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The Huerfano-Cucharas [ttigation Company <br />May 12, 2009 (UPDATED May 22, 2009) <br />Page 3 of 7 <br />The Huerfano — Cucharas Irrigation Company <br />Agenda Item 17h <br />The Company was organized in 1944 as a non-profit mutual ditch company. The Company was <br />formed for the purpose of enhancing agriculture by delivering irrigation water to shareholders. The <br />Company has the power to take on debt and to pledge collateral. Five Directors are chosen annually <br />from the 47 shareholders at the annual meeting. There are presently 5,932 shares assessed at $10.00 <br />per share. Assessments are voted on by the majority of shares at the annual meeting (or special <br />assessment meeting). The Company may place a lien on delinquent stock payments and stop <br />delivery of water. The Company may sell qualified delinquent stock in order to pay for back <br />assessments. <br />Water Rights <br />The Company has direct flow rights and reservoir storage rights as shown in Table 1: <br />Table 1. Water Rights <br />Adjudication Priority Decreed Water <br />Name Amount Date Date Use Source <br />Huerfano 42 cfs 2/23/1898 2/2/1888 Irrigation Huerfano River <br />Valley Ditch <br />Huerfano 18 cfs 10/3/1921 2/23/1898 Irrigation Huerfano River <br />Valley Ditch <br />Huerfano Lake 2,017 AF 2/23/1898 2/2/1888 Irrigation Huerfano River <br />Cucharas 31,958 AF 10/3/1921 3/14/1906 Irrigation Cucharas River <br />Reservoir (absolute) <br />Cuchaxas 35,404 AF 10/3/1921 3/14/1906 Irrigation Cucharas River <br />Reservoir (conditional) <br />Based on the Lytle Water Solutions report, the Company irrigation demands are regularly greater <br />than the availability, but with a supplemental supply from Cucharas Reservoir, the target demands <br />of 3,000 .AF were met in 11 of 24 years. <br />Project Description <br />The purpose of this Project is to prevent a zero storage restriction from being imposed and to <br />maintain at least some storage in the Reservoir. <br />Alternative No. 1— No-action: The SEO has placed a deadline of October 1, 2010 to either <br />rehabilitate the existing dam, build a new one, or a zero no-storage restriction will be imposed <br />followed by an order to breach the dam and remove the hazard it represents. The no-action <br />alternative has a significant cost associated with the breaching of the dam and effectively shows <br />intent to abandon a viable and valuable storage right. This is an unacceptable alternative <br />because of the high cost and no benefit associated with this action. <br />