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Agenda Item 20a January 25, 1995 2 General Assembly, it should be done with the understanding that loan funds will be used to REFINANCE the company's cost in building the project. I visited the project in December 1994, and it is my opinion that the new diversion is well constructed, and has been built in accordance with the SCS plans and specifications provided to me by Pete Gallegos. Since the project is funded 50% by the ASCS, the company has the financial capability to repay the loan to the CWCB. The Ortiz Ditch Company is not incorporated in Colorado, and must become so prior to contracting with the CWCB. The Company has requested loan terms of 3 % for 10 years. However, a 3.5 % rate is appropriate for the relatively short 10 year term. (The CWCB used a 4% rate for 30 year term agricultural loans approved in November 1994. The 3.5 % rate is based on a declining yield curve, and would encourage the District to legally commit to the shorter 10 year repayment period.) STAFF RECOMMENDATION as Mailed to the BOARD: The staff recommends: 1. That a construction fund loan authorization in an amount of $15,000 be approved for the Ortiz Ditch Company, as the Company's cost share of the total project cost to rehabilitate the Ortiz Ditch diversion dam, and 2. That the financing terms shall be 3.5% annual percentage rate, for a duration of 30 years, and 3. That the loan may be used to REFINANCE project costs incurred prior to contracting with the State, only if approved by the Director of the Colorado Water Conservation Board, and 4. That loan approval shall be contingent upon the Ortiz Ditch Company becoming incorporated in the State of Colorado, and properly registered with the Secretary of State's Office, and ~ 5. That loan approval shall be contingent upon staff evaluation of the Company's financial condition and ability to pay, and upon all standard contracting provisions of the CWCB.