Lake Oswego Corporation

January 12, 2006

Dear Shareholders:

Flood Preparation as of noon on January 12th

We have been lowering the lake slowly over the past two days by running both power generators at full capacity. Our current level is one foot below our maximum norm. As a precaution we will continue lowering the lake while monitoring forecasted conditions. If necessary we will accelerate the water release. In addition, if necessary for major flood events, we also attempt to lower the water level even further to expand the reservoir capacity to hold water.

We ask that you check your docks, frontages and boats frequently, and to take appropriate measures to reduce potential damage that might be caused by a drawdown. If we decide to rapidly lower the level of the lake further, we will notify you on our website, and by email and flyer as time and events allow. Our ramp is open 8am to 5pm for those wishing to pull their boats during this period. After hours access can also be arranged by calling Dave Janney at 503-916-9682. Extreme caution is required to navigate at these lowered levels. You may need to raise your outdrives and paddle through shallow areas.

Anyone experiencing localized flooding can pick up sandbags from the City at their maintenance service location, 5705 Jean Road. If sandbagging needs become widespread, the City will set up sites for public pick up at publicized locations.

River Level Forecast as of noon on January 12th

The National Weather Service forecasts the Tualatin River to reach 12.6ft at the West Linn gauge around 6am Friday. By Saturday morning at 10am they forecast it to reach 14.2ft and remain at that level for a number of days.

LOC is carefully monitoring this developing threat. Your staff is on a first name basis with the forecasting agencies and with the City of Lake Oswego. When information suggests a major flood event is imminent, these agencies, the City, you as property owners, and your Corporation may have to take appropriate additional measures to respond.

Obviously there are many questions that can come up in considering potential lake flooding. We hope this has helped answer some of your questions. Again, we ask that you stay vigilant during this flood watch period. Response to a major flood event is a collective effort. We will post updated forecast information on our website as it becomes available.

Please call our offices if you wish further information.

Dave Janney
Lake Oswego Corporation
503-636-1422, ext 1