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MEMO <br /> COLORADO WATER CONSERVATION BOARD <br /> Water Supply Planning and Finance Section <br /> Date: 4/7/2005 <br /> To: Mike Serlet, PE, Section Chief <br /> Cc: Chad Henderson, Contracts Administrator <br /> From: Kirk Russell, PEA <br /> RE: BULL CREEK RESERVOIR, CANAL AND POWER COMPANY <br /> Bull Creek Reservoir Nos. 1, 2 & 4 Rehabilitation Project Loan <br /> Project Summary <br /> 1) Issue: Bull Creek violated the Amended Stipulation and Agreement(Agreement)dated October 1, <br /> 2004. <br /> Concern: The violation threatens the value of the collateral used to secure the loan. <br /> Discussion and Status: <br /> CWCB will not enter into a contract with the Company since the Company has failed to comply <br /> with the amended Agreement.This Agreement between the State Engineers Office (SEO) and the <br /> Company must be rectified prior to the CWCB Loan contract execution. It is our understanding that <br /> the Agreement has a schedule of deadlines,which have not been met.The schedule is critical to <br /> CWCB since it provides some assurance that the Project can be completed by the October 31, 2005 <br /> deadline. A large concern continues to be the collateral used to secure this loan.The collateral used <br /> for this contract is Reservoir No.4. If funds are disbursed to the Company and the water rights in <br /> the reservoir are abandoned, CWCB may not have the protection necessary to secure the loan. It is <br /> our understanding that if the Company does not repair the dam, it is likely to result in a zero gage <br /> height restriction by the SEO. <br /> 2) Issue: State Engineer's review indicates engineering plans are incomplete. <br /> Concern: Loan disbursements to a project that has a significant chance of failing to meet a terminal <br /> deadline of October 31,2005,may result in a loan repayment to CWCB without a reservoir to <br /> support repayment. <br /> Discussion and Status: <br /> CWCB has maintained communication with the SEO during the design/review effort. On multiple <br /> occasions CWCB has voiced concerns regarding the ability of the Company's engineer,Water <br /> Resource Consultants(Consultant)to deliver construction documents that can be approved by the <br /> SEO. CWCB has recently received the SEO review comments dated March 28,2005. The <br /> comments indicate the documents contain"many deficiencies". It is our opinion that the documents <br /> fall short of the level of completeness necessary to meet the construction deadline imposed by the <br /> Agreement. <br />