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I I I I I I I I I I I I I I I I I I I the shareholders with over one share of stock. The assessments are graduated to a higher rate per share for those stockholders that own 1/4, 1/2, or 3/4 of a share. In 1997 the assessment for 1/4 share was $107.50, for Ih share $115.00, and for 3/4 share $122.50. To determine the "Revenue From Assessments" this was taken into account to determine the base assessment listed in the second column. The 25 % payment the Company will have to make is shown in the seventh column with the payment taken in two years to cover the engineering in 1998 and the construction cost in 1999. The column labeled as " CWCB Foothills Loan" is the annual payment required to the CWCB. The column entitled "Remaining Amount" is the sum of all revenue and expenses for that year with the "Net Fund Reserve" being the sum of the previous year's "Net Fund Reserve" including interest at 5% plus the current year's remaining amount. The Company in 1996 had a "Net Fund Reserve" of approximately $223,949. A total "Net Fund Reserve" of at least $150,000 was carried throughout the schedule to account for a normal reserve that the Company has carried in a certificate of deposit. This is in excess of the one yearly payment to the CWCB that the Company must carry in reserve. As can be seen from Table 4, the assessments are not projected to rise from the $150.00 per share due primarily to the large "Net Fund Reserve" the Company has carried forward for several years. Our analysis indicated the assessment can actually be reduced to $70 per share in 1999 and still provide for a reserve in excess of $150,000. COLLATERAL The Highland Ditch Company, Inc. can offer the following collateral for the CWCB loan. I. The revenue from assessments as allowed by the Company By-Laws and Articles of Incorporation. 2. The physical structures associated with Foothills Reservoir and dam. INSTITUTIONAL CONSIDERA TrONS No institutional considerations exist other than the proposed loan from the CWCB. OPINION OF FEASIBILITY The selected alternative is technically and financially feasible. There are no significant roadblocks which would keep The Highland Ditch Company, Inc. from successfully completing this project. The rehabilitation of this reservoir will secure the water rights in this reservoir and ensure the use of approximately 3,000 acre-feet of water which appears to be the yield on this reservoir based on the record of use. The current value of the water is approximately $35,000 per share of stock with the value after the 30 year loan period estimated at $84,955 based on 3% inflation. The average expected rental rate is expected to be in excess of $50 per acre-foot over the 30 year life Foothills Dam- 96.014 Page 9