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<br />. <br /> <br />. <br /> <br />> <br /> <br />The preceding considerations also raise the issue of the enterprise status of the Utility <br />Fund. (The Fund has been declared an enterprise by the Town Council.) At present, it <br />appears as if approximately 40 percent of revenues are derived from the sales tax. As a <br />condition of the loan, the staff will recommend that all Amendment One issues are <br />resolved prior to entering into a loan contract with the Town. <br /> <br />. <br /> <br />The median household income of $18,500 indicates that the Town would qualify for the <br />Board's Municipal Low Income lending rate. <br /> <br />Discussion <br />Staff s review of the project feasibility studies and our discussions with the Town staff <br />indicate that the proposed project is economically, financially and technically feasible. <br />The only issues of concern are, as discussed above, the use of sales tax revenues and the <br />Amendment One questions. <br /> <br />As stated on page one of this memo, one of the conditions of Board approval was that the <br />Town is unable to obtain financing through the Colorado Water Resources and Power <br />Development Authority. That condition was included as a footnote (footnote "an) in the <br />authorizing legislation, HB95-1155, a portion of which is attached. <br /> <br />In December 1994, staff received a letter from the Water and Power Authortiy staff (copy <br />attached) which was interpreted to mean that Palisade might not be eligible for bond <br />financing at that time. In a recent letter from the Authortiy staff (copy attached) there was . <br />an indication that the project might qualify for bonds under the Small Water Program. <br /> <br />We have discussed the matter with the Authortiy staff and agreement was reached at the <br />staff level that the degree of CWCB involvement in the last few years and the Town's <br />anticipation of Construction Fund financing indicate that it may be best to continue with <br />the concept of CWCB financing for 75 percent of the project costs. <br /> <br />Recommendation <br />Staff recommends an increase in the Town of Palisade's Construction Fund authorization <br />in HB 95-1155 for the Cottonwood Creek Pipeline replacement project by an additional <br />$172,000 for a total authorization of $9mOO and that footnote "an be removed from the <br />original authorization as it applies to the Town of Palisade. For this additional increment <br />of financing, staff recommends a 30-year loan term and the Municipal Low Income <br />lending rate for 1998 as may be approved by the Board in November 1997. <br /> <br />As security for the loan, the Town will pledge Utility Fund revenues on parity with all <br />other lenders and such other collateral as the Board deems appropriate. <br /> <br />Staff further recommends that prior to entering into a loan contract with the CWCB, the <br />Town shall resolve all issues with regard to the use of tax moneys and incurring debt so <br />as to be in compliance with the requirements of Amendment One. <br /> <br />. <br /> <br />4 <br />