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~ 6 MOSES, WITTEMYER, HARRISON AND WOODRUFF, P. C. Peter Evans July 6, 1998 Page 2 .. , Acc~rding to Helton & Williamsen's June 1998 feasibility study report,' the average yield of the 270 Amity shares is 343 acre-feet per ,year. Assuming that LAWMA will be able to close on the remaining .187 Highland shares, this yield would almost cover LAWMA's replacement shortfall during average years, which is estimated at 3~9 acre-feet {not taking into account the annual 500 acre-feet offset account fee).l LA~ proposes to limit the amount it will pay for the Amity shares t;o $675 per acre-foot of average yield. This is the same price per acre-foot of average yield approved by the CWCB for the Fo=t 'Bent' shares. In addition, a supplemental appraisal is being prepared by Mr. William Paddock, Esq. to evaluate the Amity shares. Closing on the shares will be contingent on the purchase price being supported by the appraisal. Based on Helton & Williamsen's report, an Amity share yields an average of 1.27 acre- feet annually.1 Thus, the purchase price for the 270 available Amity shares would be approximately $231,458 (at $675 per AF). Because the proposed Amity purchases would yield significantly *ore water than the approved Fort Bent purchases (an estimated 342 acre-feet as compared to 262 acre-feet for the Fort Bent purchase)~ the purchase price of the Amity shares exceeds the ~ $177,000 alreaQY approved by the CWCB for the purchase of the Fort ~ Bent shares. However, the funds available under Loan Contract No~ C153768 are sufficient to cover the full purchase price. After deducting the funds necessary to close on the remaining 187 Highland shares (i.e., $158,950) a total of $259,538.50 would remain available to LAWMA from the $2.3 million loan under Loan Contract No. C153768, which is more than sufficient to cover the Amity purchase~ Of course, the contract would have to be amended to substitute ~he Amity shares as collateral. , If pqssible, LAWMAwould like to present its request to the, Board at their Jul}'. 1998 meeting in Telluride. LAWMA will attempt to finalize purchase agreements with the two sellers prior to the Board meeting. If agreements are not finalized by then, we request that t~e Board authorize you to approve the purchase of Fort Bent shares, Amity shares or a combination of the two in an amount not to exceed $235,000. This approach would avoid having to come back to the Board if a final agreement with either one or both Amity sellers qannot be reached. 1 'water. LAWMA still plans to cover any difference with leased " -