Report of State Auditor 1998 - Laserfiche WebLink

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I 22 Construction Fund Loan Program Performance Audit-September 1998 states. Undeveloped compact-entitled waters are those waters legally I available to Colorado but not currently in use. • The balance of the Fund is devoted to projects which repair and/or rehabilitate existing water storage and delivery systems,maintain the State's satellite monitoring system,or promote efficient management and operation of agricultural and multipurpose water systems. The Board,with approval of the General Assembly, authorizes loans for a variety of projects that are important to water conservation in Colorado. However, it is not always clear that these projects are consistent with statutory spending priorities. For example, over its history, the Board has approved nine loans totaling $9 million to refinance existing loans from the United States Bureau of Reclamation. These projects were originally constructed with loans from the federal government and were subsequently refinanced to lower the project sponsor's interest rate. Refinancing an 1 existing loan may not effect the consumptive benefit of Colorado waters or provide funding for the repair or rehabilitation of existing infrastructure. Other Loans May Be Questionable Given Statutory Funding Parameters �I There are additional projects that have received legislative funding where it is unclear `! whether statutory funding parameters were met. For example, we found loans that financed the purchase of existing water facilities(e.g.,wells)and others that financed the purchase of water rights. These projects consisted of changing ownership of an existing asset and did not involve construction. We could not determine whether the purchase of an existing asset would result in an increase in the consumptive benefit derived from undeveloped waters. The projects we found that were questionable included: • In 1997 the Board approved a loan for $900,000 to purchase five existing wells,the water rights associated with those wells,and the surrounding land. • In 1996 and 1997 the Board approved two loans for$600,000 and$500,000, respectively, to purchase water rights. • In 1995 the Board approved a loan for$3 million to purchase existing wells. I The Board justifies loans like these through a clause in its funding policy that states "when no project is proposed, the cost of acquisition of water rights is eligible for funding if the purchase is to satisfy an existing need or shortage, and not for future I I