BOARD00058 ‎(3)‎

• Board Meeting Date: 1/23/2007
• Description: CF Section - Changes to Existing Loan Authorizations - Penrose Water District - Water Rights Purchase and Raw Water Pipeline
• Board Meetings - Doc Type: Memo

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STATE OF COLORADO

Colorado Water Conservation Board

Department of Natural Resources
1313 Sherman Street, Room 721
Denver, Colorado 80203
Phone: [phone]
FAX: [phone]
www.cwcb.state.co.us

MEMORANDUM

Bill Ritter, Jr.
Governor

TO:

Colorado Water Conservation Board Members

Bruce Johnson, P.E. ~~' (" -- /"
Mike Serlet, P.E., Chief
Water Supply Planning and inance Section

Harris D. Sherman
Executive Director

FROM:

Rod Kuharich
CWCB Director

Dan McAuliffe
Deputy Director

DATE: January 12, 2007

SUBJECT: Consent Agenda Item 2a, January 23-24, 2006 Board Meeting
Water Supply Planning and Finance Section - Changes to Existing
Loan Authorizations
Penrose Water District - Water Rights Purchase and Raw Water
Pipeline

Introduction

On November 13, 2006, the Board approved a loan of $8,844,570, to the Penrose Water
District, acting by and through its Water District Water Activity Enterprise, to purchase water
rights, construct a raw water pipeline and enlarge Brush Hollow Reservoir. The District is now
requesting that the Board re-consider approval Condition #3 that states:

"Prior to execution of a State Contract, evidence shall be provided that a CWCB loan
reserve fund has been established within the Enterprise, in the amount of $461,334."

In place of establishing a fully funded reserve fund at the onset of the 3-year project, the District is
requesting that the reserve fund be allowed to accumulate over the standard 1 O-year time frame,
similar to other CWCB loans.

Backaround

Per Sec. 2.5.3 of the adopted CWCB Water Project Loan Guidelines (2006), borrowers are
required to accumulate the equivalent of one annual loan payment in a loan reserve fund, over
the first 10 years of loan repayment. (Le. place in reserve 10% of the annual loan payment for
each of the first 10 years of the loan.) After 10 years, the reserve fund with one full annual
payment is maintained for the life of the loan.

In their loan application and Loan Feasibility Study. the District proposed establishing the
reserve fund up front, as opposed to increasing future water rates to cover the extra 10%
obligation. CWCB staff responded by reflecting the District's request in the adopted Condition
#3. Following the CWCB loan approval, in subsequent District and Enterprise 2007 budget

Flood Protection. Water Supply Planning and Finance. Stream and Lake Protection
Water Supply Protection. Conservation and Drought Planning