PUB00085

• Year: 1999
• Title: Construction Fund Annual Report 1999
• CWCB Section: Finance
• Author: CWCB
• Description: Construction Fund Annual Report 1999
• Publications - Doc Type: CF Annual Report

1. From 1981 through 1992, about two-thirds of the Board's cost of the projects
recommended were for projects which were expected to increase the beneficial
consumptive use of Colorado's compact entitlement.

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program have been in compliance with those criteria, In particular, the Board has taken
the fo\1owing steps:

2. From 1981 through 1994, no applications for flood control projects were accepted
by the Board.

3. No applications for domestic water treatment and distribution systems have been
accepted by the Board since March, 1981.

4. A\1 feasibility studies initiated by the Board since the adoption of the criteria have
included, to the extent deemed necessary: an evaluation of water rights; an
evaluation of the engineering and economic feasibility of the project; and an
evaluation of the economic, social, and environmental effects.

4.3 Interest Rate Policy

At the November Board meeting of each calender year, the Board sets a standard 30-
year lending rate for Construction Fund loans which are to be recommended to the
General Assembly in the fo\1owing year.

From 1973 to 1992, the Board charged a fixed "service charge" of up to 5 percent to
all borrowers in accordance with state statutes, These loans typica\1y extended over 40
years. In 1992, the General Assembly (SB92-87) authorized the Board to charge interest
at a rate between zero and 7-percent. In May 1993, the Board adopted guidelines for
setting the interest rate for a "standard" 30-year loan at 2 percent (200 "basis points") less
than the average yield for 30-year U.S, Treasury Bonds for the preceding 12 months.

Lending rates are established for municipal, agricultural, and commercial projects.
For municipal projects, lending rates are established for low, medium, and high income
service areas based on median household income in the project sponsor's service area.
Lending rates for agricultural projects are identical to municipal low income rates.
Lending rates for commercial projects are higher than for the other categories.

For municipal 'ow income areas, where median household income (MHI) is less than
80-percent of the statewide Mill, the lending rate will be 20-percent below the standard
rate. For municipal medium income areas, where MHI is between 80 and IIO-percent of
the statewide MHI, the lending rate will be the standard rate. For municipal high income
areas, where the MHI is more than IIO-percent of the statewide MHI, the lending rate
will be 10-percent above the standard rate.

For loans with maturities of 20 years or less, but more than 10 years, the rate may be
reduced by one quarter of one percent below the 30-year rate for that category of lending.

CWCB FY99 Annual Report, page 24