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Staff discussed other alternatives with the Hills in addition to the recommended proposal, <br />including a complete or partial pay down of the CWCB loan. The Hills insisted that if the <br />CWCB required full payment of the loan from the conservation easement proceeds, they would <br />have to carry a large balance with the Bank at their current 9% interest rate, thereby making the <br />entire conservation easement sale financially infeasible. If the Hills were to make a partial <br />principal payment, they would still have to carry a small balance on the Bank loan, and the Bank <br />would keep a first-position lien on both Hill properties. Staff recommendation is a proposal that <br />allows the conservation easement sale to occur, provides excellent collateral for the CWCB loan, <br />and requires accelerated repayment by the Hills. <br />Staff Recommendation <br />Staff recommends that the Board approve subordinating CWCB's interest in the Ranch to the <br />DOW's conservation easement, and to increase the collateral for the loan with 1) a first-position <br />lien on the Gore Pass Ranch, including its water rights; 2) a first-position lien on the Hill's 40- <br />acre Olathe property; and 3) a lien on any future property that the Hills purchase to defer taxes <br />from the sale of the conservation easement. In addition, staff recommends as a condition of <br />approval that the Hills agree to continue to market the Gore Pass Ranch for sale in good faith. <br />Finally, staff recommends amending the terms of the loan from 30 years at 2.5% per annum to <br />10 years at 2.0% per annum, as permitted by Financial Policy #7 (Interest Rates). <br />4 <br />