PROJ01956

• Contract/PO #: C150012
• Contractor Name: Model Land and Irrigation Company, The
• Contract Type: Loan
• Water District: 19
• County: Las Animas
• Loan Projects - Doc Type: Approval Letter

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STATE OF COLORADO

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Colorado Water Conservation Board

Department of Natural Resources
1313 Sherman Street, Room 721
Denver, Colorado 80203
Phone: [phone]
FAX: [phone]

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Bill Owens
Governor

MEMORANDUM

Greg E.Walcher
Executive Director

TO:

FROM:

Peter Evans

Bill Green 'E ~

Peter H. Evans
CWCS Director

Dan McAuliffe
Deputy Director

DATE: May 15,2000

SUBJECT: Model Land & Irrigation Company - Collateral for Emergency Loan

In May 1999, the Board approved an Emergency Infrastructure Repair Account Loan to
the Model Land & Irrigation Company (Company) in the amount of $335,000 for the
repair of the Model Dam which was breached in a flood that same month. Two of the
conditions of Board approval were that:

"The Company must provide collateral that is equivalent in value to the principal
amount of the loan and will provide any analyses and appraisals of the proposed
collateral as may be required to allow the Director of the CWeR to make a final
determination as to the adequacy of collateral".

"To the extent possible, the Company will pledge Model Land and Irrigation
Company water rights as all or a portion of the collateral for the loan. "

For the last several months we have been working with the Company's attorneys, Trout
& Raley, to use the Company's water rights as collateral. We had hoped to obtain a
security interest in the allotment contracts between the Company and the Purgatoire River
Water Conservancy District (District). Recently we learned that in order to obtain the
permission of the District for this arrangement the CWCB would have to commit to
purchasing water from the District in the event of foreclosure.

We therefore asked for an appraisal of the land owned by the Company. On May 5th
Bob Trout faxed me a portion of an appraisal that was apparently done in 1997 after the
death of John Oxley, one of the three principal shareholders in the Company. The
appraisal was done by William B. Love Appraisals, Inc. (I have no knowledge of this
firm) and indicates that the company owns 2,627 acres of land, irrigated and non-
irrigated, with a total appraised value of$867,550. This results in an average value of
$330 per-acre.