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New Salida Ditch Company Updated November 20, 2008 Page 2 of 4 Background Agenda Item 26b The New Salida Ditch Company is located in Chaffee County and delivers water to agricultural users from the Arkansas River (River) through a diversion in Browns Canyon. The diversion is located 10 miles north of Salida. The ditch was constructed in 1882 and is approximately eight miles from its diversion to its end at Ute Gulch. In Browns Canyon, the New Salida Ditch (Ditch) runs parallel to the River for 1.25 miles. This section has historically been difficult for the Company to maintain and has suffered frequent breaks resulting in costly repairs and discharges of sand and gravel into the River. In 2005, the Company undertook a maintenance project designed to mitigate erosion along the ditch. During construction, sand and gravel were accidently deposited into the River and the Company was cited with violations from the Colorado Department of Public Health and Environment (CDPHE). As a resolution of this dispute, the Company and CDPHE entered into an agreement requiring the Company to enclose a portion of the Ditch to prevent the potential for discharges of material due to ditch breaks in this area in the future. Another break occurred in 2006 resulting in $20,000 in repair costs. The Company is seeking to reduce future maintenance costs and to protect the River through this Project. Loan Feasibility Study The Loan Feasibility Study titled "Feasibility of Installation of a Pipeline in Brown Canon Section of New Salida Ditch, October, 2008" was prepared by Ralph "Terry" Scanga with technical support from Chirs Manera, P.E., Colorado River Engineering. The study was prepared in accordance with the CWCB guidelines and includes preliminary engineering design and cost estimates. New Salida Ditch Company The Company is a Colorado mutual ditch company and non-profit corporation. It was established in 1953 to operate the New Salida Ditch for the benefit of its shareholders. There are 400 shares held by 14 shareholders. The Company is controlled by aseven-member Board of Directors. The Board has the ability to take on debt, levy assessments, the power to cease delivery of water to shareholders who are delinquent in payment of assessments, and the power to sell the stock of delinquent shareholders. Water Rights The Company has the right to divert 20 cfs from the Arkansas River under irrigation rights decreed July 8, 1912 with an appropriation date of May 1, 1882. The Company's average diversions are approximately 7,000 AF annually. Project Description In order to stabilize the Ditch bank that is shared with the River and prevent future failures, the Company considered the following options: