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<br />. <br /> <br />. <br /> <br />. <br /> <br />Grand County interests not only need a loan but it should be viewed <br />as a bridge loan, since no repayment capability currently is <br />available. Instead, Grand County believes that it will have <br />available, from the Colorado River Water Conservation District, <br />funds to be realized from the District's payments from Denver for <br />water deliveries from the proposed Wolford Mountain Reservoir. <br />Such revenues will not occur for at least four years, and might not <br />be available at all. Thus, the Board faces an immense security <br />risk in financing the Grand County portion. That risk can be <br />offset by using the water supply as security. <br /> <br />In my discussions with the proponents, I suggested that the <br />Board take the water shares in the new company as security. In <br />that regard, the representative from Denver indicated that the <br />Board and the Denver Water Department should be able to execute an <br />agreement calling for transport of the Board's water to the Denver <br />area should there be a default. I would pursue that course if the <br />project proceeds. <br /> <br />Prooosed Pro;ect <br /> <br />The allocations of the water supply and purchase costs are <br />shown in tables 1 and 2. The yield is estimated to be 2120 acre- <br />feet and the purchase price is $8.9 million, reduced by $1 million <br />if county permits are provided. <br /> <br />Recommendation <br /> <br />Despite all of the hurdles to be overcome, I recommend that <br />the Board forward the Clinton Reservoir project to the General <br />Assembly for authorization with conditions. I am convinced that <br />the opportunity is worth the risks. Among the conditions are: <br />protection of the Board's instream flow decrees, effective security <br />arrangements involving the water supply shares, an operating <br />agreement among the appropriate parties to accomplish the delivery <br />and storage arrangements and exchanges, and separate loan <br />arrangements with Grand and Summit County entities. <br /> <br />The Grand County interests have requested a loan of $3.265 <br />million for 30 years and a five-year deferral of repayments. I <br />recommend that approach at a 5 percent interest rate. (See <br />Attachment I). <br /> <br />The Summit County portion is for $5.635 million for 10 years <br />at a 5 percent interest rate. I recommend a loan but at the prime <br />interest rate of about 6 1/2 percent because the ski companies are <br />the primary beneficiaries of the new water. (See Attachment 2). <br /> <br />DWW/mgm <br />Attachments <br /> <br />mgm161. rpt <br /> <br />2 <br />