C153701 Consents and certificates

• Contract/PO #: C153701
• Contractor Name: Fort Morgan, City of & Fort Morgan Water Works and Distribution Enterprise
• Contract Type: Loan
• Water District: 1
• County: Weld
• Bill Number: SB94-029
• Loan Projects - Doc Type: Contract Documents

7

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1. Pledge of revenues,

2. City's interest in the SWSP pipeline (Allotment contract), and

3. 1,600 of the City's 4,635 shares of Colorado Big Thompson Project water which
has a value of approximately $1,500 per share.

This recommendation was approved by the Board at the March 9, 1995, meeting.

DISCUSSION

Loans for participation in the SWSP have been made by CWCB to the following
municipalities:

ERIE - $1,544,000
HUDSON - $1,273,000
FORT LUPTON - $4,233,000

All three involved contracting with a municipality and water enterprise, and all three used
for security a pledge of revenues (1st position) and the borrower's interest in the
Allotment Contract.

Morgan County Quality Water District (MCQWD> has also been approved by the Board and
the Legislature to receive a loan in the amount of $4,260,000 to participate in the SWSP.
This approval was not contingent upon any additional security requirements. It will be
contracted using pledge of revenues and its interest in its Allotment Contract as security.

OPTIONS

option 1 - Treat all SWSP borrowers the same. For security, contract requirements would
be a pledge of revenues and the borrower's interest in the Allotment Contract. It has been
determined in the economic analysis that in order to have adequate revenues, the water
rates for Fort Morgan will increase from $17 to approximately $37 per month in the next
several years. According to a 1993 survey, water users would be willing to pay more for
improved water quality. So, while this rate increase is substantial, it is not unreasonable
for the water users of Fort Morgan.

option 2 - Require the City to hold an election. This would allow the City to offer the
collateral we are requesting.

RECOMMENDATION

Pursuant to S 37-60-120(1), the CWCB ..... shall take a sufficient security interest in property
or take such bonds, notes, or other securities evidencing an obligation, as will assure
repayment of ~unds made available by section 37-60-119." The financial and economic
analysis of Fort Morgan's participation in the SWSP indicates that security consisting of a
pledge of revenues and Fort Morgan's interest in the Allotment Contract is adequate
security to assure repayment of the authorized loan funds.

The CWCB staff recommends the same security for all SWSP loans: pledge of revenues and
interest in the borrower's Allotment Contract.