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HomeMy WebLinkAboutC96-111 Upper Eagle Regional Water Authority, Vail Associates and Vail Valley Consolidated Water DistrictC'9611 10 ,j LETTER OF INTENT This Letter of Intent dated this 30th day of April, 1996, is among the Board of County Commissioners of Eagle County, Colorado (the "County"), the Upper Eagle Regional Water Authority (the "Authority"), Vail Associates, Inc. ("VA") and the Vail Valley Consolidated Water District (the "District"). The purpose of this Letter of Intent is to provide an outline of the general principles governing the parties' development of, and the terms and conditions under which the parties will be entitled to participate in the Eagle Park Reservoir Project. The Eagle Park Reservoir Project consists of the phased reclamation and development of the firm annual yield in two existing storage facilities owned by the Climax Molybdenum Company ("Climax") known as Eagle Park Reservoir and Robinson Reservoir. Eagle Park Reservoir is located in Section 28, T. 7 S., R. 79 W., 6th P.M., Eagle County, has a capacity of at least 3000 acre feet, and is more particularly described in the application pending in the District Court in and for Water Division No. 5 (the "Water Court") in Case No. 92CW340. Eagle Park Reservoir may be enlarged in the future beyond its estimated capacity of 3000 acre feet. Robinson Reservoir is located in Sections 33 and 34, T. 7 S., R. 79 W., 6th P.M., Eagle County, has a decreed capacity of 3,136 acre feet, and is more particularly described in the decrees entered by the Eagle County District Court in Civil Action No. 970 dated July 26, 1937, and Civil Action No. 119 dated July 23, 1958. The general principles governing the development of and participation in the Eagle Park Reservoir Project are as follows: 1. Project Yield Allocation. (a) By Purchase Agreement dated April 9, 1993, between VA and Climax, VA has certain options to acquire up to 1100 acre feet of the firm annual yield of water developed in Eagle Park Reservoir once it is reclaimed and capable of serving as a fresh water storage facility. By virtue of this Agreement, VA also has the option to acquire the first 1,000 acre feet of any additional firm annual yield developed in Eagle Park Reservoir should it be enlarged beyond its current estimated capacity of 3000 acre feet. Nothing contained in this Letter of Intent shall in any manner modify or diminish the rights of VA under said Purchase Agreement. In the event of any inconsistency between the Purchase Agreement and this Letter of Intent, the terms of the Purchase Agreement shall control. fd0065 (b) As to any firm annual yield developed in Eagle Park Reservoir as currently constructed in excess of VA's first 1100 acre feet, the County, Authority and District shall have the right to acquire up to the following percentages: County = 16% Authority = 44% District = 40% (c) In the event and to the extent any of the parties do not exercise their options or rights to acquire their respective shares of the firm annual yield developed in Eagle Park Reservoir (the "unsubscribed yield"), then the parties shall have the right of first refusal to acquire such unsubscribed yield as follows: (i) The County, Authority and District shall have a right of first refusal to acquire a portion of any of VA's unsubscribed yield up to the following percentages: County = 16% Authority = 44% District = 40% By way of illustration, if VA only acquires 1000 acre feet of the firm annual yield in Eagle Park Reservoir and its unsubscribed yield is 100 acre feet, then the County shall have a right of first refusal to acquire up to 16 acre feet of such yield, the Authority 44 acre feet, and the District 40 acre feet. In the event one or more of such parties do not exercise their right of first refusal, then such other party or parties shall have a right of first refusal to acquire pro rata such remaining unacquired yield. By way of example, if the County does not exercise its right to acquire the foregoing 16 acre feet, the Authority shall have the first right to 52% of the amount not acquired by the County, and the District shall have the first right to 48% of such unacquired amount. (ii) The parties shall have a right of first refusal to acquire a portion of any of the unsubscribed yield of the County, Authority or District up to the following percentages: County = 9.5% Authority = 26.5% District = 24.0% VA = 40.0% M0065 2 In the event and to the extent one or more of such parties do not exercise their right of first refusal, then such other party or parties shall have a right of first refusal to acquire pro rata such remaining unacquired yield. (d) The parties shall have a right of first refusal to acquire a portion of any firm annual yield developed in Robinson Reservoir up to the following percentages: County = 9.5% Authority = 26.5% District = 24.0% VA = 40.0% In the event and to the extent one or more of such parties do not exercise their first right of refusal, then such other party or parties shall have a right of first refusal to acquire pro rata such remaining unacquired yield. 2. Ditch & Reservoir Company. (a) The parties will form a nonprofit mutual ditch and reservoir company pursuant to § 7-42-101 et seq., C.R.S. (the "Company") that will hold record title to all water rights, land, facilities, easements or any other appurtenances or personalty comprising the Eagle Park Reservoir Project. The Company will issue shares of stock which will represent the firm annual yield of the Eagle Park Reservoir Project. Shares of stock will be issued to Company shareholders in direct proportion to the amount of the firm annual project yield acquired by such shareholder; provided, however, that a separate class of stock may be created to the extent necessary to recognize VA's rights to the first 1100 acre feet of yield under its Purchase Agreement with Climax. (b) In addition to the provisions of paragraph 2(a), the articles of incorporation and/or bylaws of the Company shall provide for the following elements: (i) Shareholders shall have one vote for each share of stock standing in its name on the books of the Company, regardless of the class of stock. Cumulative voting of shares of stock shall not be authorized for any purpose. (ii) At shareholder meetings, 50% of the total votes represented in person or by proxy shall constitute a quorum. At such meeting where a quorum is present, the affirmative vote of 51 % of the votes represented at the meeting shall be the act of the shareholders unless a different percentage is specified in the articles. M0065 (iii) No shareholder shall have any preemptive or similar rights to acquire or subscribe for any additional unissued or treasury shares of stock. (iv) Any amendment to the articles of incorporation shall require 67% or more of the total votes entitled to vote at a meeting of the shareholders where a quorum is present; provided, however, that any sale of the Company's assets which provide firm annual project yield (other than a sale of shares entitling one to the use of the Company's assets) shall require the affirmative vote of 90% of the total votes of the Company. (v) Each of the parties shall have at least one designated director's seat on the Company's board of directors. (vi) The Company shall have the power to make assessments from time to time on its stock for ordinary repair, maintenance and operation of the Company's assets, or for the purchase of any outstanding shares of stock. Any such assessments shall be levied pro rata on the outstanding shares of the Company's stock upon the approval of a majority of the votes represented at a shareholder's meeting where a quorum is present. Any assessments for capital improvements shall require the affirmative vote of 67% of the votes represented at such meeting. (vii) No shareholder shall object in Water Court to another shareholder's use of water from the Eagle Park Reservoir Project by direct use, augmentation, exchange, replacement or substitution, provided, however, that this provision shall not prevent a shareholder from filing a statement of opposition in Water Court to any other aspect of an application. Likewise, this provision shall not limit any shareholder in the exercise of its governmental functions. (viii) There shall be no restriction on the place of use. (ix) Such other provisions as may be customary for a ditch and reservoir company incorporated in the State of Colorado. 3. Project Yield. (a) The parties recognize that the firm annual yield of the Eagle Park Reservoir Project (the "Project Yield") may be derived from a combination of a number of different sources including, without limitation, the application for water rights pending in Water Court Case Nos. 92CW340 and 93CW301; the exchange of certain water rights owned by the Authority, District and VA pending in Water Court Case No. 95CW348; the acquisition, change and/or use by exchange of the Pando Feeder Canal water right to be acquired from the Colorado River Water M0065 4 Conservation District; the subordination of certain water rights owned by Denver, Aurora and Colorado Springs; certain senior water rights or imported water owned by Climax; and the extension of certain collection systems in the headwaters of Ten Mile Creek and the East Fork of the Eagle River. The price paid to Climax for certain increments of Project Yield may vary depending upon the specific source of the Project Yield. Notwithstanding the fact that different parties may contribute to the Company their own water rights to develop a portion of the Project Yield, the initial shares of Company stock to which the parties are entitled hereunder shall be offered to the parties hereto at the same price without any credit being received for such contribution of water rights; provided, however, that notwithstanding any provision to the contrary, nothing contained herein shall in any manner obligate VA to pay a price per acre foot for the first 1100 acre feet of Project Yield, or for the 1000 acre feet which it has optioned in the event Eagle Park Reservoir is enlarged, that is greater than the prices set forth in its Purchase Agreement with Climax. (b) To the extent a portion of the Project Yield is derived from the Green Mountain Reservoir contract water which is the subject of the exchange in Water Court Case No. 95CW348, then the annual contract price for such increment of Green Mountain Reservoir water that contributes to the Project Yield shall be paid for by the Company. (c) Nothing contained herein shall obligate the parties to acquire any portion of the Project Yield or shares of Company stock, or to contribute any of their existing water rights, Green Mountain Reservoir contract rights, or snowmaking return flows to the Company to develop Project Yield. 4. Start-up Expenses. Prior to Company formation the legal, engineering and other fees incurred by the parties in acquiring Eagle Park and Robinson Reservoirs and developing the Project Yield shall be paid in accordance with the parties' Cost Sharing Agreement dated May 9, 1995, as said agreement may from time to time be amended. 5. Assi agn bility. The rights and benefits accruing to the parties under this Letter of Intent, including shares of stock in the Company, shall be freely assignable in whole or in part; provided, however, that any assignee shall be responsible for any associated obligations. 6. Cooperation. The parties shall cooperate with one another and provide such reasonable assistance as may be required to acquire the Eagle Park Reservoir Project and develop the Project Yield. 00065 Executed as of the date first set forth above. BOARD OF COUNTY COMMISSIONERS OF EAGLE COUNTY, COLORADO ! y: Name: Title: UPPER EAGLE REGIONAL WATER AUTHORITY Y�ZDX�w Name: �i�cn w,�u�_ j_) IpzCc�rcft,�c Title: VAIL ASSOCIATES, INC. By: �a"A Name: . 6A L Title: i� " / VAIL VALLEY CONSOLIDATED WATER DISTRICT M0065