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<br />Thank you.
<br />
<br />-----Original Message-----
<br />From: Van Seiver, John
<br />Sent: Wednesday, June 11, 2003 4:54 PM
<br />To: 'John Gillogley'
<br />Cc: 'Kent Nelson '; 'Terry Yergensen'; 'Lee Norgaard'; 'Lynn B. Obernyer'; 'Jennifer Lindahl'; Roger Sams @
<br />GMS; Greg Monley/Kumar; Bassi, Linda; Serlet, Mike; McAuliffe, Dan; Kuharieh, Rod; Haynes, Mark; Boyer,
<br />Doug
<br />Subject: ewCB Loan to the DOC to Rehabilitate the RCC Reservoir #1
<br />
<br />6/11/03
<br />
<br />Dear John
<br />
<br />Thanks for your email response concerning this project. Here is some straight talk concerning your loan
<br />application.
<br />
<br />As we have discussed, a CWCB loan to the DOC will be more complicated than loans normally made by
<br />the CWCB. Since we have never made a loan to the DOC, and because the DOC has no debt, our first
<br />task is determining if a loan can be done. That is why I have asked you to answer some basic questions,
<br />before you and the CWCB spend a lot of time on this effort. The primary question involves collateral.
<br />Apparently the DOC is not able to make a multi-year commitment of its revenue (or income, or budget)
<br />such that the commitment would fequire the statement "....subject to annual appropriation." That is why I
<br />have asked if the DOC can pledge assets (the project, the water rights, for example) as well as revenues.
<br />A multi-year asset pledge will be necessary, in order for the CWCB to approve the loan, according the
<br />CWCB policy on collatefal. Have you ever pledged collateral (made a multi-year asset pledge) for a loan
<br />before now? If the answerer is yes, we have something the work with. However, the citation you note
<br />below (authorizing this Department to "purchase, sell, trade, and exchange" real
<br />estate) is silent on the issue. Which brings me back to my original fequest that your attorney confirm
<br />that the DOC can legally offer a multi-year collateral pledge. Please keep in mind that I have been unable
<br />to confirm, through any other source, that the DOC has that capability. However, if your attorney confirms,
<br />in writing, that you can, that would allow us to go to the next step.
<br />
<br />You are proposing a $613,000 improvement to an existing jurisdictional dam. This requires that the State
<br />Engineer review and approve the plans in advance of the project. If, for some reason the State Engineer
<br />waives formal review, that will be based on an up-front evaluation of the project that determines there will
<br />be no affect on the safety of the dam. Generally this happens when the project is no closer that 200 feet
<br />from the dam. Based on the drawing in your loan packet, the reservoir area for the RCC NO.1 dam
<br />is relatively small, and within 200 feet of the upstream toe of the dam at all locations. At this point it would
<br />be unwise to assume the State Engineer will not require a formal review. The current SEO plan review
<br />backlog is about 3.5 months, so if you plans need formal review, and if you don't have plans in the queue
<br />at this time, your construction date will be pushed back. Please have your engineer contact Mark Haynes
<br />(303) 866-3581 x 276, present the proposal, and determine if a formal review can be waived. Absent this, I
<br />will assume a formal review (or at least a pier review) is required. Which then takes us to the next step.
<br />
<br />The CWCB requifes a feasibility study as a part of all loan applications. The study is due at the same time
<br />the application; in your case June 1, 2003; in ofder to be considered at the July 2003 meeting. As a
<br />convenience to the borrower, we make a practice of allowing an additional 2 weeks to complete the
<br />feasibility study, beyond the application deadline. This allows an initial review of the application to
<br />detefmine whether, "on the surface", the loan is a go. After all, if a fatal flaw shows up right away, why
<br />have the applicant spend the time and money doing a study for the CWCS, when the loan can't be
<br />approved anyway? Once the feasibility study is received, it is used to fully evaluate the borrower (and the
<br />project) and as a basis for drafting the Board Memo requesting approval of the loan. In summary, the
<br />feasibility study is needed up-front to evaluate the loan and to form the basis for CWCS approval. In
<br />this case' have allowed 3 weeks beyond the June 1 deadline, to complete the study. I would expect to
<br />have YOUf feasibility study by June 20th, in order to schedule you for the July 28th CWCB meeting. (Please
<br />note: Before undertaking the feasibility study for our benefit, I recommend that you first address the issues
<br />above.)
<br />
<br />6/20/2003
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