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Republican River Water Conservation District Agenda Item 26e November 10, 2008 (UPDATED NOVEMBER 19, 2008) Page 4 of 7 surface right owner's senior water rights on the North Fork of the Republican River for the rest of 2008 and a newly created Yuma County P1D would buy the water rights for $20 million by the end of 2008. The Republican District's Enterprise also agreed to contribute $5 million towards the purchase by agreeing to lease the water rights from the Yuma County PID for 20 years (North Fork Lease). The $5 million is a one-time lease payment that will be paid to the surface right owners at closing. An additional benefit of the water rights pwchase is to assist the State of Colorado in complying with the Republican River Compact by reducing the consumptive use charged to the State under the Republican River Compact Administration's accounting procedures over the next 20 years by approximately 2,500 AF/yr. The North Fork Lease will supplement the Republican River Compact Compliance Pipeline and will reduce the amount of ground water that will be pumped during the term of the North Fork Lease, thereby prolonging the life of the aquifer in the area of the wells that will be used as Compact Compliance Wells. Loan Feasibility Study The Loan Feasibility Study titled "Loan Feasibility Study for North Fork Lease ", dated October 2008, was prepared in part by James E. Slattery, PE, Slattery Aqua Engineering and Dennis Montgomery, Esq., Hill & Robbins, P.C. The study was prepared in accordance with the CWCB guidelines and includes: Republican District Enterprise formation documents, Pwchase Contracts, lawsuit legal summary, and an Economic Development Report prepared by Colorado State University. Republican River Water Conservation District The Republican District was established in 2004 by Senate Bi1104-235 to assist the State in complying with the Compact. The Republican District is managed and controlled by a 15-member board of directors comprised of one member appointed by the county commissioners of each of the seven counties wholly or partially within the Republican District, one member appointed by the boards of the seven ground water management districts within the Republican District, and one member appointed by the Colorado Ground Water Commission (GWC). The Republican District established a water activity enterprise in October 2004. The Enterprise began imposing a use fee of $5.50 per assessed irrigated acre on diversions of ground water for irrigation use bypost-compact wells within the Republican District, which was increased to $14.50 per assessed irrigated acre in 2008 to generate revenues to address Compact compliance. There are approximately 500,000 assessed irrigated acres in the basin irrigated bypost-compact wells. Enterprise use fees currently generate approximately $7 million in revenues annually. The Enterprise has also imposed a use fee of $11.60 per AF on post-compact diversions of ground water for municipal and commercial use. Municipal and commercial diversions within the Republican District are small, but will generate an additional $119,000 in 2008. Historically the Republican District has used the Enterprise revenues to provide local cost-sharing for federal programs designed to retire irrigated acreage in the basin, including the Republican River Conservation Reserve Enhancement Program (CREP) and the Environmental Quality Improvement Program (EQIP). To date, approximately 30,000 irrigated acres have been