BOARD01112

• Board Meeting Date: 1/24/2006
• Description: CWCB Director's Report
• Board Meetings - Doc Type: Memo

Water Quality-Water Quantity Coordination Meeting. The next meeting took place on January 4, .
2006, The following issues were discussed: ,
. The 2006 Legislative Update
. The 2006section 303( d) list rulemaking
. Western States Water CouncilfEP A dialogue regarding water quality standards
for effluent dependent waters
. Agency updates

Fortunes Flow From Water Sales: The state frowns on the practice, but speculators make millions
buying and selling metro-area rights. Despite a Colorado legal doctrine intended to prohibit speculating
on water, the practice is not a crime and can be stopped only in cases that come before a water court
judge,

Savvy investors work largely behind the scenes buying and selling rights to water in irrigation companies,
water conservancy districts and other markets - in one case doubling the paper value of their investment
in a single afternoon. The speculators playa role in driving up the price of water that new and growing
cities pay despite a Colorado Supreme Court ruling that speculative claims "discourage those who have
need and use for the water," In the Denver metro area, cities charge as much as $24,424 simply to connect
a new home to the water line - more than twice as much as any other city listed in a recent national
survey.

For the most part, the game of speculating in water rights is played in the shadows, With virtually no
public recording requirements in many of the state's water markets, it is impossible to know to what
extent investors share in the wealth of the farmers and ranchers cashing in on rights held for generations.
Colorado water courts have prevented large-scale private speculation. The courts have repeatedly spurned .
investors who tried to comer rights to billions of gallons they hoped to sell to cities. In general, the courts
were able to do so because the investors had to apply to change how the water would be used.

But in conservancy districts, rights can be transferred from fann to city without going to water court, and
shares of water rights held in private ditch companies also can be bought and sold without going to court.
So investors can buy rights to water in local markets with no intention of ever using it. The buyer then
either allows farmers to continue using the water, leases it or "parks" it on a friendly fann, and then sells
the water later,

Arkansas River Basin

Lower Ark Water Board Questions Aurora Deal: The Lower Arkansas District formed in 2002 to
protect Arkansas Valley water wants Congress to look into Reclamation's authority to issue long-term
water storage contracts to users outside the basin, The Lower Arkansas Valley Water Conservancy
District has voted unanimously to draft a resolution and letter to federal and state lawmakers challenging
Reclamation as it continues an environmental assessment of Aurora's request for a 40-year storage
contract.

Reclamation's longest term for a contract now is currently 25 years with the Pueblo Board of Water
Works, a member of the Southeastern Colorado Water Conservancy District, the local agency that
oversees the Fryingpan-Arkansas Project.

For 20 years Aurora requested and received temporary storage in Lake Pueblo. When the lake is full,
Aurora's water is the first to be released, It needs the storage to exchange the diversion point of water it
purchased in Otero and Crowley counties to Twin Lakes near Leadville, From there, Aurora moves the

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