Report of State Auditor 1999

• Year: 1999
• Title: Report of the State Auditor
• CWCB Section: Finance
• Description: Evalation of Actions Taken on the 1998 Colorado Water Conservation Board Construction Fund Loan Program as of December 1999
• Publications - Doc Type: Tech Report

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Report of The Colorado State Auditor 11
Office of the State Auditor's Evaluation of Actions Taken
(December 1999):
In progress. In August 1999 the Board received an Attorney General's opinion related to
loans authorized for the purchase of water rights or existing wells. The Attorney General
concluded that"the CWCB acted lawfully in making those loans." While perhaps "lawful,"
loans made for the purchase of water rights and/or existing wells do not clearly fit the
statutory criterion of "increasing the beneficial use of Colorado's undeveloped water
resources," neither do they clearly meet the other statutory spending priorities.
The Board has a responsibility to demonstrate that the loans it authorizes meet statutory
intent. The Board needs to improve its documentation methods so that it can clearly show
that loans of this type do indeed meet statutory intent and/or seek statutory changes that
specifically authorize the use of funds for such purposes. Further, we still question the
appropriateness of the Board's decision to authorize loans for the purpose of refinancing �'
existing loans made by the United States Bureau of Land Reclamation. Again, it is
incumbent upon the Board to prove that refinancing an existing loan furthers the attainment
of existing statutory goals,or the Board should seek statutory changes that specifically allow ,
this practice.
Establish Time Limits for Use of Construction Fund Monies
Once a project loan is approved through the Program, monies in the Fund are earmarked for the
project and, therefore, are not available to finance other projects. If an authorized project is not
pursued,the Board and/or the General Assembly will deauthorize the funds,which allows the money
to be used for other projects. In the 1998 audit we found the Board did not always seek these
deauthorizations in a timely manner. We also found this to be the case for completed projects with
residual funds. For example, we identified about $181,000 in leftover funds that were still
authorized for projects that had been completed for some time. We also found that although the
Board had established time limits requiring construction to be completed within two years of the
signing of a contract, there was no time limit for starting construction in regard to the date of the
project's approval.
Recommendation No. 5 (September 1998):
The Water Conservation Board should establish re asonable time limits for project sponsors to use
monies authorized from the Construction Fund. The time limits should be based on the average time
needed to start a project. Upon expiration of the time limit, project deauthorization should be
automatically sought unless the Board specifically authorizes an extension. Also,the Board should
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