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Raymond Dairy, Inc. September 9, 2009 (UPDATED September 16, 2009) Page 2 of 5 Background Agenda Item 7c The Borrower is located in Mesa County just northwest of Fruita, Colorado. The Borrower owns Raymond Ditch (Ditch). The Ditch is located on land owned by Robert and Helen Raymond. The Ditch has a capacity of 3.5 cfs and is used to carry irrigation water to approximately 125 acres of field crops for dairy cattle. This dairy operation has been owned and operated by the Rayrnond family for more than four generations and currently milks 400+ dairy cows on a daily basis. The Ditch is located in the Salinity Control area as defined by USDA/NRCS. The NRCS administers the Colorado River Basin Salinity Control Program by providing construction cost sharing and technical assistance using the USDA's Environmental Quality Incentives Program (EQIP). NRCS, Grand Junction Service Center, is managing the planning, design, and field engineering services for this Project. Qualifying ditch owners who install more efficient irrigation systems that reduce salt loadings are eligible for funding. The Borrower has been approved (and signed a contract) for a grant from NRCS that will cover approximately 33% of the cost of the Project. This Project involves replacing 2,400 feet of the ditch, and installing new head gates and punch plates. This Project will decrease seepage; thereby improving the environment by reducing salt leaching into the Colorado River. Feasibility Study Robert (Bob) Raymond, of Raymond Dairy, Inc., with assistance from Lenore Snoke, completed the feasibility study in accordance with the CWCB guidelines. The study, titled Reconstruction of the Raymond Ditch #545, dated August 2009, includes an alternative analysis, engineering design, and a cost estimate that was prepared by NRCS and supported by a preliminary estimate by a local contractor. The contractor's estimated price was used to establish the requested loan amount. Raymond Dairy, Inc. Raymond Dairy, Inc. has been incorporated in the State of Colorado since 1993. Shaxes in the corporation are held by members of the Raymond family. Revenues from the corporation will be used to repay the CWCB debt service. Water Rights Water supplying the Ditch originates from imgation returns that flow into an unnamed tributary and are then diverted into the Ditch. The 3.5 cfs water right has an adjudication date of March 1, 1947. The full water right has been diverted every year since the original recorded date. In addition, the Borrower also owns 283 shares of Grand Valley Irrigation Company.