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sale was more uncertain and would likely take place later than
the Corpus Christi transaction. As we did in the Corpus Christi
valuation, we must now determine the appropriate and foreseeable
base price, time delay, and discount rate for a sale of the
unused water.
In Mr. Lloyd’s valuation of the unused water, he assumed a
base price of $250 per acre foot of water based on the report of
an engineering and valuation consultant estimating the price the
LCRA could derive from a sale of petitioner’s water right. He
assumed that it would take 6 years to find a buyer for the unused
water and obtain regulatory approval for a sale. He factored in
3-percent inflation and discounted the price by 40 percent to
reflect private equity returns at the valuation date.
Mr. Scheig began with a base price of $600 per acre foot for
the water right, based on two transactions from other basins near
the Colorado River Basin. He applied a 15-percent discount for
lack of marketability to the base price.
Mr. Camp used a base price of $783.39 per acre foot, derived
from various adjustments made to a price of $105 charged by the
LCRA to its customers. His base price took into account 3-
percent inflation and a cost of capital of 8 percent. Mr. Camp
then reduced the base price by 10 percent for the lack of a ready
market in Texas for water contracts and 30 percent for regulatory
risks.
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