C153787 Approval Letter - Laserfiche WebLink

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. . company default on repayment of the loan. The terms of the loan contract require the borrower to replenish the CD within sixty days of any withdrawal by the CWCB. However, if the borrower is unable to make the annual loan payment, it is questionable whether the borrower would be able to replenish the CD as required by the contract. In such a case, the CWCB' s security interest in assessment revenues ideally would assure repayment of the loan. Incorporation of the Smith Irrigation Ditch The Smith Irrigation Ditch ("SID") was incorporated with the Secretary of State on May 13, 1997 under the Colorado Nonprofit Corporation Act and Article 42 of Title 7, C.R.S (1986 and Supp. 1996), which governs ditch and reservoir companies. The bylaws of the SID establish that the company's purpose is to manage the ditch for the landowners whose properties are irrigated with water from the Smith Ditch. The company's members are landowners whose properties are located within the company's service area and who own or lease water shares or water rights in the Smith Ditch. The company does not issue share certificates. "7 The by-laws authorize the company to collect annual dues for funding maintenance, emergency repairs and administrative expenses, and levy special assessments to fund construction or other major expenses, provided that such assessments are put to a vote of the members at the annual or a special meeting. If the members do not approve such assessments, the board of directors is authorized to set special assessments as needed for continued operation of the ditch. This provision of the by-laws is similar to the provisions of Section 7-42-104(1) and (2), C.R.S. (1986), except that Section 7-42-104 applies to. assessments on shares of stock, which the Smith Irrigation Ditch does not issue to members. Staff Decision The staff has concluded that, because the Smith Irrigation Ditch does not own l~ water rights, th~PPropriate collateral for its $50,000 Small Project Loan would b~pledge of revenues, -&-1 . cate of.deposit equivalent in amount to one annual loan payment (about $3,500), a curity interest in the new diversion structure as collateral for the $50,000 Small Project Loan. The Smith Irrigation Ditch has consented to this arrangement.. . We will review the history of and procedures for collateral on Construction Fund loans with you at the September Board meeting. cc: Bill Stanton Bill Green J an Illian Linda Bassi Keith Pankey, Smith Ditch Corp. John Fetcher, UYWCD