STATION #2

SUNDANCE WATER SUPPLY PROJECT PURPOSE & BACKGROUND

The majority of the districts water originally came from the Upper Black Squirrel Basin. However, a stipulation handed down in 1999 restricted the use of this water. Restricted 8 wells that provided water to Cimarron Hills, Claremont and Schriever A.F.B (1,900 acre feet restricted use) The conditional rights associated with the Sweetwater well field were abandoned (lost 610 acre feet of water) What was once a return flow available for the district to reuse became the property of the Upper Black Squirrel Basin The result was that approximately 800 acre feet of water was lost on an annual basis

The Cherokee Metro. District needed to find a water supply project that made up for the shortfall resulting from the 1999 stipulation and also afforded the protection of Black Squirrel water resources The district wished to take full responsibility for acquiring water for their rate payers; including ownership of the water rights and the pipeline and storage related project costs The Sundance Water Supply Project is being developed pursuant to the rights adjudicated in the water court case 99cw126. With less water under Sundance Ranch, the property cannot develop at a high density

STATION #2
SUNDANCE WATER SUPPLY PROJECT PURPOSE & BACKGROUND CONTD

Cherokee currently leases between 500 A.F. and 1,000 AF of fully treated water to make up the shortfall CSU requires Cherokee to pay infrastructure access fees, system usage fees and water rates at a multiplier Subject to annual water rate increases Current cost is $4,900 per acre foot per year The arrangement will terminate as soon as the Southern Delivery System (SDS) pipeline is operational, or in the year 2016 unless Cherokee is in compliance with all the terms and conditions of the SDS project This agreement is not financially sustainable Cherokee is making a very conscious effort to be a good neighbor in the Black Forest Community and we are committed to remaining good stewards of the resources which we are developing at the Sundance Ranch. We are continually working to develop the Sundance Ranch water supply and associated infrastructure in a manner that minimizes impacts to the Black Forest community. Minimal private property easements and maximum use of the existing county road rights -of-way Seek easements that adjoin existing easements already in place Plan on overlaying the pipeline with trails where appropriate Conscious effort to work in harmony with the environment Project planning that conforms to the Black Forest Preservation Plan and buildings that fit into the fabric of the community Adhering to El Paso County parks, trails and open space plans Plan to provide hydrants that will be made available to the public for fire protection