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SURPLUS WATER LEASE AGREEMENT <br /> THIS AGREEMENT("Agreement")is made and entered on the dates set forth below by and between <br /> Colorado Springs Utilities,an enterprise of the City of Colorado Springs,a Colorado home-rule city and <br /> municipal corporation. hereinafter called"UTILITIES,"and Schmidt Construction,2635 Delta Drive, <br /> Colorado Springs,CO 80910,hereinafter called"SCHMIDT." <br /> RECITALS <br /> A. UTILITIES is the owner and operator of Clear Spring Ranch, <br /> B. UTILITIES owns certain water wells located on Clear Spring Ranch(Hanna Wells)that are <br /> decreed for industrial use whose pumping is augmented by reusable sewered return flows <br /> released from the Las Vegas Water Reclamation Facility and/or nonsewered return flows as <br /> permitted in Division 2,Water Court,Case Nos.W-4376 and 1989CW36. These augmentation <br /> releases are made in sufficient quantity to ensure that any water pumped from the Hanna Wells <br /> can be fully consumed, <br /> C. UTILITIES,through the operation of the Hanna Wells,and based on current conditions and <br /> operation system constraints,has determined that a limited amount of surplus untreated <br /> groundwater("Surplus Water")is normally available for nonpotable use at a gravel mine <br /> operated by SCHMIDT, located adjacent to UTILITIES' Clear Springs Ranch property as <br /> depicted on Exhibit A; <br /> D. SCHMIDT has the desire to lease up to 250 acre-feet per year of Surplus Water from UTILITIES <br /> each year to be used for various nonpotable uses such as dust suppression,washing of gravel,and <br /> other nonpotable uses associated with gravel mining(SCHMIDT Uses):and <br /> E. The water rights for the Hanna Wells are currently decreed for municipal,industrial and domestic <br /> purposes in conjunction with the operation of UTILITIES R.D.Nixon Power Generating Plant <br /> located on Clear Spring Ranch. <br /> F. In order for SCHMIDT to use the Surplus Water as described herein,it must request and obtain <br /> approval of a substitute water supply plan(SWSP)from the Colorado State Engineer's Office <br /> pursuant to C.R.S 37-92-308(5)or C.R.S. 37-90-137(11)that allows the Surplus Water to be <br /> used for SCHMIDT's Uses,and <br /> G. UTILITIES desires to lease Surplus Water to SCHMIDT for use in its gravel mining operation on <br /> an annual basis if and when such a supply is available, according to the guidelines set forth in the <br /> UTILITIES' Water Management Plan. <br />