January 1, 2003

From the Board of Directors and Staff:

* * * * * * * * HAPPY NEW YEAR!* * * * * * * *


            Thanks to all of you who attended or sent proxies for the 2002 Annual Stockholders Meeting. With 303 members represented, it was the most well-attended meeting the Association has ever held, except maybe for the Organizational Meeting of April 29, 1955 where 34 people signed up for water taps, pledging $150 apiece for them. Attendance at that time was apparently 34/34, or 100%.

            It may be that the 2002 Annual Meeting was the most significant since1955. The question was presented to the members whether to continue as a minority partner with the Town of Cedaredge, or to separate from the Town and build our own treatment plant. After a lengthy discussion with very thoughtful questions from many members, a vote was taken. The result was an overwhelming majority in favor of becoming an independent water system and building our own treatment plant.

            Part of the meeting was devoted to representatives of the Pall Corporation, a filter manufacturer from New York. They explained the membrane filtration process, using slides, and answered many questions. USCDWUA is especially interested in membrane filtration because of its low labor demand, its ability to handle fluctuations in raw water quality, and its ability to meet and exceed water quality standards, both present and future.

            Much of the discussion concerned the financial impact of becoming independent. It was pointed out that the Association is going to incur considerable capital costs whether we remain with the Town or not. The present raw water collection system on Grand Mesa is in need of a complete reconstruction. The present filter plant has difficulty dealing with episodes of high turbidity, and will need an expensive upgrade to correct this problem. The members in attendance at the meeting concluded that the cost of independence was about a wash in comparison with the cost of remaining tied to Cedaredge.

            A resolution was passed authorizing the Board to seek grants and loans in order to finance the new filter plant. A budget for 2003 was authorized which allows for capital expenditures of about $500 thousand, expected to cover approximately one-half of the filter plant project. No increase in the price of taps, or the monthly water charge was proposed for 2003.

            The next couple of years will see intense effort devoted to launching the Association onto this new course. It is the firm belief of the staff and Board of Directors that this is the best way to ensure that USCDWUA remains a successful water provider. Thank you for your vote of confidence.