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Helton &Williamsen, P.C. <br /> Consulting Engineers in Water Resources <br /> 384 Inverness Parkway, Suite 144 <br /> Englewood, Colorado 80112-5822 <br /> Phone (303)792-2161 <br /> e-mail:kwilliamsen@helton-williamsen.com <br /> December 9, 2016 <br /> Ms. Heather R. Dutton <br /> San Luis Valley Water Conservancy District <br /> 623 Fourth Street <br /> Alamosa, Colorado 81101 <br /> Subject:Appraisal of Water Rights Update-Anaconda Ditch <br /> Dear Ms. Dutton: <br /> This letter serves to update my December 14, 2006 appraisal of water rights <br /> concerning 58 percent of the water rights in the Anaconda Ditch associated with the <br /> River Island Ranch owned by Rio Grande Ranch, LLC. In that appraisal, copy attached, <br /> I opined that the unit value of the water rights was $2,918 per acre-foot of historical <br /> consumptive use as of December 14, 2006. The average yield of the water rights, 306 <br /> acre-feet of historical consumptive per year, was based on the historical use and <br /> historical consumptive use calculations for the Anaconda Ditch water rights presented <br /> In the August 2006 report by HRS Consultants, Inc. I understand that since the <br /> completion of my appraisal in 2006 the yield of the water rights was adjusted to an <br /> average of 304.8 acre-feet of historical consumptive use per year. <br /> The appraisal is now 10 years old and you have asked me to update the <br /> appraised value based on today's conditions. I believe there are two factors to consider <br /> in adjusting the appraised value: 1) the increased value caused by inflation and 2) the <br /> increased value caused by demand. I have evaluated both factors and have developed <br /> an adjustment to the 2006 appraised value to bring the value to 2016 value levels. <br /> Inflation Adjustment <br /> The value increase caused by inflation, or cost of living, can be estimated using <br /> a Consumer Price index (CPI). In this case I used the CPI published by the Bureau of <br /> Labor Statistics for All Urban Consumers in the Denver-Boulder-Greeley area. The CPI <br /> adjustment multiplier from 2006 to mid-year 2016 is 1.214. <br /> Demand Adjustment <br /> The demand adjustment is the increase in value caused by supply and demand <br /> and is more difficult to determine due to the infrequency of water right sales in Water <br /> Division No. 3. The "Rules Governing the Withdrawals of Groundwater in Water <br /> Division No. 3 (The Rio Grande Basin)", adopted by the State Engineer in 2016, should <br />