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<br />"'" <br />VJ <br />OJ <br />"'"-( <br />l':'J <br /> <br />,,-'" <br />.......,' <br /> <br />Agenda Item 11 <br />Page two <br /> <br />Firm water sale revenues are essential since the district <br />has no other basis for repayment security to offer the board. <br />A special mill levy is now imposed to repay previous <br />obligations. To approve the proposed contract. the board must <br />be prepared to accept repayment entirely based upon those <br />revenues which are not yet formally committed. A condition <br />(C.l.a) prevents the director form releasing funds until formal <br />contracts for water sales are in place. <br /> <br />Several unique provisions have been proposed. One is an <br />escrow account based upon the first and second year payments. <br />Should there be a subsequent shortfall of revenue. the escrow <br />account would be used to make scheduled payments <br /> <br />Another provision. A.l.e.. is proposed to give priority to <br />a minimum level of funds for annual operation and maintenance <br />before any revenues are devoted to repayment. The concept is <br />to protect operation of the facility with a minimum of $25.000 <br />available for such activities.. <br /> <br />Transfer of ownership will entail obtaining approval of <br />congress and obtaining a permit from the U.S. Forest Service <br />since the reservoir is on Forest Service land. provision <br />C.l.b. requires that all such conditions are met before the <br />loan funds are transferred. <br /> <br />Recommendation <br /> <br />Purchase of Platoro Reservoir and its operation for the <br />benefit of local water users and for the State Engineer in <br />compact administration offer an important opportunity. <br /> <br />Nevertheless. repayment circumstances pose some risks for <br />the board. The various conditions to be met determine whether <br />or not a loan is made and offer several check points to <br />demonstrate progress. However. the security issue must be <br />considered in light of statutory requirements: <br /> <br />"The state of Colorado shall have the ownership and control <br />of such portions of said projects. or shall take a <br />sufficient security interest in property or take such <br />bonds. notes. or other securities evidencing an obligation. <br />as will assure repayment of funds made available..." <br />(37-60-120 (1) CRS) <br />