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1 <br /> 13 <br /> 1 Construction Fund Management <br /> 1 <br /> Chapter 1 <br /> 1 <br /> Background <br /> 1 <br /> The Colorado Water Conservation Board's Construction Fund Loan Program <br /> (Program)was established by the General Assembly in 1971. This program provides <br /> loans for projects that will either increase the beneficial consumptive use of <br /> Colorado's undeveloped compact-entitled waters and/or repair or rehabilitate existing <br /> 1 water storage and delivery systems. The first project funded through this program <br /> was completed in 1977. <br /> Overall Management of the Program <br /> Needs Improvement <br /> Through our review we concluded that the Program needs to make operational <br /> improvements to ensure that state resources are being used effectively and efficiently. <br /> Problems exist in the Program's loan review, approval, billing, and collection <br /> processes. Further, we found problems in the areas of fiscal management, <br /> performance measurement, accounting, statutory compliance, contracting, and <br /> recordkeeping. Our findings related to each of these areas are discussed in detail <br /> later in the report. <br /> 1 Since the Program started,the Board has approved loans totaling about$233 million <br /> for 360 projects and feasibility studies. However, we observed that many of these <br /> ' projects were never built at all or were built years after they were authorized at a <br /> much higher cost. In fact,we found that about one in four projects authorized by the <br /> Board has never been started. In addition,we found an instance where the Board had <br /> 1 approved a loan in 1987 for $412,500 but had to increase the loan amount to <br /> $787,500 in 1998 because delays in the construction process led to increased project <br /> 1 costs. <br /> We are also concerned about approval of projects that may not be consistent with <br /> 1 statutory intent. As stated above,statutes limit the use of Program funds to two types <br /> of water projects. We identified $9 million in projects that were funded (i.e., <br /> refinancing of existing U.S.Bureau of Reclamation loans)even though they maybe <br /> 1 inconsistent with these requirements. Statutes also require that project sponsors <br /> 1 <br />