Memorandum Construction Fund Workshop item b

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Implementation Plan • We have outlined the following tasks as part of our implementation strategy: • Continue to require evidence that applicants have explored other sources of funding in every loan application considered by the Board. • Determine an acceptable balance of loans involving borrower's whose only source of funding is the CWCB and those capable of obtaining other funds. • Present implementation issues for consideration to the Board and interested constituencies beginning at the January 1999 meeting. • Consult with the water community to revise statutes as necessary [37-60-121(b) (V), CRS]. Discussion Given the required information regarding the investigation of other funding sources by the borrower is presented for the CWCB consideration, the question becomes, what does the Board do with it? What kind of evidence of alternative funding should be obtained? Our Loan Application specifically asks that the Borrower provide a brief narrative description of potential sources of funding(in addition to the CWCB) which have been explored or which will be • explored for the proposed project(Examples would be Banks, Rural Development, Colorado Water Resources and Power Development Authority, Colorado Division of Local Governments, etc.) Was the intent of the existing statute to make the CWCB the "lender of last resort" or was it to limit state funding to only those projects that have fewer financing options? Requiring the fund to function only as a"lender of last resort" could undermine its integrity. There is no statutory requirement that the CWCB be a lender of last resort, although the statutes do provide that all other means of financing shall be thoroughly explored before use is made of fund moneys [37-60-121(b) (V), CRS]. To what degree does the Board want to promote cooperative financing of Construction Fund projects? In order to protect the long-term integrity of the Construction Fund, the Board tries to maintain a balance between the more risky loans for borrowers that would not otherwise be able to borrow enough money to develop an adequate water supply, and investments in the more financially sound borrowers. Our marketing brochure for the Loan Program states that preference for Construction Fund low • interest loans will be given to those who find it difficult or impossible to obtain the needed funding elsewhere [page 1, bottom of column 2]. 2