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". " , . . . AGUA - Water Rights Purchase/Recharge Project September 22-24, 2003 Agenda Item 5c than other alternatives. The EIC water was recornrnended as the preferred water right purchase alternative because it has the lowest cost per acre-foot of consumptive use yield of the alternatives, and because it is located on the main stem of the Arkansas River where most of AGUA's well depletions occur. Appraisal - An "Update of the Estimated Fair Market Value of Stock in the Excelsior Ditch Company" has been prepared by Blatchley Associates, Inc. of Denver, dated August 11, 2003. Mr. Ron Blatchley, P.E. estimated the fair market value of 785 shares of EIC as of August 11, 2003, with a average historic consumptive use of 703 acre feet per year, to be $1,050,000. This represents $1338 per EIC share and $1494 per acre-foot of historic consumptive use of irrigation water. Comparable sates of water rights decreed from the Arkansas River are between $1,000 and $1,900 per acre-foot, or an average of $1 ,500 acre-feet of historic consumptive use. Recharae Project and Ditch Enlaraement - AGUA is also proposing the construction of a new 15- acre recharge pond and enlargement of the last 4 miles of the Excelsior Ditch. This will allow AGUA to better utilize excess replacement water sources (such as Excelsior Ditch credits, SECWCD return flows and leased Pueblo water), increase the value of its EIC shares, and provide lagged replacement credits throughout the year in a more uniform monthly pattern. The lagged replacement credits accrue to the stream in a manner that is very similar to the stream depletions caused by AGUA's well pumping. The recharge capability adds significant value to the EIC shares, especially if wet years precede dry years. Excess replacement credit during wet years can be recharged through the ponds which would carry credit into the following dry years. The new pond would complement the two existing ponds totaling 6.3 acres (4.2 and 2.1 acres) constructed in February/March 2003. The ditch enlargement would widen the ditch by about 3 feet east of 39th Lane, to carry 40 cfs (existing capacity 20-30 cfs.) The 15-acre recharge pond is proposed to be constructed on the Pueblo Army Depot property located at the end of the ditch, and on the north side of U.S. 50 highway. This is the preferred location based on distance to the river (longer lag time), and discussions have been initiated regarding an easement agreement. If AGUA is unable to obtain an easement agreement, AGUA will use an alternate location adjacent to the two existing recharge ponds on property owned by Mr. Dick Evans. In the purchase agreement, Mr. Evans has agreed to convey easements to AGUA for all of the recharge pond facilities. State Enaineer's Office - The Division 2 staff generally supports the AGUA loan request, and characterizes the EIC shares as a fairly significant source of replacement water in AGUA's plan. Although the water right is not considered a senior right, and does suffer during dry to very dry years, it appears to still generate some yield even in those years. In better water supply years it can be a significant contribution to the AGUA portfolio. Division 2 estimates average consumptive use yield at 0.88 AF/share or 691 AF per year for 785 shares, but indicates that a higher average yield may be reasonable as 2002 and 2003 were unusually dry years. This tends to support the average historic consumptive use of 703 acre feet per year (0.90 acre-feet) from the Blatchley Associates, Inc. appraisal. Division 2 considers the water right to be a reliable, permanent supply under the requirements of the Arkansas River Augmentation Account criteria. Because the existing recharge facilities appear to work well, Division 2 believes that AGUA probably could operate a larger recharge facility effectively, Since the EIC is not a participant in the Winter Water storage program it is eligible for diversions from November 15th to March 15th under the priority system senior to the Winter Water call, and can obtain some credit that is enhanced by the opportunity to lag the effect back to the river through recharge. Page 5 of9