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� <br />� The general approach used to estimate the value of the subject rights was to examine <br />comparable sales of rights in the vicinity of the District. Alternative source was not given <br />much consideration since the water rights currently being used by SNMD are the water <br />' rights decreed for use by the District and require no additional action to continue to use <br />#hem to meet the existing needs of the District. <br />� Although the District had a fairly good idea of the value, to avoid escalating the dispute <br />with BMDC, we jointly agreed to have HRS Water Consultants appraise the rights. Their <br />� report is found in Exhibit B. Their appraised value was very close to the District's <br />original estimate. <br />Financial Feasibility <br />After lengthy negotiations, SNMD has reached a settlement with BMDC which will <br />enable the District to acquire clear title to the water rights. It should be emphasized that <br />this settlement agreement is to acquire clear title to the same water rights originally <br />purchased by SNMD to meet its service plan, including Tiger Run which is not in the <br />District. The determination to negotiate and settle, rather than litigate was carefully <br />examined by the Board and our attorneys. The water rights had been in place since <br />1985 and were "settled law". However, even a small risk of an adverse result in the <br />courts was to be avoided. <br />Having made the decision to settle, the District amended the budget and appropriation <br />following CRSs 29 and 32. The Resotutions and Public Noticing for these are found in <br />Exhibit E. The financial decision to settle with a minimal fee increase to the customers <br />led the district to the decision to seek funding from CWCB. The district feels A 20 year, <br />$150,000 loan to protect our long term water rights is a very reasonable action. No <br />objections from the public were submitted. The rate increase authorized by the Board of <br />up to $10 per month is not unreasonable. The alternative to CWCB funding is borrowing <br />the funds and issuing unsecured notes. The CWCB loan is vastly preferable. <br />The District is run very conservatively. The Board manages the operation with technical <br />assistance from Southwest Water but has not had a paid manager for two years. <br />Expenses are kept to a minimum and the District will have no problem making the loan <br />payments as well as building a reserve to retire our bonds early. Financial Reports and <br />Audits for 2007 and 2008 and Audit Exemption Accounts for 2009 are found in Exhibit J <br />20 Year Financial Projection <br />� Table 4 reflects a summary of the 20 Year Financial Projection. The Financial Projections are base <br />on current dollars with no inflation or cost of living increases. Because SNMD is 98% built-out, no <br />increases in revenue from service fees nor increases for operational expenses (other than a 02.5% <br />� increase in maintenance expenses) are forecasted. The tap fees forecast take SRR to build-out. Tt <br />4 SFEs in Swan's Nest may never be built and it is even less likely any building will occur in-district <br /> I� <br />15 <br />� <br />