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Feasibility Study Mariano (Boedecker) Reservoir Dam Rehabilitation September 2001 Financial Plan This feasibility study was funded in part by a grant of$5,000 from the CWCB and in part by Ditch Company funds, The Ditch Company will apply to the CWCB to borrow up to $1,048,000 from the Emergency Loan Account to be used to rehabilitate the dam, The loan from the CWCB is contingent upon CWCB approval, and the successful negotiation of a contract between the CWCB and the Ditch Company, The financial condition of the Ditch Company is solid at the present time, The Ditch Company has no obligations except those listed on the loan application, a copy of which is attached in Appendix D, and current operating expenses, and is not in default on any of its obligations, Ditch Company financial information can be found in Appendix E, The Ditch Company currently has 2,001 shares of stock issued and outstanding with an annual assessment to shareholders of $125 .00 per share, For diversions during 2001 of 23,631 acre-feet this amounts to $10,58 per acre-foot. A cash flow analysis for a $943,000 (approximately 90 percent of the estimated project cost), Emergency Loan at a 3,5 percent interest rate over a 30 year repayment period is included on Table 3, For the analysis, it was assumed that the Emergency Loan money would be available in 2002 with repayment beginning in 2003. Annual dept service for the loan amounts to $51,272 or $25,62 per share ($51,272/2,001 shares), This equates to a cost of approximately $2.17 per acre-foot per year, assuming a diversion amount for the company of 23,631 acre-feet per year ($51,272/23,631 acre-feet), The maximum annual assessment for all costs related to this project, excluding the 10 percent cash payment in Year 1, is $37,05 per share during the 29th year of dept service, Collateral The Ditch Company has the following collateral it can offer for the CWCB loan: 1, Pledge a revenue stream flow from Ditch Company assessments, 2. The project itself, The project will be owned by the Ditch Company and can be offered by vote of the Board of Directors, 3, Mariano Reservoir and the surrounding property owned by the Ditch Company (subject to the existing lien due to an existing loan), 4, The storage rights associated with Mariano Reservoir. Opinion of Feasibility The rehabilitation project is technically and financially feasible, There are no significant road blocks which would keep the Consolidated Home Supply Ditch and Reservoir Company from completing this project. J:\344S_004\FeasibilitLSmdy.rptdoc - 5 -