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I I I I I I I I I I I I I I I I I I I Currently available rates are running between 4 to 7 % per annum for a 30 year loan. The Reservoir Company voted at their annual meeting in March 2004 to pursue an interim loan up to $50,000. See Appendix E for a letter detailing the Reservoir Company's commitment to alternative financing. COLLATERAL As security for the CWCB loan, the Reservoir Company has pledged the value of the Bull Creek Reservoir No. 4 (see Appendix E, Commitment of Collateral). For purposes of this loan application the Reservoir Company has conservatively estimated the value per acre foot of stored water as $1,600/AF for 312 AF for a total of $500,000. The Reservoir Company has further committed to adjusting assessments to cover the cost of servicing this loan and cover associated operating expenses. ECONOMIC ANALYSIS The economic analysis is best viewed from opportunity cost vs. return on investment. The opportunity cost is the loss of 229 AF of senior water rights. The current value of these rights is conservatively valued within a range of $360,000 to $460,000 ($1600 to $2000 per AF). Based on similar construction of new facilities, e.g., taking a "replacement cost" view of valuation, would place the cost per acre-foot more in the $10,000 to $12,000 per acre-foot. This would produce a "high" range of $2.3 to $2.7 million. Viewed from this perspective, the cost/benefit ratio varies from approximately 1.0 to 4.0 to 4.7. Regardless of the methodology used, the value of the water rights will continue to increase, particularly as domestic demand continues to drive the value of rights. SOCIAL AND PHYSICAL IMPACTS The project will have no significant social impacts, since it will assure the continued operation of a currently existing irrigation system. The project is scheduled to be completed in the late Bull Creek Reservoir, Canal and Power Company Bull Creek Reservoirs Nos. 1,2 and 4, Feasibility Study May 31,2004 Page 11 of 12