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<br />,. <br />! <br /> <br />. <br /> <br />. <br />STATE OF COLORADO <br />. <br /> <br />-o-~ <br /> <br />Colorado Water Conservation Board <br /> <br />Department of Natural Resources <br />1313 Sherman Street <br />Denver, Colorado 80203 <br />Phone' (303) 866-3441 <br />FAX, (303) 866-4474 <br /> <br />MEMORANDUM <br /> <br />Bill Owens <br />Governor <br /> <br />Greg E. Walcher <br />Executive Direaor, DNR <br /> <br />Peter H. Evans <br />Director, ewes <br /> <br />To: The Town of Palisade File <br /> <br />From: Bill Green p? <br /> <br />Date: October 13, 1999 <br /> <br />Re: Change of Collateral and Financial Condition <br /> <br />Introduction <br /> <br />The purpose of this memo is to update the financial analysis for the Construction Fund loan to <br />the Town of Palisade for the Cottonwood Creek Pipeline Project. <br /> <br />Backl!:round <br /> <br />In November 1997, the CWCB approved an increase of$I72,OOO to a 1994 loan of $750,000 <br />(for a total of $922,000) to the Town of Palisade to finance the replacement of the Cottonwood <br />Creek Pipeline. After discussing potential sources of collateral, the CWCB approved the loan <br />and delegated the final decision io the Director. <br /> <br />During contract negotiations, the Town's bond counsel informed us it could not convey a <br />security interest in its real property or the pipeline because it lacks the statutory authority. <br />Therefore, we have accepted as collateral, a pledge of net water system revenues, including a rate <br />covenant in the loan contract and an ordinance approving the loan, and the establishment of a <br />debt service reserve fund equal to an annual loan payment, in addition to an annual audit report <br />and an annual certificate of debt service coverage prepared by a CPA. <br /> <br />Discussion <br /> <br />My November 1997 memo to the Board (Agenda Item No. 16 c. for the November 1997 Board <br />meeting) recommending the loan included the following discussion of the Town's financial <br />condition: <br />