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r <br />STATE OF COLORADO <br />Colorado Water Conservation Board <br />Department of Natural Resources <br />1313 Sherman Street, Room 721 <br />Denver, Colorado 80203 <br />Phone: (303) 866-3441 <br />FAX: (303) 866-4474 <br />www.cwcb.state.co.us <br />MEMORANDUM <br />TO: Colorado Water Conservation Board Members <br />FROM: Bruce Johnson, P.E. <br />Mike Serlet, P.E., Chief <br />Water Supply Planning and Finance Section <br />DATE: January 12, 2007 <br />Bill Ritter, Jr. <br />Govemor <br />Harris D. Sherman <br />Executive Director <br />Rod Kuharich <br />CWCB Director <br />Dan McAuliffe <br />Deputy Director <br />SUBJECT: Consent Agenda Item 2a, January 23-24, 2006 Board Meeting <br />Water Supply Planning and Finance Section — Changes to Existing <br />Loan Authorizations <br />Penrose Water District — Water Rights Purchase and Raw Water <br />Pipeline <br />Introduction <br />On November 13, 2006, the Board approved a loan of $8,844,570, to the Penrose Water <br />District, acting by and through its Water District Water Activity Enterprise, to purchase water <br />rights, construct a raw water pipeline and enlarge Brush Hollow Reservoir. The District is now <br />requesting that the Board re-consider approval Condition #3 that states: <br />"Prior to execution of a State Contract, evidence shall be provided that a CWCB loan <br />reserve fund has been established within the Enterprise, in the amount of $461,334." <br />In place of establishing a fully funded reserve fund at the onset of the 3-year project, the District is <br />requesting that the reserve fund be allowed to accumulate over the standard 10-year time frame, <br />similar to other CWCB loans. <br />Backaround <br />Per Sec. 2.5.3 of the adopted CWCB Water Project Loan Guidelines (2006), borrowers are <br />required to accumulate the equivalent of one annual loan payment in a loan reserve fund, over <br />the first 10 years of loan repayment. (i.e. place in reserve 10% of the annual loan payment for <br />each of the first 10 years of the loan.) After 10 years, the reserve fund with one full annual <br />payment is maintained for the life of the loan. <br />In their loan application and Loan Feasibility Study, the District proposed establishing the <br />reserve fund up front, as opposed to increasing future water rates to cover the extra 10% <br />obligation. CWCB staff responded by reflecting the District's request in the adopted Condition <br />#3. Following the CWCB loan approval, in subsequent District and Enterprise 2007 budget <br />Flood Protection • Water Supply Planning and Finance • Stream and Lake Protection <br />Water Supply Protection • Conservation and Drought P1aiuluig <br />