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<br />LAWMA - Water Rights Purchase
<br />January 22-23, 2008 (UPDATED January 28, 2008)
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<br />Agenda Item 11c
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<br />trial, the Special Master made it clear that LAWMA's continued and expanded use of the Offset
<br />Account in John Martin Reservoir would be critical to insuring Colorado's ability to comply with the
<br />Arkansas River Compact now and in the future.
<br />
<br />Feasibility Studies
<br />
<br />LAWMA, through its engineer Randy Hendrix, with Helton & Williamsen, P.C., and its attorney,
<br />Richard Mehren, with Moses, Wittemyer, Harrison and Woodruff, P.C., have completed a feasibility
<br />study in accordance with CWCB guidelines, dated January 2008.
<br />
<br />Water Riahts/Proposed Purchase
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<br />The Keesee Ditch is located on the mainstem of the Arkansas River approximately five miles
<br />downstream of John Martin Reservoir. The Keesee Ditch shares a common diversion dam with the
<br />Fort Bent Canal, and diverts from the south bank of the Arkansas River. Three priorities are decreed
<br />to be diverted through the Keesee Ditch. Those priorities are NO.1 for 9.0 cubic feet per second
<br />(cfs) with an appropriation date of March 31, 1871 which is senior to all water rights downstream on
<br />the Arkansas River, and Priority NO.4 for 4.5 cfs with an appropriation date of December 31, 1883 is
<br />senior to all but 24.75 cfs of water rights downstream on the Arkansas River. Accordingly, these two
<br />water rights, totaling 13.5 cfs, generally are not affected by downstream river calls and can therefore
<br />provide a consistent supply of replacement water to LAWMA even in dry years. The Keesee ditch
<br />also includes Priority No. 1918-4 for 15.0 cfs with an appropriation date of September 3, 1893, and
<br />the Keesee Ditch has an Article II Storage Account in John Martin Reservoir which is allocated
<br />conservation storage water on an annual basis.
<br />
<br />Under this purchase agreement, LAWMA would acquire the remaining % of the Keesee water rights,
<br />and Keesee Article II Storage Account in John Martin Reservoir. Additionally, the remaining land
<br />historically irrigated under the Keesee ditch would be dried-up.
<br />
<br />Appraisal - An appraisal of the remaining one-half of the Keesee Ditch water rights was prepared in
<br />March, 2006 by McCarty Land & Water Valuation, Inc. That appraisal estimated that the fair market
<br />value was $6,000,000 (Based on a $3,OOO/AF of consumptive use water at an estimated yield of
<br />2,000 AF) and is in the process of being updated as of the date of this memo. The updated
<br />appraisal should be available before the January 22, 2008 CWCB Board Meeting. As part of the
<br />purchase, LAWMA will also, acquire property rights in the form of 1) a real covenant for dry-up of
<br />historically irrigated land; and 2) a real covenant for revegetation of dry-up lands, that is the
<br />responsibility of the seller.
<br />
<br />The Total Project cost is estimated to be as follows:
<br />
<br />TOTAL
<br />
<br />$3,600,000
<br />50,000
<br />$3,650,000
<br />
<br />1.
<br />2.
<br />
<br />Acquire remaining % Keesee Water Rights
<br />Engineering
<br />
<br />To cover the water rights purchase, LAWMA is requesting a $2,470,000 loan from CWCB and the
<br />issuance and sale of 400 shares of preferred company stock, at an estimated value of $3,200 per
<br />share, for a stock sale revenue of $1,267,000, and a total project revenue of $3,737,000. LAWMA
<br />has a tentative closing date of February 29,2008 to purchase Keesee water rights.
<br />
<br />The Colorado Division of Wildlife (DOW) has been actively involved with LAWMA towards the
<br />purchase of the Keesee water rights. DOW is interested in Keesee water rights as a potential water
<br />source to be added to the permanent pool in John Martin Reservoir. The ability to use the Keesee
<br />water rights as permanent pool water is contingent upon Arkansas River Compact Administration
<br />
<br />3
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