Report of the State Auditor 1993

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6 Water Conservation Board Construction Fund Performance Audit-February 1993 Recovery of Feasibility Study Costs The Board determines if the project is viable before a project sponsor is loaned money. These decisions are made through feasibility studies. The Board usually pays 50 percent of the total feasibility study cost and the project sponsor pays the other 50 percent. The Board's cost of the feasibility study is added to the amount of the loan. The feasibility study costs, as well as project costs, are paid back over the period of the project loan. However, the Board does not seek recovery of its share of feasibility study costs when authorized projects are not constructed. According to a Board analysis, the Board expended more than $58,000 in feasibility study costs for five authorized projects that were eventually deauthorized over the past three years (1990- 1992). These projects did not go ahead because of a decision by the project sponsors. The Board believes that requiring reimbursement could discourage applications for financing from the Construction Fund. However, $58,000 is lost money [0 the Construction Fund. As a result, there is less money available for projects that are viable and needed. In the current fiscal environment, the Board should identify all opportunities to recover its costs to demonstrate.it is effectively managing the Construction Fund. The Board should develop and implement procedures which would recover its share of feasibility study costs for projects that are not constructed. Alternatives should be evaluated, including payback over a period of time. Colorado Water Conservation Board Response: Agree. The CWCB is in the process of revising its policy for recovery of the CWCB's share of feasibility study costs. However, the CWCB wants to preserve the option of funding selected feasibility studies on a non-reimbursable basis when those studies are determined by the CWCB to be necessary to the mission of the Construction Fund.