manipouri tailrace tunnel contract converted to a cost-plus-incentive fee basis a number of construction projects successfully completed utah enters construction materials business with new sand and gravel operation the year included a u s government cost-plus-award fee type contract for construction in thailand by a utah-sponsored joint venture and a cost-plus-fee contract from cerro corporation for engineering and con struction of a new copper mining operation in a remote area of peru a utah-sponsored joint venture is constructing the tailrace tunnel for the manapouri project on the south island of new zealand this hydroelectric scheme new zealand's largest utilizes a mountain range as its dam and two natural lakes as its reservoir from lake manapouri water will drop approximately 600 feet through penstocks to turbines located in an underground powerhouse and thence through the 6v1 mile tailrace tunnel into the tasman sea initially awarded on a fixed price basis the contract is being amended as of october 1 1966 to convert it to cost reimbursement plus an incen tive fee the change in the contract was made because unexpected and very difficult tunneling conditions had been encountered badly fractured rock and excessive inflows of water under high pressures had slowed the progress of the work and substantially increased its cost utah had recorded material losses on the project but under the new contract arrangement all costs will be assumed by the government of new zealand as of octo ber 1 in addition to converting the contract a cash payment will be made by the government in settlement of the joint venture's claims for con ditions encountered between february 1966 and the end of september under a separate cost reimbursement plus incentive fee contract utah is constructing the underground powerhouse which is the other principal element of the manapouri project impressive construction division accomplishments during the year in cluded completion on an accelerated schedule of the mount goldsworthy iron ore project under the target cost estimate completion of the oued nebaana dam for the government of tunisia completion of the marcona stage vii expansion and pima stage ii expansion programs completion of the 106-mile avon valley railroad project in western australia an oil bitumen plant for shell oil company of australia ltd successful joint venture participation in the large san luis dam project at los banos california and the grand forks air force base and malmstrom air force base minuteman missile installations the year end also brought the prom ise of impending successful completion of the mt coffee hydroelectric project in west africa currently the wells dam on the columbia river is not profitable and its outlook is uncertain utah's construction division will also direct a new project which bridges all three operating sectors of the company we have acquired control of substantial acreage at the mouth of the russian river some 60 miles north of san francisco this land which extends some 4.5 miles upstream contains deposits of sand and gravel estimated at 60 million tons the plan is under a long-term lease with the state of california to dredge sand and gravel from the river bed and transport it by barge to richmond in the san francisco bay where it will be processed and sold in the bay area market the first sales agreement is to furnish 800,000 tons of material for backfill on the transbay tube part of the bay area rapid transit system much of the land which we control contiguous to the russian river will not be utilized in the gravel operation and this property is available for other development the construction division has continued to perform engineering serv ices on a wide variety of work for other companies as well as in-house support of engineering and construction responsibilities on the mount dredging equipment fully and successfully utilized utah acquired control of the 5,400 acre work ranch bay farm island reacquired and land being reclaimed pauma valley country club is now a private membership club and lot sales are commencing sales program at diamond oaks underway saint paul's towers completed and fully occupied goldsworthy marcona and pima work a feasibility study on the cuajone project for southern peru copper corporation was completed this year dredging had one of its most successful years with the completion of three profitable projects and the almost uninterrupted utilization of all the dredging equipment backlogs in current dredging contracts will keep our equipment occupied for at least another year overseas the dredge alameda is currently scheduled to finish the mount goldsworthy dredging next year in spite of the high level of interest rates which prevailed during the past year our land development activity was profitable in may the com pany acquired control of 5,400 acres of land on the monterey peninsula california known as the work ranch this land is located adjacent to the city of monterey under the terms of our agreement we will have an opportunity to develop the property in a manner which is consistent with the future needs of the monterey peninsula late in october utah reacquired the bay farm island property which had previously been sold in 1964 this property is located on the water front of the san francisco bay within the city of alameda and contains approximately 903 acres of land we estimate that it will require approxi mately two years to reclaim the land arrangements have been concluded between reclamation district 2105 and our dredging division to have the dredge franciscan place the estimated 20 million cubic yards of fill material required for the reclamation at pauma valley california the company neared completion of the first stages of its development program . at year end there were 1 292 acres unsold this property is situated between san diego and los angeles at the foot of mt palomar the facilities already constructed include an 18 hole golf course a club house cottage units containing accommodations for 100 guests swimming and tennis facilities and a 2,700 foot landing strip for private planes a 23 acre lake is in the planning stage on july 5th pauma valley country club became a private membership club with all facilities reserved for members and guests this has materially reduced revenues from the use of the club's facilities and for the time being operating losses continue to be recorded the membership is developing satisfactorily however and as lot and cottage sales begin early in 1967 a marked improvement in the results of the over-all project is anticipated our sales program at the diamond oaks development near sacramento california commenced in june this property embraces 880 acres of prime residential land situated between the sierra view country club golf course and the roseville municipal course approximately 60 acres have been subdivided thus far to provide single family dwelling units the south san francisco industrial park has only 56 acres remaining unsold of the original 310 acres during the past year we completed the construction of an industrial condominium on the property a second industrial park el segundo is located near the los angeles international airport during the year several sales of land were made in this park and at year end only 75 of the original 197 acres remained unsold saint paul's towers a 24-story senior citizens apartment complex lo cated adjacent to lake merritt in oakland california was completed in october this project built for st paul's episcopal church of oakland contains 286 apartments and was conceived designed financed and con structed as a turn-key operation by utah and its joint venture partner occupancy commenced on october 10th with all apartments reserved and a waiting list for future vacancies