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AGUA — Water Rights Purchase/Recharge Project September 22-23, 2003 b) Inactive Wells: $76 er well c) Augmentation Water Fee: d) Acquisition Reserve Fee: Agenda Item 5c Breakdown: $ 30 Administration Fee 46 Loan Reserve Fee $ 76 Total $34 -$60 per acre-foot of annual well depletion $5.00 per acre-foot of annual well depletion The Augmentation Water Fee reflects AGUA's cost for the lease of augmentation water from other sources. This can vary throughout the year, and has varied substantially during the last two years because of the drought. In general, lease costs from several sources are averaged and "passed through" to members at cost, with the charge to members set by the AGUA Board. In 2003 AGUA has already offered replacement water to members at $60.00 (1 S ` quarter allocation) to $34.00 (2 and 3'� quarter allocations). During the 2002 plan year, the Augmentation Water Fee ranged from $13.50 to $25. The Acquisition Reserve Fee provides funds for the purchase of water rights, including associated engineering and legal expenses. Proposed Water Riqhts Purchase and Recharae Proiect The new loan request is similar to the 1998 acquisition in which AGUA purchased 1007 shares of EIC. There are 3,333 total shares outstanding for the EIC. Present ownership of shares and proposed ownership with the new loan are: AGUA Lafarge North America, C.R. Evans TOTAL Current 1,007 (30.2%) Inc. 450 (13.5%) 1,876 (53.6%) 3,333 With Proposed Loan 1792 (53.8%) 450 (13.5%) 1,091 (32.7%) 3,333 Excelsior Ditch Water Riqht - Costs for water rights acquisition are eligible for CWCB funding under Policy #8, (Purchase of Water Rights). The Excelsior Ditch is a relatively junior direct flow irrigation water right that diverts from the Arkansas River below Pueblo in Section 36, T20S, R64W, approximately 5 miles east of Pueblo. The water right has two priorities, May 1, 1887 with a 20 cfs decree, and January 6, 1890 with a decree of 40 cfs. Diversion records show that the long-term Excelsior Ditch diversions averaged 4,070 acre-feet per year between 1908 and 1985 (excluding 1939). During the pre-Compact period (1908 through 1947), the Excelsior Ditch average diversions were 5,020 acre-feet per year. Between 1948 and 1985 the diversions averaged 3,095 acre-feet per year. Diversions by the Excelsior Ditch ranged from a low of zero acre-feet in 1977 to a high of 9,934 acre-feet in 1948. In 2002 the Excelsior Ditch diverted 12 acre-feet during the irrigation season and approximately 800 acre-feet during the non-irrigation season of November 2002 through March 2003. Average historic consumptive use is based on Excelsior Ditch diversions for the period 1908 through 1947(excluding 1939), 5020 acre-feet, to avoid the effect of significant well diversions beginning in the 1940's. In the water rights appraisal, discussed below, Blatchley Associates, Inc. determined that 785 out of 3,333 total shares would yield 1,182 acre-feet diverted and 703 acre-feet of consumptive use irrigation water (59.5% allowed replacement credit.) At the purchase price of $863,500 this is $1,228 per acre-foot of historic consumptive use. Alternatives - To determine the feasibility of AGUA's potential purchase of 785 EIC shares, AGUA's engineers utilized results of two previously prepared feasibility studies: AGUA's 1997 Feasibility Study that summarizes average annual yields, cost components, total cost, and cost per acre-foot for each of six water right purchase alternatives investigated; and MAGUA's 2000 Draft Feasibility Study that summarizes average annual yields, cost components, total cost and cost per acre-foot for each of finrelve water right purchase alternatives investigated. The feasibility analysis also is based upon an independent water rights appraisal recently prepared by Blatchley Associates, Inc. Analysis of the average annual cost per acre-foot (present worth) of EIC water was $1,537, which is much less Page 4 of 9