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Chphan Wel)s nf Wiggins L1.0 -• f17C Fbrgivcn�ss <br />1u�y l, 2Ul 1 <br />F's►ge 3 af d <br />Agenda Itc.�rn 27 <br />• In. 2009 OWW sells assets paid for with CWCB loan fu�ids, but not sec;ured by the l�an <br />cantract, to cover the $140,000 zn engineering an.d legal fees. <br />•�r�m 2009 to presei�t CWC�3 and OWW have bee�� working tog�ther to develop a solutipn <br />to address OWW's situation and outstanding debt. <br />Discussion <br />The past eight years for OVITW has been a time consuming, expensive, and an emotional endeavor, <br />with less than desirabie results, as articulated in Mr. Hrun.tz's attaclied letter. CWCB in 2003 <br />assumed the risk of providing loan funds to construet an. augmentation project without frst having <br />aa�. approved water caurt augrntntation plan. It is diftieult, however, to forecast any water court <br />outcome and in most cases funding is needed in advancc to finance necessary camponents af the <br />borrower's overall application process. <br />For the past 2 years C3WW has actively tried to sell its augmentatton praiect in an effart to pay of#' <br />its debt with C'WCB. It appears that negotiatians with potential buyers are compiicated �y OWV4''s <br />contractual arrangement with C;VIiCB and the potential for OWW n�t being able to meet its <br />obligatian. Buyers arc �waiting to see if OWW defaults, allowing CWCB to assume ownership and <br />sell the asset. at a reduced a�naunt. It has noi been staff's position ta move in the direction of <br />default, but to work with OWW in developin� a long term solution t17at works in the hest interest af <br />botl� parties. <br />It is �WW's current position to adhere to ihe terms of its loan contract rvith CWCB, znake their <br />required annual payment of $50,Q74.65, and to re-�valuate �ts position under a revised set of <br />conditions and param�ters in t.hc future. It's (}W W's opinion that its abi.lity to obt�in an approved <br />augmentation plan will improve, based on the lag time that ha..� occurred since its wells have been <br />tw-ned off.. <br />CVvCB's collateral positio�� on the original loan consists only of recorded easements necessary to <br />complete the work (i.e. pipeline, recharge ponds, wells, etc.). 'I'herefore, it is staff opinion that it is <br />in the best interest of CWCB io work with OWW, given our current callateral position and the <br />currenl ecanomic envi:roa�ment. 1n forgiving $56,872.44 in I1�C, CWC�3 wili receive 10 shares of <br />Rivezside Private Reservoir Rights and 1 share oi' Jack.son Private Reseivair Ri�,hts as additional <br />collateral, val.ued at $480,000 ($42k/share Riverside and $60K/share Jaekson}. Zfiis allows C:WCI3 <br />to substantialIy stren�;then its callaterai positian, while OWW commits to pay $95,739.28 in IDC <br />and make its an�aua) payment of SS50,474.65. If C)WW cioes not meet its amea�deci contractua3 <br />obligati.an, CV�'GB is in a mueh better �osition to reec�up its investm�nt in tlae Projeet. <br />Sta.f�'views the request by OWt� to rec�uce IDC; as an isc�lated, uniyue case, subject to the review <br />and approvaI c�f the Board, which cioes not grant any �xisti�3g or future borrc�wer this consideration. <br />• • <br />