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Loan Feasibility Study for Raw Water Acquisition and Utilization Page 39 12 recaps the District's retained cash earnings for the period extending from 2001 through 2005 inclusive. Table 12 Penrose Water District Retained Cash Earnings') Year COLOTRUST Cash/CDs U.S. Treasury Total 200 12) $1,848,674 $ 96,518 $205,504 $2,150,696 2002 2) $2,125,002 $ 108,625 $198,045 $2,431,672 2003 2) $ 576,780 $1,722,752 $192,081 $2,491,613 2004 2) $ 667,462 $1,779,099 $193,612 $2,640,173 2005 1)3) $ 748,263 $1,851,1244) $198,607 $2,797,994 1) Figures reflect cash balances with maturities less than one year stated at cost as of December 31 of each year 2) Audited figures 3) As of December 31, 2005, a portion of the District's retained earnings were allocated to restrictive cash activities. For this year, those amounts and the corresponding activities include: repayment of 2003 Revenue Refunding Bonds - $198,607; repayment of Rural Development bonds (mandated reserve account) - $11,660; and acquisition, delivery and storage of water by voter approval - $282,763 for a grand total of $493,030. 4) Certificates of Deposit pledged as collateral on bank loan on Goodwin Ranch purchase with Fremont Bank The figures contained in the above Table 12 are as reported in the District's formal audits as of December 31 of each respective year. These cash reserves have continued to earn income during 2006. For example, the COLOTRUST account as of July 31, 2006 had a balance of $848,145. The District's other cash investments have seen similar increases. No significant withdrawals have occurred. As evidenced by the cumulative total of the District's cash and cash equivalents, they have seen steady growth over this five year period. As of the end of December 31, 2005, the District's retained cash and cash equivalents stood at approximately $2.8 million. A portion of the funds are restricted by the Board as noted in footnote 3 of Table 12. The 2003 Refunding Bond issue has a requirement that a full annual payment equal to the highest annual payment remaining be held in a cash reserve. The amount currently held in the reserve account exceeds that required. The required amount stands at $173,012. Rural Development (RD) within its bond covenants requires a reserve in the amount of the equivalent of one annual payment which equates to $11,660. The income being generated from the 3.000 mill levy approved by the District's voters is funneled into the COLOTRUST account and restricted for use in the acquisition, delivery, and storage of water resources. At of the end of 2005, that account balance stood at $282,763. As of July 31, 2006, it has increased to $325,565. Of note is that the significant CDs held in the cash column on file with Fremont Bank have been pledged as collateral for the $3,000,000 interim loan issued by the bank for the District's acquisition of the Goodwin Ranch and associated water rights. Those CDs will be released upon payment of the outstanding note. Said payment is projected to occur in July of 2007 based upon the availability of funding from the CWCB loan. Leonard Rice Engineers, Inc. August 2006 — 1018PEN05 GMS, Inc.