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C150150 Feasibility Study
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C150150 Feasibility Study
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Last modified
3/27/2014 11:06:58 AM
Creation date
3/26/2007 10:18:48 PM
Metadata
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Template:
Loan Projects
Contract/PO #
C150150
Contractor Name
Lower Arkansas Water Management Association
Contract Type
Loan
Water District
67
County
Bent
Loan Projects - Doc Type
Feasibility Study
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<br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br /> <br />of the case. LA WMA's President, manager, engineer and attorney all testified at the Kansas v. <br />Colorado trial and LA WMA' s attorney attended a maj ority of the trial which took place in California. <br /> <br />In total LA WMA spent approximately $ 303,885 in engineering and legal expenses <br />as a result of its need and Colorado's desire to have LA WMA participate in the trial. In order to free <br />up some cash-flow for LA WMA to cover its expenses related to its direct participation in the trial the <br />CWCB agreed to defer some ofLAWMA's CWCB loan payments. On September 25,2001 the <br />CWCB approved LA WMA' s first loan deferral request and granted a one-year 100% deferral of its <br />May 1, 2002 Contract No. C153715 loan payment in the amount of$ 122,000. On November 26, <br />2002 the CWCB approved LA WMA's second loan deferral request and granted a one-year 100% <br />deferral ofits May 1,2003 Contract No. C153715 loan payment in the amount of$ 122,000, its July <br />1,2003 Contract No. C15375610an payment in the amount of$ 7,718 and its November 1, 2003 <br />Contract No. C153678 loan payment in the amount of $ 8,114. These loan deferrals totaled $ <br />259,832 and did not cover all of LA WMA's approximately $ 303,885 in expenses. Additionally, <br />while these loan deferrals did assist LA WMA by freeing-up some cash-flow to pay for its <br />participation in the trial, the deferred interest amount of each loan was added to the current loan <br />balances and then re-amortized over each loans' remaining life so the CWCB will be fully repaid by <br />LA WMA. <br /> <br />C. LA WMA' s Current CWCB Loan Request for the Purchase of One-Half ofthe Keesee <br />Water Rights. <br /> <br />The cost of LA WMA's acquisition of one-half of the Keesee water rights will be <br />$ 2,250,000. An independent appraisal of the Keesee water rights is being performed for LA WMA <br />and will also be submitted to the CWCB. In order to purchase one-half of the Keesee water rights <br />LA WMA must borrow $ 2,250,000, which is 100% of the purchase price. LA WMA must borrow <br />$2,250,000 or 100% of the Keesee purchase price from the CWCB because LA WMA's cash-flow <br />situation is currently extremely tight as a direct result of the costs it had to cover in participating in <br />the Kansas v. Colorado trial and because LA WMA plans to close-out Contract No. C 153768 as part <br />of this transaction and pay the approximately $234,473 of accrued interest to the CWCB shortly after <br />closing on the purchase of one-half of the Keesee water rights. LA WMA understands that CWCB <br />Loan Policy No. 11 provides that the CWCB may generally lend up to 90% ofthe purchase price for <br />the acquisition of water rights with CWCB funds. <br /> <br />Given LA WMA's need to purchase this important and unique source of additional <br />replacement water and LA WMA's lack of cash-flow as described above, LA WMA is hereby <br />requesting that the CWCB make an exception to the general policy expressed in Loan Policy No. 11 <br />and agree to lend LA WMA 100% of the funds, $2,250,000, for this purchase. Obtaining <br />100% financing for this purchase is critical because otherwise LA WMA' s purchase of one-half of the <br />Keesee water rights would be economically impossible because LA WMA would have to come up <br />with approximately $459,473 in cash in the short term ($234,473 in accrued interest to close-out <br />Loan No. CI53768plus$225,000 forits 10% of the purchase price). LAWMAsimplydoes not have <br />the cash flow to cover a $459,473 payment to the CWCB so the CWCB's approval of financing <br /> <br />12 <br />
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