C153787 Approval Letter

• Contract/PO #: C153787
• Contractor Name: Smith Irrigation Ditch
• Contract Type: Loan
• Water District: 44
• County: Routt
• Bill Number: SPL
• Loan Projects - Doc Type: Approval Letter

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STATE ct COLORADO

o

Colorado Water Conservation Board
Department of Natural Resources
721 Centennial Building
1 31 3 Sherman Street
Denver, Colorado 80203
Phone: [phone]
FAX: [phone]

Roy Romer
Governor

lames s. Lochheild
Executive Director, DNR

Oaries C.lile, P.E.
Diredor, ewes

TO:

Colorado Water Conservation Board Members

Chuck Lile ~

FROM:

DATE: 1997

SUBJECT: Smith Ditch Diversion Structure Loan

At the Board meeting on July 21, the Board approved a loan of$50,000 from the Small Project
Loan Account to the Smith Ditch Corporation to assist the Smith Ditch irrigators in replacing
their diversion structure on Elkhead Creek. I The Board requested that the staff look into the
question of security for the loan and advise the Board as to the Director's decision with regard to
collateral.

Collateral
In the last year or more, the Board has approved several loans to ditch companies and other
nonprofit corporations which are or will be secured with a pledge of assessment revenues and a
certificate of deposit equivalent in amount to one annual loan payment. Examples of Small
Project loans secured in this manner include loans to The Farmers Independent Ditch Company
($55,000) and The Chipperfield Lane Ditch, Inc. ($60,000). Examples of standard. Construction
Fund loans secured in this manner include loans to the Durkee Ditch Company ($120,000), the
Weldon Valley Ditch Company ($188,000), and the River Oaks on the Roaring Fork Property
Owners Association, Inc. ($25,500).

The use of a certificate of deposit ("CD") in the amount of one annual payment as collateral
appears to be most appropriate when the borrower does not own real estate or water rights that it
can offer as collateral. Frequently, a mutual ditch company does not own the land over which its
ditch runs but, rather, has an easement for the ditch Additionally, in many cases, shareholders,
rather than the company, own the water rights run through the company's ditch. The advantage
of a certificate of deposit is that the CWCB has direct access to one annual payment should the

1 Since the July Board meeting, it has come to our attention that the correct name of this
borrower is Smith Irrigation Ditch. Consequently, at the September meeting, we will ask the
Board to amend its approval of this loan to correct the name given for the borrower