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<br />;.. <br /> <br /> <br />REC[""C'~ m~ <br />'JUl 1, -; ,. . <br /> <br /> <br />Colore.).:, ".c:.-" " <br />Consen.'~,_.,'.:-: I ..c~.;.: d <br /> <br />People · Partnership · Progress <br /> <br />July 14, 1997 <br /> <br />Mr. William Green <br />Colorado Water Conservation Board <br />1313 Sherman Street, Room 721 <br />Denver, CO 80203 <br /> <br />Dear Mr. Green: <br /> <br />The City of Fort Morgan is requesting the Colorado Water Conservation Board consider <br />parity bond status for its upcoming water revenue bond fmancing. Long in the planning <br />stages, the connection of the City to the Southern Pipeline Project can now proceed thanks to <br />the overwhelming support of nearly 70% of the voters at the June 17, 1997 election. The <br />total cost of the _ project is estimated at $31 million and will be funded through a series of <br />fmancing options. All fInancing sources, whether bonds, notes or loans will be secured by the <br />net revenues of the water system, the same reserves securing the CWCB loan. <br /> <br />A project of this size can be complicated. To design the fmancing structure, Fort Morgan has <br />hired George K. Baum & Company Investment Bankers. George K. Baum & Company has <br />recommended and we are proceeding with an interim fmancing using variable rate revenue <br />bonds. This approach will allow us to fund the project today and "take out" the variable rate <br />bonds with loans from Rural Development, CWCB and Colorado Water Resources and <br />Power Authority in the future. <br /> <br />Now that the community has voiced it strong support for the project, it is critically important <br />to move ahead as quickly as possible. The city has committed to and calculated the water rate <br />increases necessary to repay the fmancing. Allowing the City to issue bonds and accept loans <br />which are on a parity basis with the CWCB loans will help make the project more affordable <br />and feasible. Subordinate revenue bonds are not readily accepted in the market place for a <br />financing of this magnitude. <br /> <br />To assist in your analysis, the City has received a Parity Certificate from Anderson, Lee & <br />Company, Certified Public Accountants, demonstrating that with planned water rate increases <br />the City of Fort Morgan meets the parity bond test. In fact, during the interim financing <br />period, the estimated combined maximum annual debt service would be $2,391,927, about <br />$40,000 less than the estimate for permanent fmancing. <br /> <br />City of Fort Morgan <br /> <br />710 E. Railroad Avenue <br />Administration (970) 867-4310 <br /> <br />P.D. Box 100 <br /> <br />Utility Billing (970) 867-4350 <br /> <br />Fort Morgan, CO 80701 <br />Fax (970) 867-3039 <br />