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<br /> <br />GALE A. NORTON <br />Attorney General <br /> <br />MARTHA PHILLIPS ALLBRIGHT <br />Chief Deputy Attorney General <br /> <br />RICHARD A. WESTFALL <br />Solicitor General <br /> <br />STATE OF COLORADO <br />DEPARTMENT OF LAW <br /> <br />STATE SERVICES BUILDING <br />1525 Shennan Street - 5th Floor <br />Denver, Colorado 80203 <br />Phone (303) 866-4500 <br />FAX (303) 866-5691 <br /> <br />OFFICE OF THE A ITORNEY GENERAL <br /> <br />October 2, 1997 <br /> <br />William A. Hillhouse II, Esq. <br />Parcel, Mauro, Hultin & Spaanstra, P.C. <br />1801 California Street, Suite 3600 <br />Denver, CO 80202-2636 <br /> <br />RE: Response to Comments on Draft CWCBIHCWUA Loan Contract <br />Dear Bill: <br /> <br />Enclosed for your review is a red lined version of the CWCBIHCWUA loan contract that <br />incorporates most of your suggested revisions. Before addressing the suggestions that we did not <br />incorporate into the contract, I will clarify the procedure by which the CWCB will disburse the loan <br />funds to the HCWUA. Once the parties and the State Controller have executed the contract, the <br />HCWUA should submit a written request for the loan funds to the CWCB staff. The CWCB will not <br />disburse the full $825,000 as a single disbursement. Rather, it will disburse the $504,000 to be deposited <br />into the escrow account and will disburse funds for the HCWUA to use for its legal and engineering <br />expenses related to setting up its augmentation plan (You mentioned on page 2 of your letter that these <br />expenses would be slightly over $205,000). The HCWUA will need to provide the CWCB with <br />documentation of these expenses. The CWCB will not disburse the remaining funds, which the HCWUA <br />will use to pay Reid Cattle Company and Smith Cattle, Inc. and for additional expenses related to setting <br />up the augmentation plan, until those payments are due or expenses are incurred. <br /> <br />Introductory Paragraph: We have to refer to the HCWUA as both the Borrower and the Contractor <br />because of the Special Provisions, which the State Fiscal Rules require to be included in all contracts <br />with the state. While we cannot revise the language in the Special Provisions, I have added Paragraph <br />C.IO to the contractto set forth our understanding of the applicability of those provisions to the <br />HCWUA. <br /> <br />Paragraph A.2: Does the HCWUA own any physical structures in connection with the use of its water <br />rights, such as a diversion structure or headgate? The insurance requirement is a standard CWCB <br />contract provision, but if the HCWUA does not own or operate any physical structures, we may be able <br />to revise or remove this provision. The insurance requirement is not only related to impairment of <br />collateral, but 'also goes to the borrower's financial well-being and ability to repay the loan should a <br />mishap occur for which it could incur liability. <br /> <br />Paragraph A.3.e: The debt service reserve fund requirement is a standard contract provision for all <br />CWCB loans. Because the CWCB would have no access to or security interest in the reserve fund, we <br />do not view it as a form of collateral. However, in light of your comment, I have revised ~ A.9.d to <br />