C150338 COC Approval letter - Laserfiche WebLink

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Eckhardt Farms, Inc Consent Agenda Item 4a January 26-27,2015 Board Meeting(Updated January 28,2015) Page 2 of 2 Background The Corporation runs a farming operation in Weld County near LaSalle. The Corporation irrigates approximately 3,000 acres to grow hay, wheat, corn, sugar beets, onions, and pinto beans. Historically, the Corporation had access to well water under the Central Colorado Water Conservancy District's Well Augmentation Subdistrict. Those wells have not been able to pump since 2005. To cover this water loss, the Corporation was leasing 21 Western Mutual Ditch shares owned by the McWilliams family (McWilliams Shares). This loan was originally sought to purchase the McWilliams Shares to allow the continued agricultural use of the land. Project Update Right after the original loan approval, the Corporation was notified that the McWilliams shares were no longer available for sale. To replace this water, the Corporation identified the Farmers Independent and Western Mutual shares shown on Table 2 below. Based on an analysis from White Sands Water Engineers, Inc. the consumptive use (CU) on a per share basis averages 10.42 AF for Farmers Independent Ditch shares and 10.18 AF for Western Mutual Ditch shares. White Sands Water Engineers provided a valuation that used a 20% reduction in CU as a contingency and a market rate in the South Platte Basin of$8,000 to $12,000 per AF of CU. Both ditches can deliver to the Corporation's farm and no water right change case will be required for the Corporation's intended agricultural on-farm use. TABLE 1: DITCH WATER RIGHTS Name Appropriation Adjudication Water Court Date Date Case No Farmer's Independent Ditch 11/20/1865 4/28/1883 CA6009 Hewes Cook Ditch (aka Western Mutual Ditch) 8/10/1871 4/28/1883 CA6009 TABLE 2: COST SUMMARY Owner Ditch #of Shares Purchase Cost Appraised Value Carlson Western Mutual 2 $140,000 $130,000 - $196,000 Farmer's Independent 5 $350,000 $333,000 - $500,000 Chacon Farmer's Independent _ 2.56 $184,875 $171,000 - $256,000 Fritzler Farmer's Independent 8.5 _ $680,000 $567,000 - $850,000 TOTAL 18.06 $1,354,875 $1,201,000 - $1,802,000 Schedule: The Carlson Shares were purchased in December 2012 and January 2013. The Chacon Shares were purchased in November 2013. The Fritzler Shares are scheduled to be purchased by February 2015. Collateral: The Corporation will provide the shares of stock purchased by this loan to the CWCB as collateral. Because the purchase cost is within the appraised value, and this loan will only finance up to 90% of the purchase cost, this meets the requirements of CWCB Financial Policy#5 which requires hard collateral valued at an amount equal to or greater than 110%of the loan amount. cc: Frank Eckhardt, President, Eckhardt Farms Inc. Susan Schneider/Jennifer Mele, Colorado Attorney General's Office Attachment: Water Project Loan Program - Project Data Sheet