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

Report of The Colorado State Auditor 15
Although the policy was not effective until October 1999, we reviewed the eight projects
authorized by the General Assembly in Fiscal Year 1999 to determine if the Board had
discontinued its practice of authorizing projects before a completed feasibility study was
received. We found that seven of the eight projects did have a completed feasibility study
before authorization. The remaining project's authorization was contingent upon the
j completion of the feasibility study. We also found that in all cases project sponsors provided
the information required by the Guidelines and that this information was sufficient to assess
the project's benefit and the applicant's ability to pay its loan obligations.
Identify and Begin Collection of Payable Feasibility Study Loans
In order to encourage entities to undertake water projects,the Board sometimes loans entities money
for the purpose of conducting a feasibility study. Prior to 1993, contracts required entities that
received feasibility study loans to pay them back if the project was started within ten years. If the
project did not begin within the ten years, repayment was not required. At the time of the 1998
audit,we identified seven cases where the Board had no information about whether feasibility study
loan recipients had started their projects and an eighth case where repayment of a$42,000 feasibility
study loan should have begun in 1996, but no payments had ever been requested or received.
( :
7 (September 1998
Recommendation No. p )
The Water Conservation Board should identify all feasibility study loans made before 1993 in order
to determine whether these loans are payable under the ten-year clause or whether the loan has
attained grant status. If payable loans are identified, the Board should contact the borrowers to
inform them of the obligation and make every effort to collect the amount due plus interest, if
possible.
Water Conservation Board's Report Response
r (September 1998):
Agree. This process is in progress and the CWCB staff will identify and initiate collection
of any unpaid obligations by June 30, 1999.
This requires not only that CWCB staff determine whether the project was constructed but
also whether the funding agreement provides for the collection of interest. Some feasibility
studies included more than one project,which will make it difficult to establish the amount
of the repayment if some of the projects are not completed.
It may not be feasible to collect interest curing the study period. In most cases prior to 1994,
the Board's policies for implementing tf e Construction Fund Loan Program did not include
I