C150379 Value of Shares - Laserfiche WebLink

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Mr. Brett Ginther January 17,2014 Page 2 The remainder of this report will focus on the FHL system, relevant characteristics of the subject FHL shares,and the estimated current market value for the subject FHL shares. Farmers High Line Water Rights and System The Farmers High Line Canal and Reservoir Company (FHL) is a mutual ditch company that holds numerous (15) water rights on Clear Creek, Little Dry Creek, and Ralston Creek, and Leyden Creek, although the majority of the rights (12) are on Clear Creek.Numerous reservoirs along the ditch are also filled via the main canal and headgates, including the Wadley Farms Reservoirs, which are discussed further below. Most direct flow and storage diversions into the canal occur at the Clear Creek headgate in Golden, Colorado. Wadley Farms receives both direct flow water and storage water through the Farmers High Line Canal and the Signal Ditch extension. Direct flow irrigation season deliveries are provided by three shares of FHL already owned by the Wadley HOA and a varying number of additional FHL shares leased by the HOA in more recent years.In the non-irrigation season,the Canal is also used to deliver water to the three Wadley Farms Reservoirs under their own storage rights. The two additional subject FHL shares will increase the irrigation season deliveries only. The two shares of FHL being considered for purchase by the Wadley HOA make up 0.180 percent of the 1110.8588 total outstanding shares in FHL3 and were historically used for irrigation near what is now East 100th Avenue and York Street. Water attributable to the two additional FHL shares will be delivered to the end of the main canal and into the Signal Ditch, which will carry the additional deliveries to Wadley Farms. It is our understanding that existing turnout equipment and other infrastructure will be used to distribute the additional FHL deliveries into the Wadley Farms raw water system. Methodology for Determination of Value In Colorado, the value of a water right is typically dependent upon the historical consumptive use associated with that water right.This is because, in most cases, only the portion of the water right that was historically consumed may be transferred in order to prevent injury to other water users. However, the two subject FHL shares considered here are not being transferred out of the ditch system or being changed for non-irrigation uses; instead, the shares will simply be used for irrigation at a different location within the same ditch system. Because the water rights will continue to be used for irrigation within the Farmers High Line system, it does not appear that the subject shares will need to be changed in water court in order to utilize them at Wadley Farms as planned. Based on Wadley Farms' plan to continue to use the subject FHL shares for irrigation within the FHL system, and since these shares will not be changed in water court, it is not necessary to analyze the specific historical consumptive use of these shares. Therefore, BBA's opinion of value was developed based solely upon comparable water right sales and transfers of other FHL shares. 2 The Signal Ditch is a carrier ditch allowing conveyance of water past the downstream end of the main FHL canal near the intersection of East 124th Avenue and Washington Street.The Signal acts as an extension to the main canal, allowing for FHL deliveries to additional areas.The Wadley Farms turnout is located on the Signal Ditch, approximately four miles beyond the end of the main canal. 3 Total of all outstanding shares as indicated by current shareholders list acquired January 13,2014 from Farmers High Line Canal and Reservoir Company.