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d_~~_~"; Excelsior Irrigating Company September 22-24, 2003 Consent Agenda Item 4a (1) Includes Sept. 1,2003 payments made. (2) Original Contract ($230,000/3.75%/30 years) was amended December 1,2000. Collateral -In addition to a pledge of revenues, collateral for Loan Contract No. C153748 included a security interest in 2883 shares of EIC owned by Dick Evans, as well as a diversion structure. In September 1997, the Board agreed to release 1007 shares as collateral so that those shares could be sold to AGUA. The Board also approved AGUA's loan for the purchase of the 1007 shares, and further determined that the remaining 1,876 shares of EIC owned by Dick Evans and the diversion . structure would be adequate collateral for both EIC loans. Loan Contract No. C153797 to EIC was subsequently executed in February 1998. Excelsior Irriaatina Company The EIC is a Colorado Mutual Ditch Company and a non-profit corporation. There are 3,333 shares outstanding for the EIC. Present ownership of shares and proposed ownership with the new loan are: Current With Proposed AGUA Loan AGUA Lafarge North America, Inc. C.R. Evans TOTAL 1,007 (30.2%) 450 (13.5%) 1.876 (56.3%) 3,333 1792 (53.8%) 450 (13.5%) 1.091 (32.7%) 3,333 The current EIC officers and their titles are listed below: President Vice-President Secretary fTreasurer Loren Hawkins (AGUA) C.R. (Dick) Evans Rusty Cochran (LaFarge North America, Inc.) Discussion AGUA's new loan request for purchase of water rights (785 shares) is similar to its loan authorized by CWCB in September 1997, by which AGUA purchased 1007 shares of EIC from Mr.Dick Evans. At that time, CWCB approved a release of 1007 shares from the EIC loan and determined that the value of the remaining 1,876 shares was sUffi.cient to secure both of EIC's loans. Appraisal - As part of AGUA's pending loan request, an "Update of the Estimated Fair Market Value of Stock in the Excelsior Ditch Company", prepared by Blatchley Associates, Inc. of Denver, dated August 11, 2003, has been submitted to the CWCB staff. Mr. Ron Blatchley, P.E. prepared the original appraisal used by CWCB for the 1997 loan to AGUA. The estimated fair market value of 785 shares of EIC, as of August 11, 2003, is $1,050,000. This represents $1338 per EIC share and $1494 per acre-foot of historic consumptive use of irrigation water. (AGUA's contract with Mr. Evans is for $863,500.) The estimated market value is based on comparable sales of water rights decreed from the Arkansas River, between $1,000 and $1,900 per acre-foot, or an average of $1,500 acre- feet of historic consumptive use of irrigation water. Based on the revised appraisal, the remaining 1,091 shares of EIC being used to secure Loan Contracts No. C153748 and No. C153797 would have a value of $1,459,758, far in excess of EIC's remaining loan amounts of $329,181.41. Because the EIC loans are over-collateralized, staff recommends further reduction of the collateral for the loans to 500 shares of EIC, plus the diversion Page 2 of 3