PROJ01856

• Contract/PO #: C153668
• Contractor Name: Erie, Town of
• Contract Type: Loan
• Water District: 6
• County: Weld
• Bill Number: SB 90-41
• Loan Projects - Doc Type: Contract Documents

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This paper addresses problems in the current way CWCB does business with municipal

borrowers based on my review of CWCB loan documents, after meetings with staff, and after

assessment of policy and statutory provisions the agency has put in place. I have tried to outline

problems here, based on Erie's conditions, and point out directions for aligning the agency as a

true partner to local governments in developing and protecting the water resources of Colorado.

I have followed CWCB for many years and recognize the agency has many classes of borrowers.

In a pre-Tabor environment, CWCB customarily extracted a full faith and credit obligation from

towns as most water bonds were issued as general obligation bonds. Secondly, the agency often

took a mortgage on financed assets. Since Tabor (and your documents did not catch up with

Tabor for a couple of years), you must now accept revenue-type borrowings in which the pledge

of water rates and charges is your first line of security. Based on Erie's circumstances, CWCB

has not yet arrived in the modern world with respect to revenue bonding and the securities

market. I use Erie as a case study to identify significant problems in doing business with you

and to point out improvements needed in the loan system you, as a Board, are rapidly going to

have to deal with.

Erie's predicament as a rapidly growing small town in the Denver/Fort Collins corridor has

enabled me to identify and isolate these problems:

(1) Your loan documents with Erie's revenue-backed borrowing did not address parity bonds

as was commonly dealt with in the marketplace in 1994. The documents are clearly silent

on parity debt. They are deficient in this business-as-usual subject area.