City Council Agenda and Packet 1979 04 17

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.Mr. Leon A. hurl 111 410 April 13, 1979 Page 2 Boulder have not been nearly as aggressive as has Louisville in water right acquisition. We have thus been able to tie up several hundred sere foot of water rights recently at what still moat be considered lower than market prices. However, this situation is certain to change and we will soon see the day when we are prying $2,000.00 per acre foot for water rights. Our strategy therefore must be to tie up as many of the quality water rights as we can while attempting to spread the payments out over a reasonable period of time. The recent contract with Marcus F. Church concerning the Howard Ditch is an excellent example. We paid *27,500.00 for the share but our payment. are wade in five equal installments. By the time we fully pay for the share it will probably be worth $75,000.00. It is not always possible to negotiate installment terms. With the value of water rights escalating so rapidly there is little incentive to sell. Most of the people we contract with are either retiring or need cash for another investment. This is the case with the contract with Mr. Norm Fleet which is on the agenda. This contract concerns the purchase of 15.4 shares of Marshall Lake water and 95 shares of stock in the Leyner Cottonwood Ditch. The total selling price would be $137,000.00. The City has not previously purchased any stock in the Leyner Cottonwood Ditch Company, but it is a water right we can use The ditch diverts from south Boulder Creek and we would propose to transfer it upstream to the pipeline and to the Community Ditch for use on both the direct flow and storage basis. The average yield per share is 0.8 acre feet. While the ditch is junior in priority to many of the water rights we already own, it is senior to the Marshallville Ditch, South Boulder Canyon Ditch, Davidson Ditch and Goodhue Ditch on South Boulder Creek. The disadvantage of this agreement is that the sellers are insisting upon a cash sale and we have not been able to negotiate any installment terms. However, you have indicated to me that the money is available. The advantage of this agreement is that it gives us an opportunity to buy a very large quality of water in a single transaction. The average yield of the Marshall shares and the Leyner Cottonwood shares together would be approximatley 138 acre feet per year. This is somewhat of a complicated situation and there is a possibility that we will not actually close on this contract. It has been represented to no that a partnership is involved in the ownership of these water rights and that the partnership agreement contains a first right of refusal which allows each of the individual partners an opportunity to purchase partnership property before it is sold to any third party. In effect, our contract offer represents a bona fide offer to the owners which triggers the right of first refusal. Due to this requirement, the conti.ct probably cannot be closed before late May or early June. .�_ —..