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<br />. <br /> <br />,r <br /> <br />. <br /> <br />. <br /> <br />. <br /> <br />Colorado Water Conservation Board <br /> <br />Department of Natural Resources <br /> <br />1313 Sherman Street, Room 721 <br />Denver, Colorado 80203 <br />Phone: (303) 866-3441 <br />FAX: (303) 866-4474 <br />www.cwcb.state.co.us <br /> <br />STATE OF COLORADO <br /> <br />Q <br /> <br />MEMORANDUM <br /> <br />Bill Owens <br />Governor <br /> <br />Greg E. WJlcher <br />Executive Director <br /> <br />Rod Kuharich <br />eWeB Direl10r <br /> <br />Dan McAuliffe <br />Deputy Director <br /> <br />TO: <br /> <br />Colorado Water Conservation Board Members ~ <br /> <br />Bill Green, P.E., Water Supply Planning and Finance Section I Ill] <br />Mike Serlet, P.E., Chief, Water Supply Planning and Finance Section", <br /> <br />March 16, 2001 <br /> <br />FROM: <br /> <br />DATE: <br /> <br />RE: <br /> <br />Agenda Item No.8a. - March 26-27, 2001 Board Meeting-Water Supply <br />Planning and Finance - Changes in Existing Construction Fund Loans - <br />Town of Erie - Loan Defeasance <br /> <br />Introduction <br /> <br />The Town of Erie (the Town) is requesting defeasance (termination under specified conditions) of <br />one ofthe Town's two existing Construction Fund loans. The Town will establish an annuity <br />backed by U.S. government securities for full repayment of the defeased loan. <br /> <br />Backeround <br /> <br />The Town currently has two Construction Fund loans. The first loan was made in 1992 for a flood <br />control project and has an outstanding balance of $455,561. Payments for this loan are made from <br />the Town's drainage fund. The loan is current and the Town will continue making payments for <br />this loan from the drainage fund. <br /> <br />The second loan was made in March 1994 to finance the Town's portion of the costs of the <br />Southern Water Supply Project (SWSP). The Town pledged revenues from water user charges <br />and fees of the Erie Water Department to repay the loan with a security interest to the CWCB in <br />an allotment contract for a portion of the capacity in the SWSP pipeline. The term of the loan is <br />40 years at 2.0 percent interest. There are 36 annual payments remaining with a balance of <br />$1,438,643 and the loan is current. This second loan is the subject of the defeasance request. <br /> <br />At the January 1999 Board meeting (Agenda Item No.1 Ob., January 27-28, 1999), the Town <br />requested parity on the 1994 loan with water revenue bonds that were issued by the Town in <br />1998. The Town placed $1.55 million in an escrow account pending the resolution of the parity <br />question. <br /> <br />Staff determined that the Town was not able, at that time, to meet the Board's parity test. <br />The Board postponed the question of parity status for the 1998 bonds until such time as the Town <br />could demonstrate that it is capable of meeting the Board's parity hen test. (A copy of Lending <br />Policy No 6 dealing with requests for parity status is attached.) <br /> <br />Flood Protection. Water Project Planning and Financing. Stream and Lake Protection <br />Water Supply Protection. Conservation Planning <br />