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<br />",\ ,~ <br /> <br />Tunnel Water Co, <br />March 21-22, 2002, <br /> <br />Agenda Item 12 <br /> <br />Discussion <br />Policy NO.7 establishes the manner in which the CWCS sets lending rates. <br /> <br />Policy No.7, paragraph 7, states: <br /> <br />"For projects that include more than one purposel a weighted average lending rate will be <br />established based on the percent of water supplied or on the percent ownership for each <br />particular purpose of the project. " <br /> <br />The policy allows a weighted average interest rate to be calculated based on the use or based <br />on the ownership of the shares, Staff consistently calculates weighted average interest rates <br />based on the ownership of the shares, Ownership criteria were used to calculate interest rates <br />for the two TWC loans, (Please see attached Policy No.7.) <br /> <br />State law establishes the conditions under which the CWCS may adjust the terms of an <br />existing loan. <br /> <br />CRS 37-60-1201 Contractual Powers of the board, states: <br /> <br />"(3) The board may adjust the authorized interest rate, extend the authorized repayment period for <br />any project, and defer one or more annual payments if, in the board's opinion. the entity requesting <br />such adjustment, extension, and deferment demonstrates that it has encountered significant and <br />unexpected financial difficulties and that it has been duly diligent in its efforts to comply with the <br />repayment provisions of its contract with the board." <br /> <br />The TWC has not identified a significant and unexpected financial difficulty that would allow the <br />CWCB to consider adjusting the interest rate on these loans, <br /> <br />Conclusions <br />The CWCB properly set interest rates in accordance with established Board Policy No, 7, <br /> <br />State law allows the CWCS to adjust interest rates only in cases where the Borrower has <br />encountered "significant and unexpected financial difficulties, " <br /> <br />Recommendation <br />Staff recommends no adjustment of the interest rates of the two loans made to the Tunnel Water <br />Company, <br /> <br />cc: Fred Walker, President, Tunnel Water Co, <br />Linda Bassi. AGO <br /> <br />Attachments: <br /> <br />1, Tunnel Water Company Letter dated January 15, 2002 <br />2, Tunnel Water Company Board Memo dated January 11, 2001 <br />3, Policy No, 7 <br /> <br />C:\Proj-New\ TunnelWaterCo302memo <br /> <br />L:\boardmem\marD2\12 - Tunnel Water Co <br /> <br />2 <br />