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1 . . . Bull Creek Reservoir, Canal & Power Company January 23-24, 2007 Page 5 of 5 Agenda Item 9b Collateral: As security for this loan, the Company will pledge assessment revenues backed by an assessment covenant. In addition, the Shareholders will pledge individual stock certificates representing no less than 90% of the Company stock. Ute Water Conservancy District has shown support for the project and indicates a value of this stored water at $3,OOO/ac-ft. The value of 500 shares of Company stock which produces 900 ac-ft of water is $2,700,000. This security is in compliance with CWCB Loan Policy #5 (Collateral). Staff Recommendation Staff recommends a loan not to exceed $1,212,000 ($1,200,000 for project costs and $12,000 for the 1 % Loan Service Fee) to the Bull Creek Reservoir, Canal and Power Company for project costs, not to exceed 90% of the costs associated with the Bull Creek Reservoir NO.4 Rehabilitation and Enlargement Project from the Severance Tax Trust Fund Perpetual Base Account. Loan funds may be used for qualifying project expenses previously incurred. The loan terms shall.be based on the current agricultural rate of 2.50% per annum for a 30-year term. Final approval of the loan shall be conditioned upon all standard contracting provisions of the CWCB Loan Program. Security for the loan shall be collateral in compliance with CWCB Loan Policy #5. Staff further recommends the following approval conditions: 1) Shareholders shall convey a security interest in the Company stock certificates to CWCB in a quantity that exceeds 90% of all Company stock. 2) Company will payoff the current loan held by the Palisades National Bank (PNB) in Palisade, Colorado, with an estimated balance of $160,000. 3) As part of this loan approval, Staff recommends de-authorization of the previous Severance Tax Trust Fund Perpetual Base Account loan to the Bull Creek Reservoir, Canal and Power Company . (Agenda Item 4d, September 2004) for $599,940 for the Reservoir Nos. 1, 2 and 4 Rehabilitation & Enlargement project. Email copy: Irvin Johnson, Company President Paul Currier, PE, Water Resources Consultants, LLC Lori Satterfield, Legal Counsel, Holland & Hart Alan Martellaro, SEa Division 5 Division Engineer Garrett Jackson SEa Division 5 Dam Safety Amy Stengel, AGO . Attachment: Water Project Construction Loan Program - Project Data Sheet