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. . , about $1,000. With a net operating income of $100,000 per year, it appears that the project would be A financially feasible. .. As collateral for the loan, the Labrouches have indicated they are willing to use the following: (1) the Vouga Reservoir site, (2) the Vouga Reservoir storage rights of 920 acre-feet, (3) approximately 680 acres of irrigated land in the Razor Creek basin owned by the Labrouches, and (4) the direct flow water rights used to irrigate the 680 acres. The staff's estimate of the value of the collateral is about $1. 0 million. The major lienholder on the Labrouche properties, Norwest Bank of Grand Junction, has indicated the bank is willing to subordinate its security interest to the Board's lien. The Wichita Bank for Cooperatives also has a lien on the land, structures, and water rights of the VRA to secure a loan with a remaining balance of abo~p;OOO. LOAN TERMS In 1994, the Board approved a 30-year loan at 4.0 percent for the VRA. Since there is now essentially a single shareholder, the staff has suggested to the Labrouches a 20-year rather than a 30-year loan and that the staff would be willing to recommend to the Board a one-quarter of one percent reduction in the original lending rate in keeping with current Board policy for 20-year loans. . RECOMMENDATION Staff therefore recommends a 20-year Construction Fund loan to the VRA for $600,000 at an amended lending rate of 3.75 percent. Staff also recommends that the repayment period of the loan might be later amended, within the limits of the legislative authorization, at such time as the VRA may acquire additional shareholders. e attachment: map cc: Linda Bassi, OAG Remy and Ruth Labrouche Mark Hermundstad, Williams, Turner & Holmes John Sikora, Woodward-Clyde 4 e bgifWlJwctranslsecblsep8a.doc