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<br />LAWMA. Water Rights Purchase
<br />July 28-29, 2003
<br />
<br />Agenda Item 20b
<br />
<br />LAWMA has two main sources of revenue, membership dues (approx. $196,236/yr.) and
<br />assessments on shares of LAWMA stock (approx. $208,994), for a total income of $405,230.
<br />LAWMA can increase its annual revenue to cover these costs by increasing its membership dues, by
<br />increasing its assessments on shares of LAWMA stock or by increasing its membership dues and
<br />assessments on shares of LAWMA stock.
<br />
<br />Table 3 shows LAWMA's projected income and expenses over the CWCB loan repayment period,
<br />as well as the required increase in LAWMA's share assessments only, above the current level of
<br />$11.30 per share, to cover their costs.
<br />
<br />Table 3. LAWMA's Projected Income, Annual Expenses and CWCS Loan Service
<br />
<br />Year 2004 - 2007 2008 - 2010. 2014 - 2034. 2037 -
<br /> 2006 2009 2013 2033 2036 2043
<br />LAWMA Income $405,230 $405,230 $405,230 $405,230 $405,230 $405,230 $405,230
<br />LAWMA's total expenses,
<br />Including CWCS loans $540,906 $455,854 $508,038 $498,884 $520,981 $413,481 $214,297
<br />LAWMA cash flow ($135,678) ($50,824) ($102,808) ($93,654 ) {$115,751} ($8,251) $190,933
<br />(Income -total expenses)
<br />LAWMA cash flow plus {$167,368} {$81 ,209) ($141,112) ($131,Q42) {$131,Q42} ($8,251) $190,933
<br />10% CWCS reserve
<br />Required Share
<br />Assessments {Existing $20.35 $15.70 $18.93 $18.39 $17.58 $11.75 N/A
<br />$11.30}
<br />% increase over existing 80% 39% 68% 63% 55% 4% N/A
<br />assessment
<br />
<br />The cost to a LAWMA member for an acre-foot of firm yield replacement water with one-half of the
<br />Keesee water rights would be approximately $62.66. . Given that LAWMA paid between $60 - $65
<br />per acre-foot of consumptive use replacement water during 2002, the figure of $62.66 per acre-foot
<br />of firm yield replacement water with 1/2 of the Keesee water rights is certainly reasonable.
<br />
<br />Election - In view of the substantial increases in share assessment levels necessary to put the financial
<br />program into effect, and to assure repayment of the CWCB loans, staff recommends that LAWMA
<br />conduct a special election of the 213 shareholder members on the proposed assessment levels, as a
<br />condition of finalizing the contract for this loan. The election would authorize the LAWMA Board of
<br />Directors to execute the CWCB loan for the Keesee water rights, and approve in concept the financial
<br />program and required share assessment levels presented above. LAWMA's Bylaws require only a
<br />15% quorum and a majority vote for approval. Staff is recommending that for adoption of the financial
<br />program presented above, the 15% quorum requirement be increased to 50%, with approval requiring a
<br />2/3 majority of the outstanding shares of stock represented by shareholders present or by proxy.
<br />
<br />Security - As security for the loan, LAWMA will pledge revenues, including membership dues and
<br />assessments on shares of LAWMA stock, as well as the acquired one-half of Keesee water rights.
<br />This is in compliance with CWCB Loan Policy #5 (Collateral).
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<br />Page 6 of 8
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