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Santa Maria Reservoir Company September 13, 2013 (Updated September 26, 2013) Page 2 of 7 Agenda Item 29b Background The Company provides irrigation water to approximately 70,000 acres in Rio Grande, Saguache, Conejos, and Alamosa Counties, in the San Luis Valley. The Company owns and operates two reservoirs: Santa Maria and Continental. The reservoirs are located in Hinsdale and Mineral Counties, about 20 miles southwest of the Town of Creede. Santa Maria receives regulated discharges from Continental through a century old conveyance system comprised of a pipeline, siphon and an open ditch. Santa Maria was constructed in 1910 and has a design capacity of 43,500 acre -feet (AF). It stores irrigation water, Rio Grande compact water, San Luis Valley Water Conservancy District water, Colorado Division of Parks and Wildlife water, transmountain water, and provides flood control. Continental was also designed in 1910 and was constructed between 1925 and 1928 with a design capacity of 27,000 AF; however, due to seepage and spillway deterioration, for the past 20 years it has been limited by the SEO to a storage capacity of 15,000 AF. In September of 2008, the Company was awarded $191,700 in WSRA grants ($50,000 from the Rio Grande Basin Account and $141,700 from the Statewide Account) to conduct a Feasibility Study and final design plans and specifications of needed improvements including: Continental Reservoir, the conveyance system, and Santa Maria Reservoir. As a result of the work, the Company plans on improving its system in two phases. Phase I was the rehabilitation of the conveyance system between the reservoirs. This Project is Phase II and will address the Continental Reservoir rehabilitation. In March of 2013, the Company was approved for a $1,391,250 loan and $463,750 in WSRA grants ($23,000 from the Rio Grande Basin Account and $440,750 from the Statewide Account) to rehabilitate the conveyance system between the reservoirs. Loan Feasibility Study Ed Toms, P.E. of URS Corporation prepared the Loan Feasibility Study, titled "Phase 2 — Santa Maria Rehabilitation Initiative, Continental Dam Rehabilitation Project" dated July 1, 2013. The Study was prepared in accordance with CWCB guidelines and includes preliminary engineering and an engineer's estimate of probable cost that were used in determination of the total Project cost. Borrower - The Santa Maria Reservoir Company The Company is a Mutual Reservoir Company, incorporated in 1931. It is registered with the Colorado Secretary of State as a nonprofit corporation and is in good standing. The Company is governed by a five- member board of directors. There are 250 shareholders with a total of 5,400 shares of stock. The board has the ability to take on debt and to withhold delivery of water to stockholders if assessments are unpaid. Shareholders must also approve annual assessments. If shareholders fail to set an assessment, the Board of Directors has the power to set assessments to provide for the maintenance and operation and to pay any indebtedness of the Company.