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Emergency Loan Application and Feasibility Study Palmerton Consolidated Ditch Company <br />respective ditch systems and how to collaboratively work on the combined elements of the <br />project(s) to maximize efficiency of resources including funding. Additional elements of the <br />proposed Palmerton Project are unrelated to the Rough & Ready Project. It should be noted that, <br />although the two ditch companies have shared some infrastructure for approximately 150 years, <br />the two companies do not have an agreement specifying the companies' respective obligations <br />for operation and maintenance of the joint infrastructure and each company has a slightly <br />difference concept of how to improve the system(s) through this repair/rehabilitate/reconstruct <br />process. Palmerton has committed to continued discussion with Rough & Ready to reach <br />resolution on these issues as soon as possible and anticipates supplementing its loan request <br />herein as additional resolution allows. <br />Alternative 1 -Do Nothing: Failure to rebuild the damaged infrastructure may result in the <br />eventual abandonment of the Company's water rights. Additionally, the Company would not be <br />able to uphold its legal obligations to deliver water to its shareholders and to the reservoir <br />structures, which will cause financial hardship for certain of the Company's shareholders and <br />will restrict water availability that is currently used for municipal purposes. <br />Alternative 2 -Rebuilding Collaboratively with Improvements: The Palmerton Ditch carries <br />water to various locations and users for agricultural and municipal uses. The Palmerton Ditch <br />system is also utilized by the Oligarchy Ditch Company to deliver water to its end users. The <br />Palmerton has begun discussions with the Rough & Ready to collaboratively move forward on a <br />joint project, but no decisions have yet been reached. As noted above, Palmerton will <br />supplement its loan request pending resolution, if any, of issues identified in its ongoing <br />discussions. Palmerton will also begin discussions with the Oligarchy re: reservoir water <br />delivery requirements. At this time, Palmerton understands that the Oligarchy Reservoir No. 1 is <br />full and will not need water delivered during the non-irrigation season. <br />Selected Alternative 3-The Company's newly replaced measuring weir/flume has been <br />relocated down-stream and out of the ditch flow area as well as there is approximately 300 to <br />400 linear feet of the ditch which is gone down stream of the head-gate that will have to be <br />rebuilt along with the diversion structure and appurtenant infrastructure. Additionally, the ditch <br />generally needs restoration between the diversion structure on St. Vrain Creek and the north side <br />ofHwy 66. These are the elements of the Company's submitted loan request. These elements <br />may be modified depending on the ongoing discussions with the Rough & Ready and/or the <br />Oligarchy. These elements may also be modified as the high water recedes in St. Vrain Creek <br />and the Company's consultants can refine their damage analysis. <br />Cost Estimate <br />The Project cost estimate, provided by the Company's consultant(s), is $1,274,822.50 and is <br />further broken down pursuant to the Palmerton Ditch Diversion Budget Estimate attached hereto .