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<br />bLL~ <br />STATE OF COLORADO <br /> <br />Colorado Water Conservation Board <br />Department of Natural Resources <br /> <br />721 State Centennial Building <br />1313 Shennan Street <br />Denver, Colorado 80203 <br />Phone (303) 866-3441 <br />FAJ( (303) 866-4474 <br /> <br />. <br /> <br />Roy Romer <br />Governor <br /> <br />July 18, 1995 <br /> <br />James S. Lochhead <br />Executive Diccctor. DNR <br /> <br />Mr. Perry Eisenach <br />City of Fort Morgan <br />P. O. Box 100 <br />Fort Morgan, CO 80701 <br /> <br />Daries e. lile, P.E. <br />Director, CWCB <br /> <br />RE: SWSP PIPELINE CONTRACT FOR $5.5M <br /> <br />Dear Perry: <br /> <br />One of the Board's requirements in awarding the loan to Fort Morgan was that collateral of <br />Colorado-Big Thompson (CBT) shares valued at $5,500,000 would be pledged as security. Loring <br />Harkness, the bond counsel for Fort Morgan, has told us that is not possible since the water <br />enterprise is the contracting party and the shares belong to the city so they cannot be pledged to <br />secure the loan. <br /> <br />It has been decided to further examine the collateral issue at the next Board meeting to be held on <br />July 23rd & 24th (I believe this item will be discussed on Tuesday, the 24th). There are several <br />options the Board may choose, as was discussed in my file memo dated July 12th that I faxed to <br />you, but only one option would allow continuation of the contracting process--that option is if the <br />Board agrees to waive the requirement of the CST shares for collateral. All other options that the <br />Board might select would probably involve a delay in the contracting process. <br /> <br />In order to pursue this alternative, a DRAFT version of the contract has been prepared to reflect <br />using for collateral the pledge of revenues and Fort Morgan's capacity in the SWSP pipeline as <br />described in the Allotment Contract. A copy of this contract has been sent to Loring Harkness for <br />his review. This is a draft contract and changes might be made to it before it becomes final. For <br />instance, Loring has been asked to provide a clause regarding the construction firms naming Fort <br />Morgan and CWCB as additional insured in the insurance policies to offer both of us more <br />protection during the construction of the pipeline. However, we did want to advance the contract <br />as far as possible, while acknowledging that this might not be the option that is chosen by the <br />. Board. <br /> <br />Perry, let me know if you have any questions. <br /> <br />Sinc~rely , <br />". <br /> <br />'- <br /> <br />. )tCiJ... <br /> <br />I. J i <br /><'-jan ~lia~ <br />con~ Administrator <br /> <br />. Enclosure: draft contract <br /> <br />cc: CWCB Staff <br />Attorney General's Office <br />