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VALUATION OF SELECTED HENDERSON MILL WATER RIGHTS <br /> November 2019 <br /> 4.0 VALUATION <br /> The market value of a water right is the amount for which the right would be bought and <br /> sold on the open market, assuming knowledgeable buyers and sellers conducting the <br /> transaction at arm's length. The best measures of market value are recent water right <br /> sales or leases in the same geographical neighborhood as the Incidental Water Rights <br /> ("comparables"). Water right values are typically expressed in terms of value per acre- <br /> foot of average annual consumptive use yield. Comparables are evaluated as to their <br /> applicability to the subject rights, and adjustments are made to the values as necessary <br /> to reflect characteristics of the subject rights. <br /> The value of a water right is affected by a number of factors, including the seniority of the <br /> right, dry year and average year yields, location, season of use, amount of water involved <br /> in the sale, whether or not storage is included, and the degree of competition in the <br /> market place. The unpredictable vagaries of the water market are also prominent in <br /> water right values. These vagaries include market transactions that are higher or lower <br /> than expected for various known or unknown reasons, including an overly motivated <br /> buyer or seller or a poorly negotiated transaction. The highest and best use of the <br /> Incidental Water Rights, from a valuation standpoint, is for municipal or industrial use. <br /> The most likely market for the subject rights is the upper Colorado River basin. <br /> 4.1 Comparable Water Right Sales and Leases <br /> Although there have been a number of comparable water right sales and leases in the <br /> neighborhood of the subject rights,the market is not as active as other areas in Colorado; <br /> for example, along the Front Range in the South Platte River basin. The following <br /> summarizes the comparable water right sales and leases that were identified and used in <br /> this valuation. The values and locations of the comparables are summarized in Table 4-1 <br /> and Figure 4-1. <br /> Calculations of the water values discussed herein were carried out to the nearest dollar. <br /> This is done for computational continuity, and does not imply accuracy to the nearest <br /> dollar. <br /> 4.1.1 Columbine Ditch <br /> In 2009, the City of Aurora and Climax Molybdenum Company purchased the Columbine <br /> Ditch water right from the Board of Water Works of Pueblo (Pueblo) for $30.23 million. <br /> Aurora reportedly owns two-thirds of the water right and Climax owns one third. The <br /> Columbine Ditch is a transbasin diversion from the headwaters of the Eagle River in the <br /> Colorado River Basin to the headwaters of the East Fork of the Arkansas River. The water <br /> right was originally decreed for irrigation in the Arkansas River basin. In Case No. <br /> i Spronk Water Engineers,Inc. Page 15 <br />