MANAGER’S REPORT

10 November. 2009

The District just finished its 106^th consecutive year of delivering irrigation water to its patrons. While the history of operations is extensive and impressive it is important to note that it has never been without challenges or risks, but with those challenges also came vision. It took the vision of looking over the dry and rock bearing high desert of Central Oregon in 1900 and picturing thousands of acres of land with water for settlers growing crops and livestock. It took the vision and tenacity of work crews scraping dirt with mules and sleds to construct the canals that would begin the settlement that has lead to the present day towns of Bend and Redmond along with a population of over 100,000 people. There have been bankruptcies, recessions and the great depression but still the region and the District has not just survived but has thrived. The District has attained this position by looking into the future and laying the plans to keep it strong.

The District heads into the 21^st century as the third largest irrigation district in the State of Oregon serving over 44,500 acres and nearly 8,000 patrons. The District has made significant investments over the years to improve the District and keep it prepared for the future while at the same time maintaining stable assessments. Wooden flumes have been replaced, reservoirs constructed, leaky ditches piped to conserve water, hydroelectric facilities built, and relationships with neighbors and friends developed and nurtured. While the challenges of the past will look different than the challenges going forward success will come from continued vision and perseverance.

There are several issues that confront the District now as it moves forward to 2010. With each of these issues there are headaches and expense, but also opportunities. It will remain important to continue to plan ahead, think creatively, remain financially stable and work with others in order to successfully meet these challenges. The issues are broad and include population growth and development, the Endangered Species Act, the Clean Water Act, increasing regulations, aging infrastructure and economic uncertainty.

Opportunities

· The Juniper Ridge Project construction is underway with 240 feet of 9’ steel pipe being laid every day. Construction crews are on schedule and continue working seven days a week. Arrangements have been completed with patrons impacted by no stock water runs this winter.

· Crane Prairie Reservoir storage is nearly the same as last year and is expected to fill to 100% with an average winter. Wickiup Reservoir is above the level of last year but is also expected to fill. Releases from Wickiup have been above average at 100cfs and the Siphon Power Project will likely be producing in surplus again for 2010.

· COID along with NUID and Swalley are conducting negotiations with two energy companies interested in implementing small scale hydro at the North Canal Dam in Bend.

· The Habitat Conservation Plan is continuing under an extension of its existing grant from the US Fish & Wildlife Service through Oregon Dept of Fish & Wildlife. A grant application for roughly $400,000 of HCP funding was filed and an announcement of award is expected in the spring of 2010.

· A federal court recently issued a remand to the US Fish & Wildlife Service on the 2007 Bull Trout Critical Habitat Plan (CHP). COID and the Deschutes Basin Board of Control is evaluating the remand and preparing for filing comments by the end of December. The DBBC was very involved in the last CHP process and is another species involving the Endangered Species Act and the Deschutes Basin.

· The Deschutes Water Alliance (DWA), originally formed in 2004 for the purposes of a US Bureau of Reclamation Water 2025 challenge grant, held a meeting of expanded membership on October 12^th. Members now include several irrigation districts of the DBBC, Deschutes-Crook-Jefferson Counties, Cities of Bend-Redmond-Sisters-Prineville, the Deschutes River Conservancy, Avion Water Co, Deschutes Valley Water, and representatives of various federal and state natural resource entities.

· Deschutes County has begun the official review of their Comprehensive Plan. COID and the fellow members of the DBBC are actively participating in this review and will be providing the County formal comments in the coming months. This is an extremely important exercise last went thru roughly 20 years ago and lays out the strategic plan for the County for predominantly land use planning and development and takes approximately one year to complete.

· COID and BLM have begun the anticipated two year process to complete the land swap authorized by Congress in the public lands bill passed this year in Badlands area east of Bend.

· COID has re-engaged Pacific Power in conversations over termination of their lease and hydro facility at Cline Falls. COID is still evaluating pursuit of licensing thru FERC and the State of Oregon if it wishes to generate hydroelectricity at that site. Analysis and evaluation of the costs of licensing are currently under review and contact has been positive with DEQ and ODFW for the project.

· COID is coordinating with BLM staff on operational issues involving BLM owned and COID owned lands and where COID has federal 1891 Rights of Way.

Challenges

• Issues continue to arise with patrons and the delivery of water to parcels past the District’s Point of Delivery. The District is evaluating its existing statutory authorities and reviewing policies to assist in resolving these issues.
• Persistence of patrons failing to beneficially use their water either due to economics, absentee ownership, or mismanagement resulting in potential confiscation by the District as the only viable option to prevent forfeiture.

STATUS REPORT

Juniper Ridge Piping & Hydroelectric Project

· Weekly project status meetings with contractor team

· Pipeline excavation and installation approximately 20% complete

· The Interconnection Agreement with PacifiCorp is in final stages and is expected to be finalized before the end of the year.

· FERC conduit exemption application submitted with full NEPA and state and federal agency support. Application to the State of Oregon pending final review for submittal and comments from ODFW completed.

· Pursuing opportunities for additional grant funds for project with US Bureau of Reclamation

Real Estate

· One 20 acre parcel near Deschutes Market Road and Hwy 97 was listed for sale through Steve Scott Realtors. Listing, as per District policies, was at the recently updated appraised value. No offers have been received to date. The remaining 20 acre parcel was not listed.

Status – In Process with no change in last month

· COID and the Redmond School District filed and received approval of a partition plat to the City of Redmond. Traffic issues in Redmond are affecting the timing of the zoning change possibility and execution of a sale to Desertscape. COID is involved in the City of Redmond’s Eastside Framework Plan addressing these issues along with Deschutes County and the Redmond School District. Significant funding at a local, state and possibly federal level are being evaluated.

Status – In Process. Joint meetings being conducted with City of Redmond, Deschutes County, COID, Division of State Lands, Oregon Department of Transportation and the Oregon Transportation Commission.

· A Conditional Use permit was received for COID owned lands along Teal Road pending county road improvements. Once completed the Board will evaluate for declaring surplus depending on market conditions and financial requirements of the District.

Status – In Process with no change in last month

Development

· Direct communication with City of Bend and Redmond public works and planning staff on resolving issues of canal safety and impacts of development that will require piping.

Status – In Process.

 ON THE RADAR SCREEN

· Bull Trout Draft Recovery Plan

· Pursuit of funding designations with Bonneville Power Administration for conservation projects above Pelton Round Butte complex