C153456 Contract

• Contract/PO #: C153456
• Contractor Name: Grand Valley Irrigation Company
• Water District: 0
• County: Mesa
• Bill Number: XB 99-999
• Loan Projects - Doc Type: Contract Documents

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J. William McDonald
Demmus D. Harvey, Jr.
Walt Feit
Page 2
January 17, 1986

and the expense of attorneys and accountants. So far, the
Company has already incurred and paid substantial expenses over
and above their normal budget in preparation for Phase II in the
amount of $9,979.00, not including billings for attorneys' fees
for December and January. It is not realistic to expect the
Company to further underwrite Phase II costs unless and until a
contract is signed with the Bureau. It is imperative that Phase
II costs incurred to date be promptly reimbursed, and that all
costs incurred in the future be promptly paid upon presentation
of invoice.

Salinity control is not well received by Grand Valley
residents, partly due to problems which have become notorious in
the Bureau's salinity control on the Highline Canal (operated by
the Grand Valley Water Users Association), and also partly due to
both real and imagined fears as to how the physical changes in
the laterals will affect the irrigation and land use practices of
Company's shareholders. Mr. Feit and Mr. Harvey can confirm the
resistance among Company shareholders to salinity control as
demonstrated at the annual meeting held December 7, 1985. It
should be apparent that a considerable education and promotion
effort will have to be undertaken to gain acceptance of this
program. The Company does not have the money, manpower, or
expertise to undertake such an effort, and it was not budgeted as
a cost item in the estimates previously furnished to you.

The credibility of the Bureau and State has now become
an issue. What was told to the Company's Board about prompt and
continuing reimbursement of costs associated with Phase II
activities, was repeated to the Company's shareholders at the
annual meeting in the presence of Mr. Harvey, Mr. Feit, and Mr.
Clay. Indeed, at that meeting, Mr. Harvey and Mr. Clay directly
responded to questions by shareholders. How do you suppose the
shareholders will react to the information that they may be
paying Phase II costs themselves after they have been promised
that they would not pay a dime for these expenses?

From information given at the January 8, 1986 meeting,
we are of the belief that there is confusion and conflict between
the Bureau and the State as to who controls and establishes
policy in the salinity control program. This dilemma obviously
must also be resolved.

Although the Company remains willing to participate in Phase
II of the Salinity Control Program, the Company is not in a
position to underwrite the costs necessary to implement Phase II,
or to mount and sustain the necessary educational and promotional
efforts among shareholders. You need also reflect on the impact