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The average direct irrigation yield, during the months of May to October, of a FHL share is 27.9 acre -feet and the dry year yield is 13.7 acre -feet. Therefore, at a cost of $400,000 per share, the cost per acre -foot of average yield is $14,337 and the cost per acre -foot of dry year yield is $29,197. Although the purchase price for the FHL is quite high, it is fair, given that the market for FHL shares is highly competitive and consists mostly of municipalities. The FHL shares to be purchased have not been changed to allow municipal use and are decreed solely for agricultural use. Nevertheless, the HOA will be paying a cost comparable to other purchases of municipally- decreed water rights in the Denver Metropolitan area rather than a cost comparable to those of agriculturally- decreed water rights in more rural areas. However, the ability to use the FHL water does not require any additional cost in infrastructure construction for the HOA and does not require any change in use Water Court proceeding, which helps to offset the high capital cost of FHL share purchase. Since the acquisition of additional FHL shares as the source of new water for the HOA makes use of existing infrastructure, it requires no new operating procedures for the HOA or the ditch companies, and there will be no additional operation and maintenance costs for HOA facilities associated with additional FHL shares. It is expected that the HOA will need to acquire two additional shares in the Signal Ditch Company to pair with the two new shares of FHL, but there is not expected to be any significant capital cost associated with this because the Signal Ditch is a carrier ditch with no associated water rights. Signal Ditch Company typically welcomes new users of the ditch due to the increased ability to spread annual operating costs over a broader user base. This purchase by the HOA would have the added benefit of keeping FHL water for delivery through the Signal Ditch to share in ditch losses. There will be additional annual assessment costs for the two additional FHL and Signal Ditch shares. These are expected to total about $2550 per year or about $35,700 in terms of present value cost. The HOA has the legal ability to assess its homeowners for costs associated with the community water system, as defined in the HOA Bylaws and Covenants that are contained in Appendix B. Homeowners presently pay an HOA assessment, which includes funds for water system operation and maintenance, of $125 every quarter (equal to $41.67 per month). A 30 -year loan at 3% for $720,000 will add about $98 to each homeowners currently quarterly HOA assessment for the first ten years of the loan period and $89 to the quarterly assessment for the remaining twenty years. The cost of the additional ditch company assessments will add another $6 every quarter. Therefore, the additional costs associated with the purchase of shares would bring the quarterly assessment total to $229 ($76.33 per month or $916 per year) for each lot for the first ten years of the loan and would drop to $220 ($73.33 per month or $880 per year) for the remaining twenty years of the loan for each lot. This is a reasonable assessment for both IIOA fees and irrigation water supply. An analysis of the HOA's ability to repay the CBCB loan, including information on operating costs, capital reserves, assessments and mineral rights revenues, are contained in the attached Supplemental Financial Analysis for CWCB Loan Feasibility. Wadley Farms No. 3 Water Supply CWCB Loan Feasibility Study Page 25