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Lake McIntosh Reservoir Company Agenda Item 18b January 25-26, 2016 Board Meeting(Updated January 27, 2016) Page 2 of 5 Background The Company is located in Boulder County and operates Lake McIntosh (Reservoir) for the benefit of its shareholders. The Reservoir is a supplemental supply storage reservoir for shareholders of the Highland Ditch Company. Prior to the formation of the Company in 2001, the Reservoir was owned and operated by the Highland Ditch Company. To this day, shareholders of the Company are also shareholders of Highland Ditch Company because, with the exception of the City of Longmont's changed shares, storage water can only be used in an exchange to the Oligarchy Ditch for direct flow water to the Highland Ditch Company. The City of Longmont uses water from the Reservoir to irrigate city open space and parks under the Oligarchy Ditch's service area. The Reservoir is located in Boulder County and has a storage capacity of approximately 2,476 AF. It was constructed in 1890 and enlarged in 1902. The Reservoir's inlet is a lateral off the Oligarchy Ditch. The outlet is located on the east side, opposite of the dam embankment and spillway, and is situated so water is discharged by gravity into the Oligarchy ditch. The outlet works pipe system is approximately 3,300 LF and is constructed of multiple types of pipe. The first section is 200 LF of 54-inch corrugate metal pipe (CMP). The second section is 790 LF of two 24-inch vitrified clay pipe (VCP), and the final section is 2,310 LF of 48-inch reinforced concrete pipe (RCP). When the Company was rehabilitating the outlet's intake structure in 2010, it was noted that the VCP pipe section may need replacement soon as the pipes were observed to be extensively cracked and in danger of collapsing. In May 2015 a section of the VCP pipes did collapse, creating a sinkhole that deposited soil in the outlet works pipes downstream for approximately 300 feet. This has rendered the outlet unusable and thus water cannot be delivered without the use of a temporary pump. Loan Feasibility Study Glen Church, P.E., of Deere a Ault Consultants, Inc., prepared the Loan Feasibility Study, titled "Lake McIntosh Reservoir Company Outlet Works Repair - Feasibility Report," dated November 25, 2015. The feasibility study was prepared in accordance with the CWCB guidelines and includes an analysis of alternative, preliminary engineering design, and construction cost estimates. Borrower - Lake McIntosh Reservoir Company The Company is a Colorado for-profit mutual irrigation reservoir company, incorporated in 2001. Upon formation, shareholders of the Highland Ditch Company received 4 reservoir shares for every ditch share. The Company currently has 248 shareholders and 2,816 shares of stock. Since formation, the Company's revenues have been primarily derived from a City of Longmont recreation lease on the lake. The Company is in good standing with the Colorado Secretary of State. The Company's By-Laws (2001) provide the five-member Board of Directors with corporate powers of the Company and the authority to set assessments. The By-Laws also provide the authority to enforce unpaid assessments by selling delinquent stock shares. Water Rights The water rights of the Company include: TABLE 1: WATER RIGHTS Name Amount Appropriation Water Court Adjudication Date Date Case No. McIntosh Res 2,460 AF 10/8/1902 3/13/1907 CA4790 McIntosh Res (Refill) 2,460 AF , 12/31/1929 7/23/1951 CA11715 The Reservoir is operated pursuant to an exchange decreed in W-8715-77 where senior water which the