year for debt service on the 1998 pipeline project). <br /> <br />The two laterals which constitute the Lower Bauer Outlet Pipeline Extensions to be <br />undertaken by Lower Bauer West Lateral, Inc, are: a) a lateral extending west and south <br />of the divider box that consists of approximately 500 feet of existing PVC pipeline from <br />the divider box to County Road 40 and an open unlined ditch approximately 8,000 feet <br />in length that serves 8 Members with a total flow of approximately 4.9cfs; and, b) a <br />lateral extending south from the divider box which is an open unlined ditch <br />approximately 7,500 feet in length that serves 8 Members with a total flow of <br />approximately 3.4cfs. There are significant losses of water to seepage, evaporation <br />and to vegetation in these existing laterals. Members desire to upgrade the laterals to <br />pipelines in order to reduce water losses, eliminate maintenance of the open ditches <br />and produce some water pressure for on-farm improvements. <br /> <br />Project Sponsor <br />The Lower Bauer West Lateral, Inc is a ditch company formed to complete the Outlet <br />Pipeline Extensions Project and manage the pipelines for the benefit of the Members as <br />an association of owners of shares of water in the Lower Bauer Reservoir and lands <br />served by the pipelines. It is a non-profit corporation registered in the State of Colorado. <br />The Company has the power to assess the Members for operations, maintenance and <br />administrative costs. The Members will enter into a Funding Agreement with the <br />Company for repayment of the loan that will be used to finance Project costs. All of the <br /> <br />5 <br />