Report of State Auditor 1999 - Laserfiche WebLink

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1 8 Evaluation of Actions Taken on Colorado Water Conservation Board as of December 1999 1 Recommendation No. 3 (September 1998): The Water Conservation Board should require applicants to provide evidence that they have explored other means of financing before approving the use of Construction Fund monies for a project. Water Conservation Board's Report Response (September 1998): Agree. The CWCB staff will insist upon evidence that applicants have explored other I g p P sources of funding in every loan application considered by the Board beginning immediately. The use of this information is expected to raise implementation issues that deserve further I consideration by the Board and interested constituencies (e.g., what is the right balance between a borrower's need for state assistance and the assurance of timely repayment?). I There is no statutory requirement that the CWCB be a lender of last resort, although the statutes do provide that all other means offrnancing shall be thoroughly explored before use is made offund moneys[Section 37-60-121(b)(V),C.R.S.]. In order to protect the long-term integrity of the Construction Fund, the Board tries to maintain a balance between the more risky loans for borrowers that would not otherwise be able to borrow enough money to develop an adequate water supply,and investments in the more financially sound borrowers. In setting priorities, the Board's policy has been to give preference to projects that include other funding sources. Requiring the Fund to function only as a"lender of last resort" could undermine its integrity. Implementation Date: August 1998. 1 Water Conservation Board's Update (October 1999): I Implemented. The CWCB has added to its Construction Fund loan application form the requirement that applicants provide evidence they have explored alternative funding sources. I Office of the State Auditor's Evaluation of Actions Taken (December 1999): 1 In progress. In its loan application, the CWCB asks applicants to provide a "brief 1 description"of other financing sources that have been or will be explored. This requirement, however, was in place at the time of the audit. To determine whether loan applicants are doing a better job of complying with the requirement since the audit, we reviewed nine applications submitted to the CWCB between June 1998 and September 1999. We found a number of problems with the responses provided by applicants,including missing or vague information and a general lack of documentation to substantiate the applicants' claims. We