Memorandum Construction Fund Workshop item f

• Board Meeting Date: 1/19/1999
• Description: Workshop item f January 27-28, 1999 Board Meeting Water Project Construction Loan Program Sufficiency of Collateral
• Board Meetings - Doc Type: Meeting

STATE OF COLORADO
Colorado Water Conservation Board
Department of Natural Resources •
1110 721 Centennial Building 1161,4
1313 Sherman Street zit;
Denver,Colorado 80203
Phone: [phone]
FAX: [phone]
Bill Owens
Governor
Greg E.Walcher
Executive Director,DNR
MEMORANDUM Peter H.Evans
Acting Director,CWCB
TO: Colorado Water Conservation Board Members
FROM: William P. Stanton and John Van Sciver
DATE: January 19, 1999
SUBJECT: Workshop Item f, January 27-28, 1999, Board Meeting -
Water Project Construction Loan Program—Sufficiency of Collateral
Introduction
• This memo provides the basis for the start of a discussion of the audit recommendation to
ensure collateral for loans adequately protect the State's interests in the event of a borrower's default
on its loan obligation. At the July 21, 1997 Board meeting,several questions were raised concerning
the way CWCB staff determines collateral requirements for loans. Staff presented this subject for
policy direction at the September 22-23, 1997 Board Meeting (Agenda Item 21c - "Collateral for
CWCB Loans"),but no action was taken. This memo provides a summary of law,policy,and practice
currently relied upon by staff when recommending collateral during the loan approval process.
Background
Recommendation#9 of the 1998 Construction Fund Performance Audit was that the Board
"should ensure its policies and practices for obtaining collateral for loans adequately protect the
state's interests in the event of a borrower's default on its loan obligation. This should include
specifically defining what constitutes sufficient collateral given the individual financial
characteristics of borrowers and applying this definition consistently among loan applicants.
CWCB Response: AGREE. CWCB staff will develop a table that shows, depending
upon the financial characteristics of each type of borrower, the range and type of collateral that
would be "sufficient" for each category. The staff will present the proposed policy for
consideration by the Board by June 30, 1999.
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