BOARD00599

• Board Meeting Date: 5/11/1998
• Description: CF Section - Revised Rate of Return Data
• Board Meetings - Doc Type: Memo

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Colorado Water Conservation Board
Department of Natural Resources
721 Centennial Building
131 3 Sherman Street
Denver, Colorado 80203
Phone: [phone]
FAX: [phone]

STATE OF COLORADO

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Roy Romer
Governor

MEMORANDUM

J.ilmes S. Lochhead
Executive Director, DNR

Dilrles C. Lile, P.E.
Director, eWeB

TO:

Colorado Water Conservation Board Members

Bill Green, P.E.-1?~
Project Planning and Construction

FROM:

DATE:

May 7,1998

SUBJECT:

Agenda Item 22, May 11-12, 1998 Board Meeting - Water Project
Construction Loan Program - Revised Rate of Return Data

Background
One of the revisions to CWCB lending policy as adopted by the Board at the November
1997 Board meeting (November Agenda Item 15.a.) was:

The Board and the staff of the CWCB will attempt to maintain an overall, long-term
rate of return of no less than 4.0 percent on the aggregate amount of all loans and
grants made through the Construction Fund in order to offset the long-run impacts
of price inflation and to maintain the integrity of the Fund.

Discussion
At the March Board meeting, staff presented preliminary estimates of the rate of return on
Construction Fund loans and grants, which were recommended for inclusion in HB 98-
1189 as of January 1998. The preliminary estimates have been updated by the inclusion of
one loan (Sedgewick Reservoir) that was recommended at the March Board meeting, The
estimates were also revised using detailed rate-of-return calculations with the full
repayment schedule for each loan.

The procedure is based on certain simplifying assumptions to provide an estimate of the
overall rate of return without unnecessarily complicating the analysis. The detailed rate-
of-return calculations are shown on the attached spreadsheets.

Results
The summary sheet on the following page lists each of the loans as well as total grants
recommended and subsequently approved in HB 98-1189. The analyses indicate an
overall rate of return of approximately 4.13 percent for loans only and 2.72 percent for
loans and grants.