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Appendix I Overview of Relevant Funding Programs 4.5 percent for municipal project loans as of January 2004; rates for any loan under this program are slightly lower for 10- or 20-year loan terms (Serlet 2004). A 1 percent loan service fee is applied to all loans. Projects that are determined to be technically and financially feasible by CWCB are recommended to the Colorado General Assembly for funding through the annual Construction Fund bill. On average, around $40 million is loaned through the CWCB Construction Fund each year. Any project over $50 million requires approval by the state legislature, while any project below the $50 million threshold only requires Board approval. Each year, about $4 million is set aside from interest generated by the Construction Fund to be used for non-reimbursable grants rather than loans. For a project to be eligible for a grant, it must either have a statewide impact or importance, or it must be designed to either answer questions of statewide water issues or show significant potential for receiving funding through CWCB loan programs. 2 Fish and Wildlife Mitiqation Fund This fund was created in 1987 to address the environmental impact of water facilities. Each year, unreserved cash from the CWCB Construction Fund may be transferred to the Fish and Wildlife Mitigation Fund in order to maintain a fund balance of $5 million. Individual projects may receive a maximum of 5 percent of total construction costs from Fish and Wildlife Mitigation Fund awards to be used for dedicated mitigation purposes.3 Around $3 to $4 million in total has been funded for environmental purposes through the Construction Fund, mainly for the benefit of endangered species (Serlet 2004). Severance Tax Trust Fund Perpetual Base Accounf CWCB also administers another major fund for Colorado water resources, called the Severance Tax Trust Fund Perpetual Base Account. The Account was created in 1995 from Severance Tax receipts credited to the Severance Tax Trust Fund. The Account provides low interest loans to water users in the development of water resource projects through a process almost identical to the Construction Fund. Sources of revenue are from the return of principal and interest on the outstanding loans, interest earned on the cash balance of the fund through investments by the State Treasurer, and annual Severance Tax receipts (CWCB Kiosk 2003). As of January 2004, the Fund's value was at about $80 million, and about $10 million is awarded from the Fund each year. About $70 million in total awards have been loaned to applicants since the creation of the account (Serlet 2004). These loans require annual approval by the State General Assembly, and no grants are awarded. In Colorado, severance tax is collected from the producers of gas, oil, coal, metals, and molybdenum, and the proceeds are deposited into a State Severance Tax Trust Fund. About $60 million of revenue, on average, is generated in this fashion each year (Serlet 2004). One- quarter of this revenue is dedicated to the Severance Tax Trust Fund Perpetual Base Account. Funds from both the CWCB Construction Fund and the Severance Tax Trust Fund Perpetual Base Account are awarded with a preference for those projects that are most cost-effective, demonstrate the greatest need for assistance in financing, and that best relate to the Board's Long Range PIan.4 Preference is also given to projects that increase the beneficial consumptive use of certain undeveloped supplies and projects that involve repair, rehabilitation, and management of existing water infrastructure and support systems. 5 Colorado Water Resources and Power Development Authority A more recently created state agency in Colorado of _ importance to water development ~~i~~~~ financing is the CWRPDA. CWRPDA ,~~'~ I was created in 1981 by the Colorado '~,.e~~~-~~~~%'~ General Assembly to assist water ~ and wastewater utilities in financing water projects. A nine-member board of directors provides policy direction for the Authority, with each member representing one of the eight major river basins and the City and County of Denver. Each board member is appointed by the governor and confirmed by the Colorado Senate. z CWCB Policy Number 14. 3 Award recipients must pay the first 5 percent of mitigation costs and any costs above the next 5 percent increment, which are covered by the award. ~~ 4 CWCB Policy Number 12. 5 Sec. 37-60-121(1)(b)(I) and (II) of Colorado Revised Statutes (CRS). ~J~~a Statew~itle Water Supply Inii'iative S:\REPORTWPPENDICESWPPENDIX I FILESWPPENDIX I OVERVIEW OF RELEVANT FUNDING PROGRAMS.DOC