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- of the Kansas v. Colorado case, Kansas has raised many issues specific to the operation ofLAWMA's replacement plan in the Lower Arkansas River basin. In order to address these issues, LA WMA must prepare detailed responses to Kansas' allegations for the State of Colorado to present to the Special Master. Given the unanticipated legal and engineering costs associated with preparation of this report (estimated at $120,000), LA WMA does not feel they will be able to meet their financial responsibilities for their CWCB loans in 2002. LAWMA therefore has requested a defennent of their $122,000 loan payment for contract #CI53715, due May 1, 2002. . LA WMA currently has three loans in payback with the CWCB as shown below: Loan Date of Current Annual Due Number Contract Princinal Tenus Balance Payment Date C153715 5/1/97 amend $3,688,567 3%-40 yr' $3,628,346 $122,000 May 1 C153678 5/11/94 $ 65,000 4 1/4%-10 yr' $ 42,190 $ 8,114 Nov 1 C153756 9/18/97 $ 65,000 3 1/4%-10 yr' $ 53,608 $ 7,718 July 1 LA WMA is current in all of their loan contract payments. Discussion The Board has the statutory authority under Section 37-60-120 (3), CRS to make loan defennents provided the borrower has encountered significant and unexpected . financial difficulties, and that it has been duly diligent in its efforts to comply with the repayment provisions of its contract with the Board. The Board's Financial Policy #10 (attached) clearly provides guidance in the resolution of this request. In order to maintain the long-tenn integrity of the loan, it is the staff recommendation that the Board grant LAWMA's deferral request. At LAWMA's request, the deferral would be approved on the condition that the deferred interest payment be added to the current loan balance, and the resulting new balance be re- amortized over the remaining life of the loan. Thisre-financing of the loan allows it to be repaid at approximately the same payoff date and still allow LA WMA relief from its current financial hardship. Recommendation The staff recommends the Board adopt a resolution to approve the Lower Arkansas Water Management Association's request for financial relief by granting a one- year, 100% defennent of their May 1, 2002 contract #C153715 loan payment in the amount of $122,000.00. The deferred interest amount of the loan will be added to the current loan balance that will then be re-amortized over the loan's remaining life. The deferral is based on the Board's finding that ~e District has encountered significant and unexpected [manclal difficulties, and that it ha~ been duly diligent in its efforts to comply . with the repayment provisions of its contracts With the Board.