C150340 Attorny Opinion Letter

• Contract/PO #: CT2015-056
• Contract/PO #: C150340
• Contractor Name: Ridgway, Town of
• Contract Type: Loan
• Water District: 68
• County: Ouray
• Loan Projects - Doc Type: Contract Documents

KUTAK ROCK LLP
Jennifer Coates,Town Manager
October 29,2013
for the Water Enterprise Fund, and have assumed the accuracy of such financial information
without undertaking to verify the same by any independent investigation. Such financial
information reflects that the Net Revenue for the Water Enterprise Fund for the twelve-month
period ending April 30, 2013 was $118,619.88 (based upon Gross Revenue for such period of
$376,848.42 less Operation and Maintenance Expenses of$258,228.54 for such period).
Parity Lien Loans
The Promissory Note issued pursuant to the Loan Contract constitutes an irrevocable and
first lien upon the Net Revenue, but not necessarily an exclusive first lien. The Town has
outstanding Parity Lien Loans which are secured by the Net Revenue and which generally
consist of the following:
(i) a loan from the State of Colorado (for the benefit of the Department of Natural
Resources - Colorado Water Conservation Board) executed on or about January 15, 1980 and
identified as Contract No. C153321, such loan does not contain a test regarding the ability of the
Town to issue Parity Lien Obligations and provides for level annual payments of$7,570.50.
(ii) an Energy and Mineral Impact Assistance Program Loan from the State of Colorado
(for the benefit of the Department of Local Affairs) executed on or about June 29, 2006 and
identified as Contract No. FO6MSL5394, such loan does not contain a test regarding the ability
of the Town to issue Parity Lien Obligations and provides for level annual payments of
$9,795.00.
(iii) a loan from the Colorado Water Resources and Power Development Authority,
represented by a Loan Agreement dated as of October 19, 2009 and a Governmental Agency
Bond, such loan does contain a test regarding the ability of the Town to issue Parity Lien
Obligations(set forth below) and provides for level annual payments of$22,500.00.
The Town has represented that it has no outstanding Subordinate Lien Obligations at this
time.
Parity Lien Test
The Parity Lien Loans identified in paragraphs (i) and (ii) in the preceding section titled
"Parity Lien Loans" do not contain requirements regarding the issuance of additional Parity
Obligations; however, the Parity Lien Loan identified in paragraph (iii) establishes the following
test:
The [Town] covenants that it will not issue any obligations payable out of, or secured by
a lien or charge on the [Net Revenue] that is on a parity with the lien or charge of this
Loan Agreement on the [Net Revenue], unless the [Town] certifies to the Authority that
Net Revenue (as defined in Paragraph (3) of Exhibit A to this Loan Agreement) for any
12 consecutive months out of the 18 months preceding the month in which such
obligations are to be issued was at least equal to the sum of (a) 120% of the maximum
4811-9916-3670.1