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4.2 Construction Fund Criteria In 1981 the'Legislature adopted criteria for the use of the Construction Fund as set forth in section 37-60-121 (1)(b), CRS. This criteria was changed in 1992 with the passage of SB 92- 87. Actions taken by the Board concerning the construction fund program have been in compliance with those criteria. In particular, the Board has taken the following steps: 1. From 1981 through 1992, about two-thirds of the Board's cost of the proj ects recommended were for projects which were expected to increase the beneficial consumptive use of Colorado's compact entitlement. 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. I ~ " . '. ' .' 4. All 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 o[-the-economic;- social, and environmental effects. 4.3 Interest Rate Policy.. . At the November Board meeting of each calendar 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 following year. From 1973 to 1992, thl1)30ard ch\ll'ged a fixed "service charge" of up to 5 percent to all borrowers in accordance with state statutes. These loans typically 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'1 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 Ule project sponsor's service area. Lending rates for agricultural projects are identical to mun{cipallow income rates. Lending rates for commercial projects are higher than for the other categories. For municipal low income areas, where median household income (MHI) is less than 80-percent of the statewide MHI, the lending rate will be 20-percent below the standard rate. For municipal medium income areas, where MHI is between 80 and 11 O-percent of the statewide MHI, the lending CWCB FY98 Annual Report, page 24 I I I I I I I I ---I I I I I I I