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I. Introduction <br />This report presents the results of a feasibility study that was completed for the Lower <br />Arkansas Water Management Association ("LAWMA"). The purpose of the study was to evaluate <br />LAWMA's replacement water supply needs and the suitability of and the current need for a <br />permanent replacement water source, the remaining one-half of the Keesee water rights, proposed <br />to be acquired by LAWMA with CWCB loan funds. This report provides information about <br />LAWMA's general service area, LAWMA's membership, their ground water pumping and other <br />water uses and the resulting stream depletions that need to be replaced under Colorado law and the <br />Arkansas River Compact. The report then describes the historical use and estimated yield of the <br />remaining one-half of the Keesee water rights that LAWMA is proposing to acquire with CWCB <br />loan funds, LAWMA's need to purchase the water rights and the effect on the average and firm yield <br />of LAWMA's water rights portfolio of adding the remaining one-half of the Keesee water rights to <br />the portfolio. Finally, the report addresses the status of LAWMA's existing CWCB loans and <br />LAWMA's financial ability to repay its existing CWCB loans and the current loan request in the <br />amount of $2,493,722 for the acquisition of the remaining one-half of the Keesee water rights. <br />II. Background <br />LAWMA is a non-profit corporation formed pursuant to the Colorado Non-Profit <br />Corporation Act, as amended, and pursuant to the Mutual Ditch and Reservoir Company Act, as <br />amended. Copies of LAWMA's Restated and Amended Articles of Incorporation and Bylaws are <br />attached hereto as Appendices A and B, respectively. LAWMA was formed for the primary purpose <br />of replacing depletions from its members' well pumping and other water uses requiring <br />augmentation within the lower portion of the Arkansas River Basin, generally below John Martin <br />Reservoir, in order to comply with Colorado law and the Arkansas River Compact. <br />LAWMA's powers and authorities are set forth in its Restated and Amended Articles of <br />Incorporation and Bylaws. The control and management of the business and affairs of LAWMA are <br />vested in its Board of Directors which consists of seven shareholders. A list of LAWMA's current <br />Board of Directors is attached hereto as Appendix C. The duties and responsibilities of LAWMA's <br />Board of Directors are set forth in LAWMA's Restated and Amended Articles of Incorporation and <br />Bylaws. Under LAWMA's Bylaws there are currently two types of inembership classes, <br />shareholders and non-shareholders, and two classes of stock, common and preferred. LAWMA has <br />226 shareholder members. Under LAWMA's Bylaws the rights and obligations relating directly to <br />augmentation for the wells and other structures of non-shareholder members is established by written <br />contract between the non-shareholder members and LAWMA. <br />Pursuant to LAWMA's Bylaws, 1 share of LAWMA preferred stock is equivalent to 2.3 <br />shares of LAWMA common stock. 18,335 shares of LAWMA common stock are used for <br />agriculturaUirrigation purposes; 112 shares of LAWMA common stock are used for municipai <br />