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VALUATION OF SELECTED HENDERSON MILL WATER RIGHTS <br /> November 2019 <br /> Company operates direct flow rights that divert from Meadow Creek and Strawberry <br /> Creek, tributaries to the Fraser River, and storage water in Meadow Creek Reservoir for <br /> 850 acre-feet. The Fraser River is a tributary to the Colorado River immediately <br /> downstream from the Town of Granby. The Fraser River basin is similar to the Williams <br /> Fork basin in terms of scarcity of available water supplies. <br /> There were five separate transactions that involved Vail Ditch Company shares between <br /> 2008 and 2011. In total, 104.5 shares were purchased at an average cost of$29,856 per <br /> share. Another 11 shares were donated to GCMDRC at an assumed value of$30,000 per <br /> share. The first and largest purchase of shares involved 85.5 shares at a cost of <br /> approximately$30,410 each. This 85.5 share transaction is most useful because GCMDRC <br /> estimated the historical consumptive use of the associated water rights, information that <br /> was not available for the other transactions. The water rights are decreed for irrigation <br /> use and would need to be changed in a Water Court proceeding to allow augmentation <br /> or other uses. <br /> The consumptive use associated with these 85.5 shares was estimated by the buyers and <br /> ranged from a high of 293 acre-feet to low of 195 acre-feet. The high number represents <br /> the consumptive use on the historically irrigated area. The low number represents the <br /> historical use on land for which dry-up was obtained. Since dry-up is almost always <br /> required in a change of water rights, the low value of 195 acre-feet is the appropriate <br /> value to use for purposes of this valuation,as it appears to reflect the buyer's expectations <br /> at the time of the sale. The subject 85.5 shares also include approximately 182 acre-feet <br /> of storage in Meadow Creek Reservoir. The value of this storage needs to be deducted <br /> from the purchase price as an adjustment to estimate the value of the consumptive use <br /> water. We assumed that the appropriate deduction is for half of the storage amount (91 <br /> acre-feet), and that the other half would be needed to make delayed return flow <br /> replacement as part of a change of water rights. Specific information as to the actual <br /> return flow lagging for these rights is not available, but approximately 91 acre-feet of <br /> delayed return flow storage for 195 acre-feet of consumptive use water is reasonable <br /> based on our experience. The value of the storage is estimated to be $5,500 per acre- <br /> foot3'4. Deducting the value of storage from the total purchase price results in a value of <br /> $10,771 per acre-foot of average annual consumptive use water. The cost of Vail Ditch <br /> shares did not increase between 2008 and 2011. We have adjusted the cost from 2011 <br /> 'Eagle Park Reservoir reportedly sold in 1998 for$3,542/af of storage capacity. This value,CPI adjusted to 2019, <br /> would be$5,779/af. Clinton reservoir reportedly sold in 1992 for$2,472/af of storage capacity. This value,CPI <br /> adjusted to 2019,would be$5,011/af. <br /> 'The approximate typical cost for development?? of lined gravel pit storage on the Front Range of Colorado, <br /> including inlet and outlet appurtenances, is$5,000 to$6,000(per Walraven Ketellapper, President of Stillwater <br /> Resources). <br /> givniog Spronk Water Engineers,Inc. Page 17 <br />