Memorandum Construction Fund Workshop item b ‎(2)‎

• Board Meeting Date: 1/19/1999
• Description: Construction Fund Workshop item b January 27-28, 1999 Board Meeting W ater Project Construction Loan Program Alternative Funding Sources
• Board Meetings - Doc Type: Meeting

• Should the existing statute and/or the Guidelines be revised?
In setting priorities,the Board has given preference to projects that involve other cooperative funding
sources. The Guidelines indicate that, in general, Construction Fund loans will be utilized to
supplement those funds which could be made available to the project sponsor from other sources
[Section 1.3.2, Lending Policy, paragraph g,page 4].
The Guidelines also state that preference for funding will be given to those projects which are most
cost effective (low cost/ac.ft.), which demonstrate the greatest need for assistance in financing(low
median household income or high cost of alternative financing), and which best relate to the Board's
Long Range Plan [Section 1.3.2, Lending Policy, paragraph f, page 4].
Typically, a borrower will shop around for the best financing available. Depending on the timing
of a Borrower's alternative financing applications and subsequent approvals, alternative funding
may very well be approved after the CWCB loan is authorized. There is nothing the CWCB can
do about the outcome of a Borrower's other funding applications. Shopping for, and taking, the
best available financing is prudent business practice. The financially prudent Borrowers are the
type of Borrowers the CWCB prefers as customers.
Decisions regarding Alternative Funding Sources are linked to, and should be considered with, the
other topics of Credit Worthiness and Delinquency/Default Rates that are also scheduled to be
• discussed at the workshop.
Recommendation
We recommend that the Board continue to evaluate alternative funding information regarding loan
applications as they have in the past. We also recommend the Board provide feedback to the staff
on the issue of alternative funding sources during a brief discussion at the January 1999
meeting/workshop and through written comments and continued discussion.
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