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Yuma Counry Water quthority Public Improvement District Novtmber 10, 2008 (~'pDATED NOVEhBER 20, 2008) Page 5 of 7 Agenda Item 26d North Fork Water Riehts Structure O'Donnell Ditch Laird Ditch Pioneer Ditch O'Donnell Ditch Enlargement Holy Joe Canal 8t Reservoir Pierce Miller Ditch FD Johnson Ditch Wiley No. 1 Wiley Spring Decreed Diversion 4 cfs 12 cfs 15 cfs 2 cfs 1 cfs 2.5 cfs 4 cfs 1.5 cfs 1 cfs The Republican District has leased a portion of the water rights in 2008, which demonstrated the value of leasing such water to reduce the consumptive use chazged to Colorado under the Republican River Compact Administration's accounting procedures. Project Description The Yuma County Water Authority reviewed the pending lawsuit which seeks to redraw the boundaries of the NHP Basin and may result in the curtailment of 1,338 irrigation wells (plus commercial and municipal welis) in Yuma County and studied the following alternatives: Alternative 7- Litigate Dispute: Both parties to the lirigation were confident that they would prevail in the June 2008 hearing before the Groundwater Commission. It should be noted that both sides were equally confident prior to the District court appeal that lead to the hearing. At the District Court level both sides won some arguments and lost some arguments. The Yuma County PID expected that the parties would experience this same level of success as the litigarion continued. Unless the NHP Basin groundwater users were completely successful there was a likelihood of curtailment of 300 to 1,300 wells. Case No. OS-GW-14 was set for a month long hearing in June 2008 in front of a hearing officer for the Groundwater Commission. The Yuma County PID estimated that it may take 4 to 10 years for a final conclusion to the dispute and cost between $3 to $8 million for attorney and engineering fees. It was unlikely that litigation would eliminate the need to mitigate impacts to the surface water users. Alternative 2- Buy out the Water Rights (SELECTED): The Nocth Fork surface users initially sought more than $40 million for their water rights, but after a year of negotiations settled for $20 million. The 2003-2007 average compact depletion charged to these rights was 2,578 AF/yr for the irrigation of 1,000 to 1,500 acres. This alternative prevents further litigatio~ conceming a dispute lasting more than 30 years and threatening curtailment of the water supply to 190,000 irrigated acres. Coupled with the compact compliance pipeline, this purchase secures the imgation, municipal, and commercial water supplies for the NHP Basin for many years. In addition, the water can be relied upon by Yuma County cities as an emergency augmentation supply in the event that compact compliance efforts fail and municipal wells are curtailed per the North Fork Lease. The purchase contract also includes a dry up covenants from the sellers. There may be additional engineering and legal costs to compiete the purchase but these are expected to be small and will be covered by sources other than the CWCB loan.