BOARD01958

• Board Meeting Date: 7/20/2004
• Description: CF Section - New Loans - Smart Brothers, Inc. - Groundwater Recharge Project
• Board Meetings - Doc Type: Memo

Smart Bros. Inc.
July 20-21, 2004

Agenda Item 14a

In 1998 SBI purchased the adjacent Hessler Farm, consisting of approximately 450 acres, 4
irrigation wells and one recharge pond. Subsequently they expanded the recharge area, now
consisting of 4 interconnected ponds, that are fed through the South Platte Ditch. SBI (which
includes the Hessler Farm and recharge area) is at the end of the ditch, and icing of the ditch poses
a significant problem during the winter. This makes running recharge water impossible at times.

SBI wants to develop a more flexible recharge system that will generate more augmentation water
to be used to offset the depletions caused by their 12 wells, They currently generate credits to
offset their charges, but are short in dry years, and are vulnerable because of the ditch icing. In
2002 they were 400 AF short of credits to offset depletions, The proposed project will add a
recharge well at the river, 13,000 feet of pipe, and 3 new recharge areas. The project will diversify
and enhance the existing recharge project by allowing operations under harsh winter weather
conditions. SBI would continue to be covered in LWU's Plan for Augmentation, but by generating
additional augmentation credits SBI can strengthen their own coverage and help strengthen the
LWU.

Feasibilitv Studies

Brent M, Nation, P.E. of Fort Morgan has completed the feasibility study in accordance with CWCB
guidelines. The study includes an assessment of alternatives to generate augmentation water for
SB!.

Smart Brothers. Inc.

SBI is a Colorado corporation in good standing, incorporated in 1987, with the primary purpose of
conducting a general farming, livestock, and agricultural business. The current officers are Austin
Smart, President, Garrett Smart, Vice-President, and Carson Smart, Secretary/Treasurer. Each
officer has 1/3 ownership of the corporation.

Water RiQhts

SBI currently has decrees on the 12 wells used for their operations. SBI also own shares of the
following water rights:

South Platte Ditch Company -17.4 shares
Davis Brothers Ditch Company - 50 shares
Prewitt Reservoir - Logan District - 715 "acre rights"

The proposed recharge well is already listed in the LWU plan for augmentation.

Proiect DescriDtion

A range of alternatives were considered on how to generate an augmentation supply for SBI,
including:

1, The no-build alternative, continue to rely on LWU and the existing recharge area for
augmentation.
2. Purchase a senior water right for augmentation.
3, Construct a new recharge well and pipeline and pump to existing and new recharge ponds,

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