C150159 Change Approval Letter

• Contract/PO #: C150159
• Contract/PO #: CT2017-1209
• Contractor Name: Orphan Wells of Wiggins
• Contract Type: Loan
• Loan Projects - Doc Type: Approval Letter

Orphan Wells of Wiggins, LLC Agenda Item 19b
January 25-26, 2016 Board Meeting(Updated January 27, 2016)
Page 2 of 2
Background
In November of 2003, the Company included 31 separate agricultural operators, 45 wells and 4,500 acres of
irrigated farmland. Past depletions from the 45 wells must be replaced during times when there is a call on
the South Platte River by senior downstream water rights. The Groundwater Appropriators of the South
Platte (GASP) originally covered these depletions. When GASP dissolved, the 31 operators were required to
cover their own well depletions. As a result, the Company was formed in 2003 to develop a recharge/well
augmentation plan to generate credits to offset the depletions from all 45 wells to help keep wells
pumping. The Company operated for three years under a temporary substitute water supply plan.
From 2005 to 2008 the Company addressed objections to its augmentation plan and purchased/leased
additional senior water to add to its proposed augmentation plan. The Company attempted to reduce its
number of members from 31 to 15 and to reduce its irrigated farmland by 50% to be in a better position to
have its augmentation plan approved in water court. In October 2008, the water court ruled that the
Company was required to cover past depletions of all of the original 31 members. This ruling caused the
Company to withdraw and delay its water court application until the depletions from past pumping no
longer impact the river.
Loan History
The original Project loan ($1,048,077) was approved in November 2003, to construct the Project. At the
May 2006 Board Meeting, the Board approved an increase of $202,000 to the Company's original
authorization. However, due to pending water court issues at the time, the contract was not amended to
reflect the approved increase.
The Project was substantially completed on March 1, 2011. CWCB disbursed $942,494.44 to the Company
for Project costs. In July 2011 the CWCB approved a reduction in the amount of IDCs due. This provided the
Company some financial relief during the expensive water court efforts. At the time, the Company agreed
to add the shares of water rights to the collateral used to secure the loan. The Company began repayment
on the reduced balance in March of 2012.
Discussion
The Company has shown perseverance in making this Project a reality so shareholders can begin irrigating
again. The Company continues to make its annual payment on time and recently filed for a junior water
right that will allow it to cover past depletions. The Company hopes to begin pumping in the next couple
years.
The Company approached CWCB regarding changing the collateral requirement because the Company
would like to use the cash from the sale of those shares in order to continue its efforts to pay for legal fees
and construct additional infrastructure for its augmentation plan. CWCB currently holds a lien on the
easements that contain the original Project components (ie pipeline, recharge ponds, wells, etc.).
It is staff's opinion that it is in CWCB's best interest to change the collateral. If the Company fails to repay
the loan the CWCB is in a much better position to sell the assets to recoup its investment in the Project.
Borrower - Orphan Wells of Wiggins, LLC
The Company is a Colorado Limited Liability Company, incorporated in 2003. The Company currently has 15
shareholders and 225 shares of stock. The 15 shareholders own 19 wells within the augmentation plan. The
Company assesses its shareholders for the debt service and requires a special assessment for other activites
necessary to advance the Company's mission.
cc: Steve Bruntz, President, Orphan Wells of Wiggins, LLC
Susan Schneider/Jennifer Mete, Colorado Attorney General's Office