PROJ02106

• Contract/PO #: FS0063FX
• Contractor Name: Groundwater Appropriators of the South Platte
• Contract Type: Miscellaneous
• Water District: 0
• Loan Projects - Doc Type: Feasibility Study

Colorado Water Conservation Board

Department of Natural Resources

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

131// t;
STATE OF COLORADO

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June 23, 1999

Bill Owens
Governor

Greg E. Wakher
Executive Director, DNR

Peter H. Evans
Director, CWCB

Mr. Jack Odor, Manager
GASP
PO Box 974
Fort Morgan, CO 80701

RE:

$1.7M Loan Authorization
Sedgewick Augmentation Reservoir
HB 98-1189

Dear Jack,

I am writing in response to your letter of February 17, 1999 in which you indicate that GASP has
identified a preferred alternative for the above referenced reservoir. You also state that this
alternative was identified through continuing technical feasibility analysis of the original proposed
project, is in the same general location as the original proposed project, and witJ serve the same
purpose.

GASP has an existing loan authorization for $1.7 million from the Colorado Water Conservation
Board (CWCB) Construction Fund (HB 98-1189). This authorization may be used to construct the
preferred alternative, as identified in the feasibility study. However, the study will need to be
updated to include the specifics of this alternative, and submitted for staff review.

The Board memo for the GASP authorization specifies a 40-year loan and an effective return of
3%. The loan may be structured with a lower interest rate for the first 10 years, provided that the
total return to the CWCB is equivalent to (has the same net present value as) a 3% per annum
loan for 40 years. This provision would allow the CWCB staff to negotiate a loan contract with an
interest rate of 0% for the first 10 years, followed by an interest rate for the remaining 30 years of
approximately 4.4%. (This combination of rates is sufficient to provide a 3% effective return over
the full 40-year duration of the loan.) It may also be possible to structure the loan as "interest only"
payments for 40 years, followed by a one-time balloon payment of $1.7 million. This would most
likely require a sinking fund account to make the final balloon payment. The CWCB Staff would
need to seek Board approval before proceeding with the interest only financing proposal.

o n an Sciver, P.E.
Project Planning and Construction Section
Colorado Water Conservation Board

Attachments: HB 98.1198 page 2, Board Memo March 10,1998 Page 4.
CC: Mike Serlel, Bill Green, Jan lllian

C:1WP51IProject-New/Gasp Letter 699