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<br />"'I.. <br /> <br />'" <br /> <br />~'ljJ <br />.~ <br />," <br /> <br />e <br /> <br />DISCUSSION <br /> <br />The District would like to retire the loan with the Bureau in order to: (1) have a much greater <br />degree of certainty with respect to annual payments, (2) reduce annual debt service as much as <br />possible, and (3) reduce its long-term debt obligation. Since Construction Fund loans usually <br />provide for equal annual payments, the first objective would be accomplished with CWCB <br />funding. With regard to a reduction in debt service, Table 2 shows that there would be a <br />reduction in debt service in two of the three years 1993 - 1995. Finally, if the Bureau is willing <br />to discount the loan as described above, the District's long-term debt could be reduced <br />substantially from about $5.6 million to $1.5 million or less. <br /> <br />Table 3 indicates that while there would be some improvement in per acre-foot costs (the main <br />concern of the water users) they are not likely to be reduced significantly. A schedule of <br />constant annual payments, however, would likely be of significant benefit to water users. <br /> <br />The staff has some concern with respect to the annual deficits and the debt service coverage <br />ratios for 1993 through 1995. While one of the main reasons for making a loan to the PRWCD <br />would be to assist in remedying the situation, the staff believes that some degree of assurance <br />should be provided that future financial operations of the District, insofar as they can be foreseen <br />and monitored, would not result in a continuation of these conditi~ns. <br /> <br />e <br /> <br />,-.) <br /> <br />There does not appear to be any substantial advantage to 40-year as opposed to 30-year financing <br />at least as far as costs per acre-foot costs are concerned. Both 30-year and 40-year financing <br />would appear to completely alleviate the financial problems identified above in Table 1 for the <br />years 1994 and 1995. In 1993, neither 30-year nor 40-year Construction Fund loans would have <br />resolved the financial problems. <br /> <br />With regard to contracting considerations for a loan, the District may form an enterprise in order <br />to comply with Amendment One requirements and would be willing to provide the equivalent of <br />one or possibly two annual Construction Fund loan payments in the form of a certificate of <br />deposit as collateral. <br /> <br />RECOMMENDATION <br /> <br />Staff recommends that the Board favorably consider a Construction Fund loan of$I,500,000 to <br />the Purgatoire River Water Conservancy District for the purpose of retiring the District's existing <br />financial obligation to the U.S. Bureau of Reclamation. The lending rate for the loan would be <br />3.75 percent, the term would be for 30 years, and the loan would be made subject to the <br />following conditions: <br /> <br />, .....) <br />~-J <br /> <br />4 <br /> <br />e <br />