BOARD00661

• Board Meeting Date: 5/21/2001
• Description: CF Section - Financial Matters - Review of 2001 Lending Rates
• Board Meetings - Doc Type: Memo

MEMORANDUM

TO:

Colorado Water Conservation Board Members

FROM:

Bill Green, P,E., Water Supply Planning and Finance Section
Mike Serlet, P.E" Chief, Water Supply Planning and Finance Section

DATE:

May 10,2001

RE:

Agenda Item No.9 a. - May 21-22 Board Meeting - Water Supply
Planning and Finance - Financial Matters - Review of2001 Lending
Rates

Staff's lending rate recommendations to the Board last November were based (as usual)
on bond yields in the previous 12 months. The average yield for the 30-year municipal
bonds averaged about 6.0 percent in that period.

Since the November Board meeting, municipal bond yields have generally declined from
about 5,80 percent in November to 5.40 percent at the present time. (The pattern is about
the same for 30-year Treasuries.) CWCB lending rates, however, are based on the
average yield on bonds over a period of 12 months.

Attached are traces for the 30-year municipal and Treasury bonds for a recent twelve-
month period. The average yield for the municipals in that time was 5.72 percent which is
about a quarter point less than the average presented at the November Board meeting.

Table I is a lending rate structure based on bond yields for the same twelve months.
There is no projected change in the Agricultural rate since it was set independently of the
procedures used to calculate the other lending rates. The Agricultural rate is currently
1,00 percent lower than rates for any of the other lending categories.

Table I. Lending Rates Based on April 2000 to April 2001 Bond Yields

Type of Loan
Municipal
Agricultural
Commercial/Industrial

Low Income
4.25%

Middle Income
5.25%
3.50%
6.25%

High Income
5,75%