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• <br /> • <br /> 4 MEMO <br /> Mike Serlet 4/7/2005 <br /> • Page 2 of 2 <br /> 3) Issue: Project scope and cost has changed. <br /> Concern: If the project is under funded and/or the scope of the Project has changed, a new application <br /> and feasibility study must be submitted and approved by the Board. <br /> Discussion and Status: <br /> We have had several discussions with the SEO regarding the scope and estimated cost of the <br /> project.We have compared this project to similar projects in the state and we have concluded that <br /> there is enough concern that the cost of construction will exceed the loan authorized. CWCB cannot <br /> proceed with a project that is under scoped and under funded. It is our understanding that <br /> shareholders have voiced displeasure about the increase in share price based on the original scope <br /> of the project.We are concerned that the additional cost may exceed the ability of the member's to <br /> pay a CWCB loan.The loan authorized by the Board was for the repair of Reservoirs 1, 2 and 4, <br /> however it appears that the funds may only cover the cost of reservoir No.4 <br /> 4) Issue: Construction Logistics <br /> Concern: Construction during the fall/winter of 2005 may not allow for completion of the Project due to <br /> weather. <br /> Discussion and Status: <br /> It is our understanding that due to the levels of snowpack this year,Reservoir No 4 may not be able <br /> to drain soon enough to complete construction.The outlet pipe has limited capacity(about 10 cfs) <br /> and the inflow to the reservoir may exceed the outlet until late summer. This may reduce the <br /> construction window to the point that the repairs cannot be completed.This would result in the <br /> reservoir remaining empty during the winter of 2005/06,thus forcing construction to be completed <br /> in the summer of 2006. <br /> 5) Issue:Forest Service Permitting <br /> Concern: Construction permits have not been processed and may add to construction delays and also <br /> affect the scope and cost of the Project. <br /> Discussion and Status: <br /> We contacted the Forest Service(Linda Perkins)to confirm the status of the Forest Service <br /> construction permits.Linda indicated that the Consultant has contacted her office,however no <br /> application or plans have been submitted. She did explain that the Construction Permit for <br /> modifications to Reservoir No.4 could be processed in time for fall construction,however without <br /> plans and an application it is difficult to know. She also indicated that changing the footprint of <br /> Reservoir Nos. 1 &2 will require public comment(unless the impact is less than five acres)will <br /> likely prohibit the Company from constructing this fall. <br /> The concerns identified above are not all inclusive,however the concerns shown above are significant <br /> enough to warrant a temporary hold on contract execution.CWCB will continue to provide support for this <br /> project,however without significant changes to the implementation process,CWCB will proceed with <br /> recommending Board De-authorization of the loan. <br />