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Memo to Erica Crosby 2 April 27, 2003 <br />Issue 2: The Denver Water Board has right of first refusal to purchase the Skylark Ranch and <br />Incidental Water Rights. How does this affect the value of the rights? <br />Resolution: Henderson states that in their experience rights of first refusal tend to increase the <br />value of the subject property. Logically, this would be the case if a potential purchaser were <br />determined to acquire the property then they would offer a price slightly higher than what they <br />believe Denver Water would be willing to pay. However, the right of first refusal provides Denver <br />Water with a distinct advantage toward the acquisition of the water rights. This advantage may <br />frustrate other potential purchasers resulting in a diminution of the bidder pool and a lower selling <br />price. DMG will include in the scope of work for the independent appraisal reviewer and <br />independent water rights attorney an evaluation of the impact of the right of first refusal on the <br />value of the water rights. <br />Issue 3: The Skylark Ranch Water Rights are subject to a pending Water Cour[ determination of <br />transferable yield. The appraised value of the water rights is dependent on successful conclusion of <br />this action. Henderson states that a proposed decree, agreeable to all parties, has recently been <br />presented to the water referee for entry, and that entry by the water judge will occur soon thereafter. <br />Resolution: DMG will request a copy of the proposed decree, and pending a review of the decree <br />and evaluation of any other pertinent facts, both by DMG and by the independent reviewers, DMG <br />will reserve the right to reject or reduce the value of the Skylark Ranch deed of trust until the <br />successful completion of the water court action. <br />Issue 4: In the 4-2-03 letter, Henderson makes a proposal regarding an independent review of the <br />water rights appraisals, the condition of and costs associated with the Williams Fork Pump Station <br />and associated facilities, and an analysis of the estimated costs that may be incurred by DMG to <br />foreclose upon and sell the water rights. Henderson also makes a proposal relating to an <br />independent water rights attorney to evaluate Henderson's ownership position in the water rights. <br />Resolution: DMG accepts Henderson's proposal to engage Tom Williamsen of Helton and <br />Williamsen to review the W.W. Wheeler appraisal. DMG will present Mr. Williamsen with a <br />request for proposal to complete the independent review. If the proposal is found satisfactory and <br />the fee is within the maximum budget proposed by Henderson, the review can proceed. If the fee <br />exceeds Henderson's proposed budget, DMG will consult with Henderson as to how to proceed. <br />DMG agrees that Henderson and W.W. Wheeler should have an opportunity to comment on the <br />independent reviewers draft report. The required parameters for the independent reviewers <br />information gathering tasks will be: <br />• the independent reviewer will document for DMG any discussions that are held with W.W. <br />Wheeler or with Henderson; <br />DMG will be notified and have the option to participate in any face-to-face meetings or <br />inspections conducted by the independent reviewer; <br />it will be understood that although Henderson will pay the independent reviewer, DMG will <br />be his client and will direct his work; <br />