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

I
I
I
I
I
I
I
I
I
I
I
I
I
I
, I
I
II
I
I

(2) Although the documents are void on the subject matter, the Town staff in December of

1997 came to you requesting to issue $8,325,000 in bonds on parity (equal status) with

your 1994 loan. Parity was granted.

(3) The contractual relationship between the Town and CWCB was the loan agreement and

contract. Upon closer reading of the documents, we now discover the Town did not need

to ask for parity in 1997, and they certainly did not need to in 1998. Your documents
neither contemplated nor required this customary arrangement.

(4) In January of 1998, CWCB adopted a "Parity Debt Policy." Given this adoption date,
anyone in the reasonable course of business would assume this policy applies to borrowers
doing business with you after the adoption date. The policy should not be applied
retroactively, and CWCB never offered a contract amendment to bring Erie into this

additional requirement. This policy was clearly not a part of Erie's agreement, and it

should not be legally binding on the Town. Contracts are normally amended by both

parties, not one side.

(5) The 1998 Policy is, in my opinion, inconsistent with the Administrative Procedure Act.

That Act, governing the adoption of rules and regulations encompassing policies of general

applicability, applies to this Board. In the normal course of adopting new, far-reaching

rules which can cause substantial legal and financial burdens to local govenunents, state

agencies must provide opportunities for interested and affected parties to be heard and

-2-