MANAGER’S REPORT

9 February. 2010

The El Nino winter weather is shaping up as one providing a fair amount of moisture in the lower elevations but a below average snowpack. Last estimates are showing 65-75% of average moisture content levels. A below average snowpack will result in lower natural flow water flows in the Deschutes and tributaries and therefore lower supply for all irrigation district water rights. This will result in heavier reliance on storage water in the reservoirs to fulfill demand. This then carries over into the need of next winter needing to provide above average snowpack so the reservoirs can fill and likely provides for lower water levels in Deschutes winter flows and for planning purposes the SPP hydro plant will likely not produce electricity next winter as it has the last two years.

The Juniper Ridge Project continues to be on schedule and on budget. All 13,750’ of 9 foot diameter steel pipe is anticipated to be completed in mid-February. This leaves the completion of the inlet and outlet structures for the beginning of April for irrigation season. The contract is structured for heavy penalties to be incurred by the contractor if not completed on schedule. At the present time the risk is minimal for this to occur.

At the completion of January’s stock water run on the Central Oregon Canal a major collapse of a section of canal bottom was discovered east of Bend. The collapse was caused by gradual erosion and seepage over the years occurring under some lava domes and they basically fell in. This resulted in all the water in the canal vacating thru the resulting sink holes and causing significant subsidence of the canal banks on both sides. Significant geotechnical evaluation was conducted and repairs made in order for the stock run to stay on schedule. The pending water run along with the stock run in March will provide a good test on the repairs and an evaluation of the integrity of the canal for the coming irrigation season.

The US Fish & Wildlife Service issued its draft Critical Habitat Plan (CHP) for Bull Trout. The new CHP was prepared in response to legal challenges of the last CHP finalized in 2005. The CHP areas identified were:

· the entire Metolious sub-basin

· the Crooked River from Lake Billy Chinook (LBC) upstream to Hwy 97

· the Deschutes River from LBC to Big Falls

o Whychus Creek from its confluence with the Deschutes up to Alder Springs

There were not any significant changes between the new draft CHP and the prior plan for the Deschutes Basin. The DBBC is planning on submitting comments before the deadline date of March 15.

The Oregon Legislature began its special one month session on Monday, February 1. COID and the OWRC will track bills of interest or concern in the coming weeks. COID is actively engaged on a few bills involving hydroelectric development, the Business Energy Tax Credit and eligibility criterion for the Oregon Renewable Portfolio Standard.

Opportunities

· The DBBC plans on submitting appropriation requests to the Congressional Delegation for additional federal funding of the Bureau of Reclamation’s Deschutes Project line item. Funding has successfully been increased by several hundred thousand dollars in each of the last two years and utilized by COID and the other irrigation districts in the DBBC for conserved water projects.

· 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. This process will be ongoing over the next few years.

· 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.

· Deschutes County is proposing new rules for Destination Resorts. Hearings began in January and are continued for the public record.

· Deschutes County has begun the official review of their Comprehensive Plan. The initial hearings have been conducted by the Planning Commission and upon their completion will forward a recommended plan to the County Commissioners. The process will likely take up most of 2010.

· 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.

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

· See separate Project Update report

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.

Status – Paused. No joint meetings have been conducted with City of Redmond, Deschutes County, COID, Division of State Lands, Oregon Department of Transportation and the Oregon Transportation Commission for several months.

· 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. Successful coordination and planning on Odem-Medo improvements most recent example of effort.

Status – Ongoing.

 ON THE RADAR SCREEN

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