Exhibit 10.5

                                   BONUS PLAN

This Bonus Plan is by and between Vidler Water Company, Inc. and Nevada Land &
Resource Company, LLC ("Companies") on behalf of Steve Hartman ("Employee").

I.    Annual Bonus. The annual bonus will be determined on an annual basis as
      follows:

      A.    The calculation to determine the bonus will be performed after the
            close of each calendar Year upon the final closing of the financial
            records during the first quarter of the following year, and will be
            based on a consolidated basis.

      B.    The calculation will be based on the following formula:

            Vidler Net Earnings,
            Before Interest Expense to Pico and Taxes        $__________________
            NLRC Net Earnings,
            Before Interest Expense to Pico and Taxes        $__________________
            Gain from sale of Companies*                     $__________________

            TOTAL Net Income/Gain,
            Before Interest Expense to Pico and Income Taxes $__________________

            NET BONUS COMPENSATION                           $__________________
              2% of Combined Net Income

      *In the event an interest in Vidler or NLRC is sold to a non-affiliated
      third party, the bonus will be calculated as 2% of the gain in Pico's book
      value resulting from the sale transaction.

      C.    Every effort will be made to finance Companies' transactions from
            the funds of Companies prior to obtaining financing from PICO
            Holdings, Inc. PICO Holdings reserves the right to dividend out
            earnings or repay/increase intercompany financing to PICO Holdings
            at PICO Holding's discretion.

      D.    In the event that the Net Bonus Compensation, as calculated in 2.
            above, is negative, no bonus compensation will be payable. Any
            negative balance will not accrue forward to the following year, as
            each year will be valued on an individual year-by-year basis.

      E.    An insurance policy in the amount of $500,000 paid by the Company.

II.   TERMINATION.

      A.    If Companies terminate without cause the employment of Employee or
            eliminates Employee's position, Companies will determine the bonus
            amount based on a prorata calculation determined as of the current
            quarter's financials. The bonus amount will also include the
            financial impact of all pending transactions which are consummated
            prior to the termination date and reach financial close by the end
            of the termination calendar



            year. The company financial statements will be closed as soon as
            possible after the end of the quarter immediately following
            termination, and paid, as soon as practicable, after the year end
            results are determined.

      B.    If Employee voluntarily terminates employment or if Employee is
            terminated for cause, Employee shall have only the right to receive
            payment for services rendered prior to the date of such termination,
            based solely on Employee's current salary at the date of
            termination, and any standard employee severance benefit. No further
            bonuses or payments of any type under this Agreement shall be due.

This Bonus Plan is effective January 1, 2003 and shall automatically renew on
January 1, of each calendar year on the same terms and conditions as stated
above, unless it has been terminated by written notice to the employee at least
ten days before the end of the calendar year.

VIDLER WATER COMPANY, INC.
NEVADA LAND & RESOURCE COMPANY, LLC

/s/ Richard H. Sharpe
- ------------------------------
Richard H. Sharpe
Director
Date:  September 15, 2003

                                        2