C153771 Contract Communication

• Contract/PO #: C153771
• Contractor Name: Horse Creek Water Users Association
• Contract Type: Loan
• Water District: 17
• County: Crowley
• Bill Number: HCL
• Loan Projects - Doc Type: Contract Documents

Colorado Water Conservation Board

Department of Natural Resources

721 Centennial Building
1313 Sherman Street
Denver, Colorado 80203
Phone: [phone]
FAX: [phone]

0\{S
STATE OF COLORADO
.

,,"

Roy Romer
Governor

October 2, 1997

James S. Lochhead
Executive Oireoor. ONR

Oaries C. l;le, PE.
Oireoor, eWeB

William A. Hillhouse II, Esq.
Parcel, Mauro, Hultin & Spaanstra, P.C.
1801 California Street
Denver, CO 80202-2636

Subject: Horse Creek Water Users Association Loan Contract C 153771

Dear Mr. Hillhouse:

This is in response to your letter dated September 12, 1997 to Linda Bassi regarding
the loan contract documents for Horse Creek Water Users Association (HCWUA).

Enclosed is a red lined version of the contract documents with all of the changes that
you requested that we felt we could make and a letter from Linda Bassi of the Attorney
General's Office responding to almost all of your other concerns.

The one concern Linda did not address was regarding your comments about the annual
payments, which I will do here. Paragraph 2b of the Board memo (copy enclosed)
states that" The financing terms for the Horse Creek Water Users Association loan shall
be at an overall annual percentage rate of 3% for a duration of 40 years, provided that
the payments on the loan for the first 5 years shall be based on the terms of 2% for a
40-year duration and thereafter upon an interest rate that will assure that the total return
to the CWCB has the same net present value as a standard 3%,40 year loan."

The net present value (NPV) for loan payments of $35,691.46, for 40 years at 3% is
$825,000. The NPV using the loan payments in the amortization schedule (Appendix 3
of the draft contFact) of $30,158.49 for 5 years and 37,058.57 for 35 years at 3% is
$825,000. The NPV using the loan payments proposed in your letter of $30,158.49 for
5 years at 2% and $37,058.57 for the remaining 35'years is only $814,344.62.

To achieve an NPV of $825,000, Horse Creek must use the loan payment of
$35,691.46 for 40 years or $30,158.49 for 5 years and then $37,058.57 for the
remaining 35 years in order to conform with the terms approved by the Board.

Once we agree on the language of all of the contract documents, I will prepare a set for
signature and transmit to HCWUA. Once they return all of the executed documents, it
takes approximately two weeks to receive the final review and approval from the State
Controller's Office, at which time the loan funds will be available for' disbursement.