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Headgate 135 Lateral, Inc. July 15, 2008 (Revised July 25, 2008) Page 2 of 5 Agenda Item 16b Background The Corporation is located in Mesa County on the east side of Grand Junction. The Corporation manages the Lateral 135 (Lateral), which starts at headgate 135 on the Grand Valley Irrigation Company (GVIC) system, for the benefit of the shareholders with water rights and lands served by the Lateral. The 2.5 mile Lateral has a designed flow of3.0 cfs, and delivers irrigation water along the Lateral and to the service area. The Project will provide an improved water delivery system to all members. The water is primarily used for lawn and garden watering. The USDA/NRCS administers the Colorado River Basin Salinity Control Program by providing construction cost sharing and technical assistance using the USDA's Environmental Quality Incentives Program (EQIP). NRCS, Grand Junction Service Center is managing the planning, design, and field engineering services for this Project. Qualifying ditch owners that install more efficient irrigation systems, that reduce salt loadings are eligible for funding. The Corporation has received funding assistance commitments from several entities (see Table 1) that will also receive a benefit from the installation of a pipeline. The executed agreements that were considered in the review of this loan have been include in the application. Feasibility Study Larry Wade, of the Corporation, has completed the feasibility study in accordance with CWCB guidelines. The study, titled Headgate 135 Lateral Incorporation - Pipeline Project, dated May 2008, includes a cost estimate which was prepared by NRCS and supported by a preliminary estimate by a local contractor. The contractor's estimated price was used to establish the loan amount requested. The estimated price is significantly higher than that which was assumed by NRCS. The NRCS grant will be paid based on percentages of the NRCS estimated unit rates. The Headgate 135 Lateral Inc. The Headgate 135 Lateral, Inc. has been incorporated in the State of Colorado since 1988. There are approximately 100 shareholders in the Corporation. The Corporation has the power to assess the shareholders for operations, maintenance and administrative costs and the power to stop delivery when assessments are delinquent. Each shareholder currently pays an annual $50.00 assessment. Subdivision users each pay an additional $15.00 for irrigation water. Headgate 135 Lateral, Inc. is governed by a board of five directors. The Directors meet and set annual assessment at the March meeting. The Headgate 135 Lateral, Inc. conveys a total of2l7 shares of GVIC water to its shareholders. Most of the water shares are owned by individual shareholders; however, 66 shares have been pooled by shareholders in a trust agreement to reduce the cost ofthe canal usage. The Corporation anticipates increasing assessments to $95 per share and increasing the subdivision user fee to $25 per user.