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Mr Don Loloff <br />RE Estimated Augmentation Plan Cost <br />December 23, 2011 <br />Page 4 of 7 <br />I am a little concerned regarding the discrepancy between how the agreement operates and what <br />the agreement actually says. However, assuming an agreement with the NCLPIC /LPAC can be <br />worked out in which they manage the recharge on your behalf, handle all return flow obligations, <br />and allow you to schedule the replacement credit when you need it, then this could be a solution <br />to handle the depletions from the Loloff Pit during the October to April timeframe. <br />The remaining depletions during the October to April timeframe total 59.00 acre -feet per year as <br />shown in Column (G) of Table 1. Assuming that NCLPIC /LPAC will allow you to schedule the <br />full consumptive use value of a NCLPIC share (6.64 acre -feet per year), then approximately nine <br />(9) shares would be required. We've previously estimated that a share of NCLPIC costs <br />approximately $30k; therefore, the total cost for acquiring the nine NCLPIC shares would be <br />approximately $270k. <br />Please note that, according to the January 2010 draft ditch -wide engineering report, historical <br />irrigation under the NCLPIC system resulted in return flow accretions to three distinct reaches. <br />Because the current recharge ponds in the NCLPIC system all are located in Reach 3 (below the <br />Ogilvy Ditch), it is advisable to acquire NCLPIC shares that were historically used in this same <br />reach in order to avoid complications with return flow obligation locations. <br />Also, please note that a change of use of NCLPIC shares in Water Court will likely require that <br />the applicant demonstrate that sufficient dry -up has been acquired. It is recommended that any <br />share obtained be researched to determine where it was historically used, and dry -up for that <br />parcel be acquired through a dry -up covenant. <br />Finally, be advised that the estimate for the consumptive use value of a NCLPIC share relied <br />upon in this analysis is based on the ditch -wide analysis performed by FIRS Water Consultants, <br />Inc. The original intent of the NCLPIC was to use the findings of the ditch -wide analysis in their <br />proposed change of water rights under Case No. 06CW295; if successfully decreed, all future <br />changes of NCLPIC shares could also rely on the ditch -wide findings, which would significantly <br />reduce the engineering and legal costs related to a change case. However, I have been told by <br />Dale Trowbridge of the NCLPIC that this year the company made a decision not to proceed with <br />the ditch -wide findings in Water Court.' This means is that any applicant who desires to change <br />the use of a NCLPIC share will be required to perform a parcel- specific analysis on the specific <br />shares being changed. This will increase the engineering and legal costs associated with a <br />change of use application in Water Court. <br />OTHER OPTIONS <br />As an alternative to using a combination of GIC and NCLIPIC shares, there are a number of <br />other water rights in the area which could potentially provide augmentation for the Loloff Pit. <br />These include water rights in the Whitney Irrigating Ditch Company, the Ogilvy Ditch, the Boyd <br />& Freeman Ditch, and the Graham Ditch Company. <br />accepted by Water Court. <br />4 Dale Trowbridge (NCLPIC), telephone conversation with Jared Dains (Applegate Group), October 11, 2011. <br />