C150036 Approval Letter

• Contract/PO #: C150036
• Contractor Name: Weld County Tri Area Sanitation District
• Contract Type: Loan
• Water District: 2
• County: Weld
• Bill Number: HB 00-1419
• Loan Projects - Doc Type: Approval Letter

DISCUSSION

Paragraph (2) of Section 1 of SB 00-1419 allows that loans made by the Colorado Water
Conservation Board may be increased or decreased as may be justified by "reasons of ordinary
fluctuations in construction costs as indicated by the engineering cost indices applicable to the types
of construction required for each project or as may be justified by reason of changes in the plans for
a project due to differing or unforeseen site conditions, errors, or omissions in the plans and
specifications, changes instituted by regulatory agencies, or changes in material quantities beyond
contract limits". Unforeseen site conditions, design modifications, and additional work not
programmed in the original cost estimate of the project, has required work that increases the total
estimated cost of the project and therefore justifies District's requested $502,400 increased loan
request.

FINANCIAL/COLLATERAL

The amended loan amount for the District will be $2,002,400, at an interest rate of 5.00%
for 30-years. Their new annual payment will be $130,259. The District's current loan of
$1,500,000 has an annual payment of $97,577.

The District's Stormwater Enterprise Fund, established in1999, is the entity with the primary
responsibility for repayment of the project loan. The Stormwater Enterprise currently assesses a
service charge of $6.00 per month on each of the existing 1810 taps in the District. The District
Board in January of 2004 is planning to increase their impact fees by resolution from $650 to
$1,000 and their service charge from $6.00 to $7.00. Additionally, the $215,500 loan received
from DOLA for the project has been converted to a grant and is no longer a long term debt for the
District.

The District has submitted a revised 32-year cash flow projection for all revenues and
expenses of the Stormwater Enterprise through the period of CWCB debt retirement. The
projection assumes 206 new taps per year over the next 8 years with no new taps thereafter, which is
consistent with current growth rates. The revised cash flow analysis projection indicates that the
project is financially feasible.

STAFF RECOMMENDATIONS:

Staff recommends that the Board approve an increase of $502,400 from the Severance Tax
Trust Fund Perpetual Base Account. The additional $502,400 increment of funding would be for
30-years at a lending rate of 5.00%. The total funding level for this project would amount to
$2,002,400, or 75% of the total project costs. As collateral for the loan, the District pledges
assessment revenues backed by a rate covenant and annual financial reporting.

Staff further recommends that the following conditions be met prior to entering into a
contract for the additional loan increment of funding:

1. The loan increase shall be contingent upon all standard contracting provisions of the
Colorado Water Conservation Board.

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