The present Arnold Irrigation District was first organized as the Arnold Irrigation Company on December 27, 1904 by W. Arnold, TO.O. Harshman and J.J. Reed and became official on January 9, 1905 when P.I. Dunbar, secretary of state of the state of Oregon at that time, certified that said Articles of Incorporation had been filed and recorded, that the name assumed by said corporation was Arnold Irrigation Company, the duration perpetual, the business: to acquire, buy, own, sell or improve any real estate or water rights; to construct flumes and canals for irrigation purposes and do a general irrigation business.
The amount of capital stock was $5,000 and location of its principal office was in the town of Lytle, in Crook County

Three other small irrigation companies, the Pine Forest Ditch Co., the Bend Company and the North Irrigation Co., the Bend Company and the North Irrigation Co., later absorbed by the Arnold CO., took water through the main canal of the Arnold Irrigation Co. Water was diverted from the Deschutes River a few miles south of Bend, through the Arnold canal for the lands to be irrigated south and east of that city. Shares of stock in the company were sold to land owners on a commission basis.

The North Irrigation Company was incorporated December 12, 1908 by John W. White, Edward Brosterhous and Fred A. Hunnel. The Pine Forest Irrigation Company was organized November 2, 1908 and articles of incorporation were signed by W.J. McGillvary, C.D. Rowe and Cora A. Ferguson. No record could be found of when the companies merged and became one under the Arnold Irrigation Company.
The Arnold Irrigation Company filed on the natural flow rights in the Deschutes River on February 1, April 15, and April 25, 1905. Filings of the Arnold Irrigation Company were 23rd and 24th in numerical order on the Deschutes River. Important prior filings were made by the Deschutes Reclamation (Swalley Ditch), the Central Oregon Irrigation Company (Crescent Lake) and by the Cline Falls Company for irrigation and power.

On September 22, 1906 the Arnold Irrigation Co., by a majority vote of the stockholders increased its capital stock from 5,000 to 6,000 dollars. On October 5, 1912, supplementary articles of incorporation were filed by W.J. McGillvary, Ed Brosterhous, Chas. Sipchen, W.F. McNaught and L.D. Wiest, duly elected, qualified and acting directors of the Arnold Irrigation Co. and adopted by ¾vote at a meeting of the stockholders held at the company offices in Bend. The Capital stock was $10,000 the number of shares was 100, each having a par value of $100.

Construction of the company’s canal was begun on or about April 1, 1905 and continued through 1910. The engineering features on the company’s canal consisted of a flume (wood) about 1 ½ miles long, 12 feet wide and 3 feet deep, the same being of sufficient size to convey water for 12,000 acres of land. The total cost to date, including the 2 subsidiary companies, was upwards of $90,000. Water for irrigation purposes from the Arnold system was first furnished on or about June 1, 1911 and continued thereafter, weather permitting.

The exact acreage or area included in the original organization was not definitely learned. In the 1934-35 Bureau of Reclamation report on Deschutes investigations by C.C. Fisher, the following statement concerning the Arnold Irrigation Company is found: “According to the Deschutes Board Report of 1922 the irrigation area of the project was then 16,500 acres of which water rights had been sold to approximately 8,500 acres with 3,000 to 4,000 acres in crops”. In the Deschutes River Decree of February 10, 1928 by the Circuit Court of Deschutes County, and modified by the Oregon Supreme Court, the Arnold Irrigation Co. was allotted a diversion right of 150 second-feet from the Deschutes River for the irrigation of 9,392 acres.
About 1920 water supply for the Arnold during the summer was limited, especially after prior rights were supplied. In 1922 the North Canal Co. constructed a log crib dam on the Crane Prairie site to test storage possibilities. The reservoir created thereby was partially filled in 1923 and ’24, however leakage through the dam was excessive and in 1930 the Arnold Irrigation Co. assisted in the repairs of the dam and in 1932 shared in the water stored. The water stored in the reservoir was obtained through a temporary agreement with the Pacific Power & Light Co., which had prior rights to the non-irrigation season flow at Bend. Leakage through the dam was still excessive and in 1939 the Bureau of Reclamation signed a contract with the COI District agreeing to reconstruct Crane Prairie Dam with a reservoir capacity of 50,000 acre-feet.

Prior to this time, the Arnold Irrigation Co. was reorganized in 1936 as the Arnold Irrigation District and it assumed all obligations of the Arnold Irrigation Company.
The work on Crane Prairie Dam was complete in 1940 and water was stored in the reservoir that year. The Central Oregon Irrigation District in turn entered into an agreement with the Arnold and others, whereby the Arnold Irrigation District was to receive the second 10,500 acre-feet stored in Crane Prairie reservoir plus 1/5 of the storage above 35,000 acre-feet. For this the Arnold Irrigation District agreed to pay 27% of the construction cost.

In 1959 the Arnold directors approved the final payment to the COI District for the 27% share of the construction cost of Crane Prairie Dam in the amount of $3,337.16. There was no further work done on the Crane Prairie Reservoir construction and the obligation was declared repaid in full in 1960.
By 1947 the main flume constructed of untreated lumber was imminent damager of complete failure. An emergency program of rehabilitation was authorized by the Interior Department Appropriations Act, 1948. Robert W. Sawyer, owner of The Bend Bulletin, was instrumental in securing this emergency appropriation for the Arnold Irrigation District.

In 1948 the district entered into a repayment contract with the Bureau of Reclamation in the amount of $210,000, to be paid, to be paid in 35 annual installments for the construction of the main canal flume and reconstruction of the diversion dam and canal work. The Bureau of Reclamation replaced the old structure with a semicircular steel flume on creosoted timber supports and concrete foundations. The work started in October 1947 and was complete in May 1951. In 1953 a modified repayment contract was executed reducing the obligation by $8,996 paid by the North Unit Irrigation District, toward the cost of repairs on the Arnold diversion dam, based for the reason that increased flow in the river released from Wickiup caused partial destruction of the rock fill in the dam resulting in decreased efficiency of the diversion structure.

The main Arnold canal, originally 17 miles in length, has been reduced to a present length of 14 miles. It has a capacity at the diversion of 120 c.f.s. In the 14 miles of main canal there were 6 other wood flumes varying in length from 250 feet to 876 feet. They were known by the following names: Huntington, Suttong, Fry, Slack, Stennick, and Billadeau.

Approximately 27 miles of laterals serve the Arnold Irrigation District of 4,292 acres and there were 10 wood flumes, varying in length from 72 feet to 1,903 feet. They were designated by the following names: Gilliland, O’Donnell, Pilot Butte, Trotter, Roberts, Miller, Northwest Blakely, Southwest Blakely, Conway and Nelson. In 1953 some of these flumes were old and needed replacing. Cost estimate was $151,000. The district, rather than go into more debt, decided to proceed with the work, using their own funds. Under the capable supervision of Kenneth Slack, manager of the district during these years, many of the flumes were replaced with landfills and concrete pipes. In 1959, however, it was necessary to secure a loan from the Bureau of Reclamation to replace the Suttong, and a portion of the O’Donnell flume. The sum of $38,000 was made available to the district for the work on these two flumes. The construction payment to the Bureau is based on a normal and percentage plan, with the base set at $1.15 per acre.
In 1960 operation, maintenance, and construction charges were $4 per acres, with a gate fee of $5. The gate fee at that time was abandoned and the per acre charge (1982-83) was increased to $12.50, debt retirement $1.43 per acre.