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On July 10, 2003 WESTERN submilted its second loan applic�tion for $5.88 million. A copy of <br />this lpplication is attached. <br />Interest Rate <br />Because of the unusuat sifuation of loaning moncy to a fedcral entity, the Board began d�sel�ssing <br />the i�iterest rate issues surroti�idinb a loan to �VESTERN ici Jt�ly I999. The Board decided that <br />becatise federal po�ver customers comprise m�u�icipalities and niral customers the most <br />appropriate interest rate woald be a blend of the Board's Agricultural and Nlunicipal Vliddle- <br />Income rate. <br />[n 2001, �vhen the loan �vas authorired, the Agriculhirll rate was 3.5 percent and the Vlunicipal <br />�Iidd[e-Income rate was 5.5 percent. Simply bltnding these two ratcs resulted in an intcrest rate <br />of 4.5 percent that ���as applied to the loan. <br />(f this samc r�tionale is apptied to this loan applicat+on, the interest rate �vill be 3.25 percent (a <br />blend of our 2.5 percent agricultural r�tc and our 4 perccnt 1�tunicipat Viiddle-income xate). <br />Collateral and Other'ferms <br />The loail to W�STERN �vill be; secured by the full faith and crcdit of Us�ited States government <br />pursuant to 31 U.S.C.A. 3123, that pledbes that the federal governn�ent will pay its obiigations <br />on public deE�t. <br />Thc terni of the loan will be 30-years. Iilterest �vill begin accruing from the date the fitn�ls are <br />disbursed, but no principal paymenl will bc due unti[ 2012. lt was agreed that beginnin� <br />repayment in 2�12 �vould minimire the impact of repayment on powcr customers. The accruecl <br />interest �vould be addeci to the principal and the loan amortired aver 30-years starting in 20t2. <br />WESTERN may elect to repay the C�VCB in one lump sum at any time or make periodic <br />payments. Therc woutd be no prepayment pcnaltics. <br />"I'he partics agrecd during the process of drafting and passing the federal authorization that a <br />?rovision shouid be included in future contracts that would allow WESTERN to elect to r1o1 <br />remit a loan paymcnt for the purpose of minimizinb the impact of loan repayme�tt on SLCA-ZP <br />�ates. This provision shall specify a date by which WESTERN m�ist noti!'y the C�VCB of its <br />intcnt to not remit a loan payment ancl shall provide that interest shail continue to accnre. Latc <br />char�es would not apply. <br />'The contract m�ist also recognize that �VESTERN's payments are contingent t�pon fecieral fi�nds <br />heing appropriated, bitdgeted, and otherwise madc avaifable. This is standard term in all fedcral <br />contracts. A�lon-payment �vot�ld not reduce or eliminate WESTBR�I's aUligations to repay <br />principal a�td interest. <br />�Recommendation <br />�Ve rccommcnd approving a loan from the Colorado Ri��er Recovcry Program Loan Fund in an <br />amount up to �5.9338 (�5.88 enil[ion for project costs and �58,800 for the onc; percent loan <br />origination fee in accordance with CWCB Loan Policy #16) to the Western Area Po�ver <br />.Administration for the purpose of constructing capital projects tinder th� Upper Colorado anci <br />San Juan Endan.gered Fislt Recovec•y Pro�ams in accordancc with PL 105-392. <br />"I'he lo�n shall be securecl by the f'u(1 faith and credit of Uititcd States government pursuant to 31 <br />U.S.C. A. 3123. <br />Colorado Waterl:oascrvation Board <br />C'loed Protc�zion •«'alcr Project Planning aad �ipancing • Str�am and 1_tikc Protection <br />Wat� Supply Protcction • ConsNrvation Planning <br />