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1 <br /> Report of The Colorado State Auditor 19 <br /> individual financial characteristics of borrowers and applying this definition consistently among loan <br /> applicants. <br /> Water Conservation Board's Report Response <br /> (September 1998): <br /> Agree. CWCB staff will develop a table that shows, depending upon the financial <br /> characteristics of each type of borrower, the range and type of collateral that would be <br /> "sufficient" for each category. The staff will present the proposed policy for consideration <br /> by the Board by June 30, 1999. There has been only one real default on a Construction Fund <br /> loan to date and that involved a project added by the General Assembly during the legislative <br /> process. The General Assembly also added and later forgave four project loans for oil shale <br /> projects. <br /> Implementation Date: June 1999. <br /> Water Conservation Board's Update (October 1999): <br /> Implemented. The CWCB Board adopted a policy titled Collateral,for Construction Fund <br /> and Severance Tax Perpetual Base Account Project Loans at its September 27, 1999,Board <br /> meeting that addresses the auditor's project collateral concerns and recommendations. <br /> ' <br /> Office of the State Auditor's Eva luation of Actions Taken <br /> (December 1999): <br /> In progress. The CWCB developed a collateral policy that is based on the type of entity <br /> applying for project funding as well as the entity's creditworthiness,repayment capacity,and <br /> available assets. This policy became effective October 1, 1999. Our review of the policy <br /> found that it is comprehensive and appears to address our recommendation. However, <br /> because the policy had been implemented only recently, we were unable to evaluate its use <br /> or effectiveness. <br /> Ensure Security Documents Are Filed in a Timely Manner <br /> Board staff are required to file deeds of trust and security agreements(i.e.,UCC-1 statements)when <br /> a borrower pledges certain types of collateral for repayment of a loan. The purpose of filing these <br /> 1 documents is to provide public notice that a borrower has pledged its property as collateral. At the <br /> time of the 1998 audit we found the Board did not have a perfected security interest in collateral for <br /> loans totaling almost$12 million. More specifically,when we reviewed 68 contracts,we found there <br /> 1 <br /> 1 <br />