William T. and Nicole L. Gladden - Page 7




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          CAP Water District was required to be distributed by HID to the              
          Harquahala Valley landowners on a per-acre basis.  See Ariz. Rev.            
          Stat. Ann. sec. 48-2990 (West 1997).                                         
               The Subcontract does not state that the water rights of                 
          Harquahala Valley landowners such as the partnership were                    
          appurtenant to the land.                                                     
               Before the beginning of each year, the CAP Water District               
          would notify HID of the amount of Colorado River water that,                 
          under the Subcontract, would be available to HID during the                  
          following year, and HID would submit to the CAP Water District a             
          requested monthly water distribution schedule for the following              
          year indicating how much of the available Colorado River water it            
          wished to receive.                                                           
               Under the Subcontract, HID was required to pay $2 per acre-             
          foot for Colorado River water it received under the above                    
          allocation and Subcontract.  Over the course of the 50-year term             
          of the Subcontract, the rate of $2 per acre-foot of Colorado                 
          River water received was subject to periodic review and                      
          adjustment.                                                                  
               Also under the Subcontract, HID was obligated to pay its                
          share of annual operating and maintenance costs of the CAP Water             
          District distribution system.                                                
               As Harquahala Valley landowners entitled to and receiving               
          Colorado River water from HID, the landowners, including the                 
          partnership herein, were required each year to pay HID for the               
          Colorado River water they received under the above allocation and            


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