We are pleased to present you this edition of our newsletter. Our goal is to provide a newsletter every other month to keep you informed of projects, issues and events SRA is involved in. Copies will be available at all our offices, Pendleton and parksites, real estate offices, and various businesses within the area. Also, the newsletter is available on our website (www.toledo-bend.com/srala) and via e-mail. For those persons who have no Internet access, you may call our office at (318) 256-4112 or 1-800-259-LAKE and ask to receive a copy of the newsletter through regular mail.

The stimulation of economic development within the Sabine River Basin, and particularly within the parishes that border Toledo Bend Reservoir, is one of the primary objectives of the SRA. The Toledo Bend area has experienced positive economic growth in the past few years. According to the Sabine Parish Assessor's Office, property assessments on Toledo Bend have increased from $12,950,430 in 1990 to $50,065,310 in 2001. The total number of homes (including mobile homes) has increased from 3,616 in 1990 to 7,909 in 2001, representing an 119% increase. Some of these new homes are the result of people choosing Toledo Bend as a retirement location. Just think about the impact of additional taxpayers that will help support schools, improve roads, and fund other community programs. Another indicator of economic growth is the 3% hotel/motel sales tax collected in Sabine Parish. This past April set a new monthly record of $12,958.57. The trend of this tax is reflective of the number of visitors to Sabine Parish. We are excited to see visitors for two reasons, we appreciate the money they spend with our local businesses and we hope they will return on subsequent visits and ultimately decide this is the place they want to build or buy a weekend camp or retirement home.

Although the news of positive growth is good, there are many other issues the SRA would like to improve such as lake level fluctuations below 168 msl, park site improvements, fishery management, and basic infrastructure of water, roads, solid waste, etc. I can assure you we will work diligently with you and other agencies to address your concerns and make the Toledo Bend area the best it can be.

Recent developments in the Toledo Bend area include Sabine State Bank's new building at their present location at Toledo Town and Caldwell Interior Design, also in the Toledo Town area. Pendleton Bridge Marina has new owners, Vicky and Harvey Comby, along with their son Henry and his wife Pam. We wish them the best. Congratulations and welcome to Betty and Wayne Mabry, the new owners of Tranquility Bay Marina. Other marinas on Toledo Bend have been busy with their improvements that include covered boat stalls, full service RV hookups, outdoor open pavilions, a conference center, cabins and an additional restaurant. Cypress Bend Resort's first 14 condo units will be completed by December of this year.

In future editions, we hope you will be a regular reader of our newsletter and we will try to provide a variety of information that is important to you. Your comments and suggestions are always welcome. Remember, Toledo Bend has unlimited potential. Working together we can achieve that potential.

Linda Curtis-Sparks, Executive Director

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The Sabine River Authority (SRA) takes management of the lake very serious. You have probably seen information suggesting that the SRA can operate while maintaining a minimum lake level of 168' msl. The SRA Board of Commissioners and staff of Louisiana would love to accomplish this. However, the conditions related to this issue are very complex. The terms & conditions of the existing contracts governing the operation of the reservoir will not allow the 168' minimum elevation desired by lake area residents. Not only do contracts that were signed on February 1, 1964 and expire on April 30, 2018 determine the minimum generation at the dam, the SRA/LA does not have the authority to make changes without the consent of the Sabine River Authority of Texas and the power companies, Cleco & Entergy. If the contractual obligation to the power companies is not met due to keeping the lake at or above 168' msl, the SRA's would possibly be required to compensate the power companies for the reduction of power or the reduction in the value of such power; there could be a possible violation of the Indenture of Trust if an operating guide change does not provide sufficient revenues to service the 1964 Series Bonds; and any action voted on by SRA/LA could lead to potential lawsuits against SRA/LA by the power companies and SRA/TX. The operating guide prohibits regular generation below 168' msl from October 1 through April 30th.

Another serious issue that compounds this problem is maintaining required downstream flows and the issue of passing through a high water occurrence on the reservoir without creating a flood situation in downstream areas. The areas along the Sabine River were sparsely populated prior to the Toledo Bend Project being built because of recurring floods. The Project actually has improved the flood conditions downstream allowing people to build in these areas prone to flooding in a high water event. The downstream residents have a request on record to operate Toledo Bend at a maximum high level of 169' msl to allow the reservoir the ability to store additional water. The SRA/LA currently is in litigation with downstream residents concerning flooding and these lawsuits will probably not be resolved for 1 1/2 to 2 years.

Prior to these lawsuits being filed, the SRA/LA & TX, and the power companies participated in a 24- month long Federal Energy Regulatory Commission mediated Collaborative Effort with representation from the lake area and downstream area to try to resolve the above issues. The SRA/LA & TX Boards expended over $393,000 on engineering studies and legal fees in an effort to reach a compromise in the Collaborative Effort and lake level related issues. The Collaborative Effort was abandoned when it was seen that no mutual agreement could be reached that would satisfy all parties.

Our long-term goal is to provide a level that works for the lake residents, downstreamresidents,SRA/TX and the power companies. We encourage those desiring to purchase property on Toledo Bend and realtors to carefully examine property to make sure the topography or lake level at a given location will be sufficient to meet the anticipated needs. Example, if you or your customer is not a person that plans to use watercraft, a high level may not be as important as the view. If you plan to have boats, jet skis or a barge, determine the elevation and where you need to build a boathouse or pier to accomplish your enjoyment. If this information is not available, stop by or call the SRA/LA office and we will assist you. Toledo Bend has a tremendous variety of properties for just about every need. The price does vary greatly depending on those needs. The SRA encourages you to do research and make sure what you get is actually what you want.

We are making plans for the 4th Annual Christmas on Toledo Bend scheduled for December 14th at Cypress Bend Park. Hayrides throughout the park, live entertainment, visits with Santa, fireworks and a floatilla are just a few things you can look forward to. Each year everyone looks forward to the floatilla, and we are hoping that this year we will have a large turnout of participants. Challenge your neighbor to compete in the floatilla, or business owners challenge other businesses to compete in the floatilla. There will be 3 different vessel size categories and winners in each. For more information please call Susie Anthony at 318-256-4112.

The Sabine River Authority's annual financial audit for the year ending June 30, 2002, performed by an independent CPA firm under contract to the Legislative Auditor's office, shows the SRA in a strong over-all financial position. According to this audit, the SRA has $73,908,329 in total assets and $22,148,632 in total liabilities, with net assets totaling $51,759,697.

The Sabine River Authority's staff has projected a temporary cash flow shortage during this fiscal year, which ends June 30th, 2003. The cash flow shortage, within SRA's Toledo Bend Division, is a result of several events and factors, primarily due to the need to overhaul the two generators at Toledo Bend Dam at a cost of $3.4 million.

The generators have been on-line since 1969 and were anticipated to be overhauled after the year 2004. In March of 1999, after lengthy deliberation and financial analysis, the SRA Board of Commissioners authorized the issuance of the 1999 Series Capital Improvement Bonds. The Board and staff were aware that the additional debt obligation would constrain the Toledo Bend Operation's annual operating budget until the 1964 Series Bonds were retired in 2004. In the fall of 1999, the power companies recommended to the Toledo Bend Project Joint Operation (TBPJO) Operating Board that the overhaul project be implemented within the next two years. Subsequently, the TBPJO implemented the overhaul project and Unit #2 was taken out of service in September of 2001 and placed back on line in August of 2002. Unit #1 was taken out of service on Sept. 30, 2002 and is scheduled to be back on-line on May 28, 2003. During the period Unit #2 was out of service, the TBPJO adhered to the Operating Guide Rule Curve and released the equivalent amount of water through the spillway that would typically have been "run" through the generator. The decision to adhere to the Guide and release the water was made solely to mitigate a possible flood event downstream and not jeopardize the TBPJO's position relative to active downstream flood litigation. The water released was equivalent to $727,695 in lost revenue. An anticipated loss and/or reduction in revenue will be associated with the overhaul of Unit #1.

Other factors and events, beyond the control of SRA that have contributed to the temporary cash-flow shortage include the drought of FY 2000, FERC mandated drawdown for dam repairs in 2001, downstream flooding litigation, and the FERC mediated Collaborative Effort. The drought of FY 2000 resulted in power generation revenue of only $1.1 million compared to a 30-year average of $2.5 million. Additional revenue of $208,444 was lost due to the drawdown of the reservoir to facilitate repairs to the dam, as directed by FERC in September of 2001. Downstream flooding litigation and the Collaborative Effort have resulted in unanticipated expenditures of approximately $53,000 for SRA-LA and an additional Toledo Bend Project Joint Operation expenditure of approximately $340,000.

SRA-Louisiana's Toledo Bend Operations is experiencing a temporary cash-flow shortage by attempting to absorb capital expenditures into its operations budget. SRA's staff and Board are currently evaluating all options that include continuing to absorb the expenditures in the operations budget by cutting programs/services and/or addressing the generator overhaul project as a capital project funded with a bond issue.

The Lunker program is designed for the catch and release of healthy fish for spawning purposes which provides brood stock for natural spawning. The program provides a fiberglass replica to the fisherman who catches a bass weighing at least 10 pounds, which is weighed in on certified scales and released live back into Toledo Bend. Since SRA started the program in 1993, 151 Lunkers have been caught on Toledo Bend and turned in for certification. In 2001, 20 lunkers were reported, and in 2002, 13 have been reported so far. Toledo Town & Tackle has sponsored the Lunker program since 2001.