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We are not persuaded by the experts’ analyses. Mr. Lloyd
and Mr. Camp based their high discount rates on the premise that
there were no potential buyers for the unused water as of the
valuation date. The LCRA was a potential buyer. The LCRA’s
interest in petitioner’s water right over the 30 years before the
valuation date should be considered in valuing the unused water.
Mr. Kowis, an employee of the TNRCC and its predecessor agencies
for 27 years, testified that as of 1996, the LCRA was the most
logical potential buyer for petitioner’s water, and he was not
surprised by the ultimate sale to the LCRA for $75 million. Mr.
Rose, the general manager of the LCRA who negotiated with Mr.
Lehrer, testified that discussions had halted because Mr. Lehrer
was interested in selling only a portion of petitioner’s water
right, and the LCRA was interested in acquiring the entire water
right. It is apparent that the actual sale that occurred was in
part the result of Mr. Lehrer’s change in position on this issue
and in part the result of changes in the political landscape.
The valuation of the unused water must take into account the
potential for a purchase by the LCRA.
Mr. Scheig’s use of transactions in the Rio Grande and other
basins near the Colorado River Basin as comparables is flawed.
At trial, Mr. Scheig admitted that the market conditions in the
Rio Grande were very different from those in the Colorado River
Basin. Unlike the uncertainty surrounding the conversion of
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