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Air Don Loloff <br />RE• Estimated Augmentation Plan Cost <br />December 23, 2011 <br />Page 3 of 7 <br />Please note that, according to the May 1998 Poudre Prairie engineering report, historical <br />irrigation under the GIC system resulted in return flow accretions to the Poudre River (both <br />above and below the Ogilvy Ditch) and the South Platte (both above and below the Patterson <br />Ditch). Although no mention is made in the Poudre Prairie decree regarding whether future <br />changes of GIC shares would need to consider the location where return flows are replaced, it <br />would be wise to attempt to acquire only those GIC shares which were historically used on <br />parcels whose return flows historically accrued to the Poudre River above the Ogilvy Ditch. By <br />only acquiring shares of this type, you could avoid complications if objectors to the potential <br />Loloff Pit augmentation plan demand that return flow be replaced to the historical reach in which <br />they accrued. <br />Also, please note that changing the use of GIC shares in Water Court requires that the applicant <br />demonstrate that sufficient dry -up has been acquired. It is recommended that any share obtained <br />be researched to determine where it was being used at the time the Poudre Prairie Decree was <br />entered, and dry -up for that parcel be acquired through a dry -up covenant. <br />NCLPIC SHARES <br />Currently, the NCLPIC system is capable of making replacements to the Poudre and South Platte <br />rivers below the Ogilvy Ditch, making it useful for replacing depletions during the October <br />through April timeframe. Because NCLPIC water is diverted solely during the irrigation season, <br />in order to acquire credit during the non - irrigation season the shares must be placed into recharge <br />or stored in a reservoir for later release. The NCLPIC and Lower Poudre Augmentation <br />Company (LPAC) currently operate recharge ponds that could be used for this purpose. All <br />existing recharge ponds are located in what the NCLPIC calls "Reach 3 ", or the reach below the <br />Ogilvy Ditch. <br />It appears that NCLPIC /LPAC has a history of making agreements with NCLPIC shareholders <br />whereby the shareholder provides the shares and the NCLPIC /LPAC will recharge the shares in <br />their recharge facilities. One such agreement between NCLPIC /LPAC and Contreras Farms, Inc. <br />was investigated. For a monthly assessment of $250 per share, NCLPIC /LPAC recharges <br />Contreras' two NCLPIC shares into recharge ponds operated by the company. According to the <br />agreement, Contreras is responsible for accounting for the augmentation and return flow <br />replacements resulting from the recharge of these shares. <br />In practice, it appears that the agreement operates a bit differently. According to Dean <br />Santistevan of Clear Water Solutions, engineer for Contreras, a monthly schedule of <br />replacements is provided to NCLPIC /LPAC annually, and they manage the recharge to achieve <br />the requested schedule. They also handle the return flow obligations. Contreras is allowed to <br />schedule the full consumptive use credit of the shares as determined by the ditch -wide analysis, <br />which equals approximately 6.64 acre -feet per share per year. <br />2 Dean Santistevan (Clear Water Solutions), telephone conversation with Jared Dains (Applegate Group), October <br />20, 2011. <br />3 HRS Water Consultants, Inc., Draft Ditch -Wide Historical Use Analysis Report for the NCLPIC and CLPRC <br />Shares Used in the Greeley Canal No. 2, dated January 2010. Note that the findings of this report have not yet been <br />