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The regular meeting of the Board of Directors of the Central Oregon Irrigation District (COID) was called to order by President Carroll Penhollow at 9:02 AM on

March 6, 2007 in the District office.

Directors present were Carroll Penhollow, Paul Kasberger, John Robbins, Tom Burke and Robert Borlen. Also attending were Steve Johnson, Secretary-Manager; Liz Dickson, Attorney; Priscilla Ross, Assistant Secretary, Bob Beal, Hydro Engineer, Larry Roofener, Operations Manager, Mike Kasberger, Capital Project Manager and the visitors shown on Exhibit “A”.

1. OPEN FORUM

CR King informed the Board that he wished to apologize to Steve Johnson for his behavior at the Powell Butte Town Hall meeting last week. He then said

that last year he had received a letter from COID stating that he had not beneficially used twenty-five (25) acres of his water. After Cary Penhollow, Watermaster, visited Mr. King’s property, the non-use amount was reduced to approximately three (3) acres. This year he received another letter reporting twenty-three (23) acres of water not beneficially used. He asked that the Watermaster visit his property again before it “greens up” due to rain to reevaluate the alleged non-use. He informed the Board that health issues had prevented him from moving his sheep from pasture to pasture and that this year he would be able to fully use all his water.

Discussion ensued regarding Mr. King’s opinion of the ditchrider’s job performance that is assigned to the District in which he resides. Two Board members, Tom Burke and Bob Borlen, who live in the area both stated that they had worked with this ditchrider and had not had any problems. Bob Borlen stated that he had contacted COID prior to his tenure on the Board to give this ditchrider a favorable “report card”. Mr. King informed the Board that he had submitted a letter last week requesting the names and addresses of other patrons in that Division in addition to other personnel information. Steve Johnson said that COID was verifying what information could be distributed per Oregon Statute and that Mr. King would receive a response once that answer had been determined.

2. MINUTES:

Paul Kasberger made a motion to approve the minutes as submitted. Following a second by John Robbins, the motion passed unanimously.

3. TRANSFERS / INCLUSIONS:

Carroll Penhollow reviewed the following transfers with the Board. See Exhibit “B”.

PBC Permanent: None

COC Permanent: Total 3.10

Everett and Steelhammer 3.10 Off

Everett and Steelhammer 3.10 On

Carroll Penhollow made the motion to approve the transfers as reported. The motion was seconded by John Robbins and passed unanimously.

Note: The above transfer was cancelled on March 7, 2007 at the request of the applicant.

Carroll Penhollow reviewed the following water right transactions:

· 2.50 on the PB Canal and 1.75 acres on the CO Canal were quitclaimed to COID.

Steve Johnson reviewed the summary of the water right acres in reserve. Total available bank reserves are currently about 240 acres. The goal is to have approximately 300 acres in the bank by the end of 2007 and 400 acres by the end of 2008. He said that approximately 400 irrigation acres will become available with the annexation of additional land into Redmond’s UGB.

There have been eleven new applications for one-year instream leases of 192.57 acres and a total of 110.20 instreamed water rights have voluntarily terminated their leases. There are currently a total of 1,611.277 acres instreamed on the PBC and 345.510 acres instreamed on the COC. No new five year leases are being approved. It was noted that this is close to COID’s total acre target for 2007.

4. NEW BUSINESS

Carroll Penhollow introduced Candi Fronk, CPA, from Harrigan, Price, Fronk to review the 2006 annual report. After distributing copies of the separate reports for the Siphon Power Project and COID in total, she reported that the audit had gone well and that the Power Plant in particular had a good year. Steve Johnson asked for clarification regarding whether or not the eighteen months of bond reserves currently held in the Local Government Investment Pool and with the Department of Energy could be used as payments during the last eighteen months of the agreement. Ms. Fronk stated that usually agreements permitted a reserve paydown but that management should review this specific bond agreement for verification. Following a review of the schedules detailing both maintenance and capital operations, she noted that current operation costs are not covered by assessment revenue. Discussion ensued regarding the Board’s plan to offset operational increases with Endowment Fund earnings and the potential available investment options to maximize return. Given the anticipated real estate proceeds to be realized during 2007, Ms. Fronk recommended that COID utilize more than one broker to manage these funds.

Following a question by Steve Johnson, she stated that she had no recommendations for changing accounting procedures or controls currently in place.

5. REPORTS:

A. Water Report –

A written report (Exhibit “C”) was mailed to the Board prior to the meeting.

B. Engineering Report –

A written report (Exhibit “D”) was mailed to the Board prior to the meeting. Mike Kasberger informed the Board that he had been offered and had accepted a position as Manager for Ochoco Irrigation District effective April 1, 2007. The Board thanked him for his years of service to the District.

C. Maintenance Report –

A written report (Exhibit “E”) was mailed to the Board prior to the meeting.

D. Hydro Report –

A written report (Exhibit “G”) was mailed to the Board prior to the meeting. Bob Beal stated that the batteries in the power house were about twenty years old and should be replaced. Since all the budgeted repair and maintenance funds will probably not be used this year on the pipe supports, Steve Johnson asked Bob to get a quote for and proceed with replacement.

E. Manager Report –

The written Manager’s Report (Exhibit “H”) was mailed to the Board prior to the meeting.

6. BILLINGS & PAYROLL: Paul Kasberger moved to accept the payroll registers and billings as presented. The motion was seconded by John Robbins and passed unanimously.

7. OLD BUSINESS:

A. SPP 2007 Budget - Exhibit “I”

The budget was accepted with a unanimous vote following a motion by Bob Borlen that was seconded by John Robbins.

B. Resolution 2007 – 5 Developer Irrigation Plan Fees - Exhibit “J”

After noting that this resolution was the result of the Board’s request that management modify the resolution that was presented at the February Board meeting, Carroll Penhollow read the resolution. A motion to accept this resolution was made by Bob Borlen, seconded by Tom Burke and then was passed unanimously.

C. Monthly Assessment Billings

Bob Borlen inquired about COID’s practice of mailing assessment statements monthly given that the assessments are not actually due until April and that there is a considerable cost to do these mailings. Priscilla Ross responded that staff had informed her that monthly mailings significantly improved COID’s cash flow. However, a planned WWIN system improvement will be to add the capacity to flag only specific accounts for monthly invoices.

D. Ni-La-Sha

Steve Johnson reported that staff had met with representatives from Ni-La-Sha and reviewed documentation showing that prior to the last four years their assessment had been rounded up. COID personnel will draft a letter that Ni-La-Sha can give to other residents explaining this assessment calculation.

Carroll Penhollow adjourned the Regular Session of the COID Board to Executive Session at 12:05 PM per

· ORS 192.660(2)(e) to conduct deliberations with persons designated by the governing body to negotiate real property transactions

· ORS 192.660(2)(h) to consult with counsel concerning the legal rights and duties of a public body with regard to current litigation or litigation likely to be filed.

· ORS 192.660(2)(i) to consider the dismissal or disciplining of, or to hear complaints or charges brought against, a public officer, employee, staff member of individual agent who does not request an open hearing.

The Regular Session of the COID Board was reconvened at 1:35 PM.

A motion was made by Paul Kasberger and seconded by John Robbins to adjourn the Regular Session. The motion was unanimously accepted.

ATTEST: CENTRAL OREGON IRRIGATION DISTRICT

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Steven C. Johnson, Manager Carroll Penhollow, President

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Robert Borlen Thomas Burke

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Paul Kasberger John Robbins