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THE RURAL DITCH COMPANY 'LLD COUNTY
NOTICE OF ANNUAL STOCKHOLDERS MEETING
COMMISSIONERS
January 2011 JAN 24 AID;
21, 2012 48
Longmont, Colorado RECEIVED
The regular annual meeting of the stockholders of The Rural Ditch Company will be held
in the "Clover Meeting Room" IN THE CLOVER BUILDING AT THE
BOULDER COUNTY FAIRGROUNDS, 9595 NELSON ROAD,
LONGMONT, CO. 80501. THE "CLOVER" MEETING ROOM IS
ON THE NORTH SIDE OF THE CLOVER BUILDING IN THE
BASEMENTLEVEL at 2:00 p.m., THURSDAY, FEBRUARY 16, 2012 for
the purpose of electing directors for the ensuring year and the transaction of such business as
may properly come before the meeting including adopting Article XIII Changes of River Water
Rights to the bylaws of the Company. The proposed bylaw is enclosed for reference and
recommended by the Board of Directors.
Dan Grant, Secretary/Treasurer
(303) 776-7207
drgnlg@msn.com
P.O. Box 1826
Longmont, Co. 80502-1826
Even if you expect to be present, please sign, detach, and mail the PROXY NOW. If you
are present, the Proxy will not be used, but we cannot have a legal meeting unless we have a
majority of stock represented.
X X
PROXY FOR VOTING STOCK
KNOW ALL BY THESE PRESENTS, that I (We)(Record Owners of Stock): JAN S 02012
�fJ \ (Sean P. Conway. Chair)
t�-
do hereby constitute and appoint the President of the Rural Ditch Company, or
Bruce Barker, Greg Nelson, or Steve Nguyen
of Weld County, Colorado as my Agent, and in my name, place and
stead, to vote as my proxy at the annual meeting of The Rural Ditch Company to be held
February 16, 2012 upon all matters that may properly come before said meeting or any
adjournment thereof according to the number of votes I should be entitled to vote if there �S
personally present. La
WITNESS MY HAND, this 30th day of January , 201
Attest: Clerk to the Board By: Depu Clerk to the Board et ler A
2012-0287 "
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Final version of proposed Bylaw amendment
From: Scott E. Holwick (SHolwick@Igkhlaw.com)
Sent: Fri 1/20/12 5:05 PM
To: 'DANIEL R GRANT' (drgnlg@msn.com)
Cc: jasittner@lgeverist.com (jasittner@Igeverist.com); gcvarravci@aol.com (gcvarravci@aol.com);
rray@ccwcd.org (rray@ccwcd.org); Linda Lohmann (lohmann_linda@swsd.org)
1 attachment
2012 proposed Catlin Bylaw.docx (15.0 KB)
Dan,
Per the Board's direction yesterday, the proposed revised(reflecting the new reimbursement cap and
reflecting a change in the starting date by which the Company may consider CPI adjustment to such cap
(s)) Bylaw amendment(attached) is summarized below, along with pro's and con's. If you have any
questions re: the narrative in the Notice to the Stockholders, please let me know.
Summary:
The proposed Bylaw amendment is commonly known as a"Catlin Bylaw Provision"and it, or a version
of it, has been adopted by a large number of mutual ditch and reservoir companies in Colorado. It is
included in the template Bylaws published by DARCA (the Ditch and Reservoir Company Alliance) for
its members. The water rights decreed to the Rural Ditch may be legally used by the Company's
stockholders for irrigation of lands lying under the Ditch. It is lawful for a stockholder to file an
application in Water Court to change the use of the water associated with the stockholder's shares to a
use other than irrigation. In fact, in Case No. 01CW255, the Central Colorado Water Conservancy
District did change the use of its 3.5 Rural shares so that they may be also used as a source of substitute
and replacement supply in Central's decreed plans for augmentation. Two other water court
applications are pending—Case Nos. 03CW306 (Varra et al.)and 07CW22(the Larsons)—in which
stockholders seek to change the use of their shares(4 shares and I share respectively)for purposes other
than what the water is now decreed.
When such water court applications are filed, the Company participates in the adjudication in order to
insure that any decreed change of use does not injure the Company's ability to operate Rural's decreed
water rights or its stockholders' ability to continue to use their shares as they have historically done.
The Company's participation requires review of the proposed change by the Company's legal counsel
and by the Company's consulting engineer. The Company's participation may,from time to time,also
require involvement in Water Court proceedings, including trial. Depending on the nature of the change
application, and the parties involved in the adjudication, the Company may incur significant costs to
protect itself and its stockholders—such costs have historically come from the Company's Operating
Budget,which is funded by the Company's assessments,which are approved annually by the
stockholders.
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The proposed Bylaw amendment would require that,stockholders who wish to change their shares in the
future,must first obtain approval of the planned change from the Company prior to filing the water court
application. The proposed Bylaw amendment would also require the stockholder seeking the change to
reimburse the Company for expenses incurred during the review process and the subsequent
adjudication process. The reimbursement amounts to be paid by the shareholder are capped at$2,500
(for the initial review)and $2,500(for the adjudication process). Both such caps may be adjusted by the
Company based upon changes in the CP1 Index which will be reviewed annually.
mss:
If passed,the Company would gain additional flexibility in initially reviewing and either approving or
denying a proposed change prior to the stockholder filing for such a change in water court. This will
allow the Company to seek common protective terms and conditions from each changing stockholder
which will allow the Company to better manage its water delivery operations and its obligations to the
stockholders. If passed,the Company would also recoup some of the expenses(up to the capped
amounts)from the changing stockholder who will benefit from the change decree without having to
allocated those costs among those stockholders who are not seeking to change their shares. This will
also free up funds in the Operating Budget to be used for other purposes that will be beneficial to all
stockholders and will allow the Company to minimize or freeze any future assessment increases that
would otherwise be required to fully fund the Company's operating expenses.
Con's:
If passed, stockholders who seek to change their shares have an additional internal approval process to
navigate. Those changing stockholders will also be subject to the reimbursement caps set in the
provision,which costs would otherwise be fully borne by the Company through its Operating Budget.
The reimbursement caps will likely not fully cover the Company's costs incurred in such a proceeding.
Scott E. Holwick
LYONS GADDIS KAHN&HALL,PC
P.O. Box 978
Longmont, CO 80502-0978
303-776-9900; Facsimile 303-776-9100
Email:sholwick;aslgkhlmr.com; Website: www.lgkhlaw.com
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ARTICLE XIII
Changes of River Water Rights
13.1 Any stockholder desiring a change of water right ("Applicant"), including, but not limited to, a
change in point of diversion or place of use of any water that Applicant is entitled to receive as a result of
stock ownership, must first submit a written application for such change to the board of trustees
("Submission"). A change of water right shall include the use of water the stockholder is entitled to as a
result of stock ownership as augmentation water in a plan for augmentation or exchange. The
. Submission should detail the requested change and include adequate terms and conditions to prevent
injury to the Company and its stockholders. If, in the reasonable opinion of the board of trustees, the
requested change may be approved without injury to the Company and all of its stockholders,the board
of trustees shall approve the change subject to necessary terms and conditions. In evaluating whether
the requested change can be made without injury to the Company and its stockholders, the Company
may obtain engineering and legal analyses of the requested change and the terms and conditions offered
by Applicant.
13.2 The Company shall approve or disapprove the Submission within 120 days of receipt.
13.3 No application for approval of a change of water right or plan for augmentation as described
above may be filed in the District Court for Water Division No.1, State of Colorado (the "Water Court"),
unless the same has first been approved by the Company. If an application has been approved by the
Company, Applicant must include in its application to Water Court terms and conditions at least as
stringent as those approved by the Company.
13.4 If the board of trustees requires legal and/or engineering services to evaluate the Submission,
such expense shall be paid by the stockholder making such request upon presentation of estimated
expenses by the board of trustees. The board of trustees may require that all or part of the estimated
costs be paid to the Company prior to engaging such services. Payment of expenses for legal and/or
engineering services for any such review shall be limited to actual expenses not to exceed a total of
$2,500.00, adjusted annually beginning on January 1, 2013, in accordance with the"U.S. Bureau of Labor
Statistics Consumer Price Index for Denver-Boulder, All Items, All Urban Consumers" or its successor
index for the previous year. The board of trustees may, without penalty or liability, defer any
determination until such condition has been met. The determination by the board of trustees shall be
final,and shall not be subject to revision unless it is proven in a court of law having jurisdiction over water
matters that such determination was made arbitrarily or capriciously.
In the event the Company approves the request,the Company may elect to file a statement of opposition
to the water court application filed by the stockholder to insure that the board's decision is complied with
in any final decree. If the Company files a statement of opposition to the application, the stockholder
shall pay the Company's actual legal and engineering fees, to insure such compliance, in an amount not
to exceed $2,500.00, adjusted annually beginning on January 1, 2013, in accordance with the "U.S.
Bureau of Labor Statistics Consumer Price Index for Denver-Boulder, All Items, All Urban Consumers"or
its successor index for the previous year.
13,5 If any portion of this Article XIII is declared void by a court of law,the remaining portions of this
by-law shall remain in full force and unaffected.
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