CT2016-2005 Approval Letter

• Contract/PO #: CT2016-2005
• Contractor Name: Lower Poudre Augmentation Company
• Contract Type: Loan
• County: Larimer
• Loan Projects - Doc Type: Approval Letter

Lower Poudre Augmentation Company Agenda Item 22b
September 15-17,2015 Board Meeting(Updated September 18, 2015)
Page 2 of 4
Background
The Company was formed by the New Cache La Poudre Irrigating Company (Irrigating Company) and the
Cache La Poudre Reservoir Company (Reservoir Company) in order to separate the costs and benefits
accrued for a well augmentation program. The Company operates an augmentation plan for wells
located within the service area of the Irrigating Company and the Larimer and Weld Irrigation
Company. Currently, augmentation is provided to 28 well owners for a total of 62 wells that provide
irrigation water to approximately 4,000 acres of irrigated land.
The Company's augmentation plan was awarded a decree under consolidated Case No.
04CW025/06CW295 in January 2014. Under this decree, the Company is required to augment out of
priority pumping depletions associated with pumping of the member wells. The Company currently has
in place a quota of one AF of augmentation water per irrigated acre due to a limited augmentation
water supply. It is the intent of the Company to allow its well members to utilize their wells to their
maximum potential and thus the Company actively seeks water rights to add to its portfolio.
Loan Feasibility Study
Jared Dains, P.E., of Applegate Group, prepared the Loan Feasibility Study, titled "Feasibility of the
Lower Poudre Augmentation Company Water Rights Purchase," dated August 2015. The feasibility study
was prepared in accordance with the CWCB guidelines. Additionally, the Company provided a water
rights appraisal prepared by A. Bruce Johnson a Associates, dated August 5, 2015.
Borrower- Lower Poudre Augmentation Company
The Company is a non-profit augmentation company that was incorporated in December 2004 and is in
good standing with the Colorado Secretary of State. Its office is located in Lucerne. The Company is
owned by the Irrigating Company (2/3 interest) and the Reservoir Company (1/3 interest). Well owners
receiving augmentation water are not shareholders of the Company, but contract with the Company for
coverage through augmentation agreements. Revenues are primarily derived from well owner
assessments and leasing excess water to the oil and gas industry.
The Company's By-laws (2004) provide the five-member Board of Directors with authority to enter into
loan contracts and to manage the business and affairs of the Company. The Board of Directors annually
sets the assessments on wells based on the approved budget.
Water Rights
The water rights of the Company include:
TABLE 1: WATER RIGHTS
Name Amount Appropriation Adjudication Water Court
Date Date Case No.
Harmony 25 Reservoir 682.75 AF 9/1/2005 2/27/2009 09CW030
(Conditional)
Box Elder Ditch Company 4.5 Shares Various 4/11/1882 09CW030
(Change Case)
Cache la Poudre Irrigating 34.5 Shares Various Various 04CW025
Company _ (Change Case)
Cache la Poudre Reservoir 4.0 Shares Various Various 04CW025
Company (Change Case)
Additionally, the Irrigating Company received a decree in Case No. 01 CW201/04CW343 for confirmation
of direct flow and storage water rights that are utilized as the principal source of augmentation supply
in the Company's augmentation plan. These rights include water storage rights for Cornish Plains
Reservoir and Barnesville Equalizer, and direct flow rights for the Greeley Canal No. 2, including direct
flow from the Cache la Poudre River and various points of inflow along the Greeley Canal No. 2
including the John Law Seepage Ditch, Cole Bank Draw, Eaton Draw, Lonetree Creek, and Owl Creek.