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<br />, <br /> <br />. <br /> <br />. <br /> <br />. <br /> <br />LAWMA. Water Rights Purchase <br /> <br />Agenda Item 20b <br /> <br />JUly 28-29. 2003 <br /> <br />Arkansas River Augmentation Loan Account - The proposed loan meets the criteria for the use of <br />this account, as set forth in CRS 37-60-130, in terms of: reliability of the water rights supply, security <br />and collateral for loan repayment, LAWMA's ability to collect assessments and to repay the loan, <br />provision of service to a broad user group, and maintaining agricultural viability of the Arkansas River <br />Valley. <br /> <br />Recommendation <br /> <br />Staff recommends a CWCB loan, not to exceed $2,250,000, to the Lower Arkansas Water <br />Management Association, from the Arkansas River Augmentation Loan Account, to purchase one-half <br />of the Keesee water rights for use as a replacement water source to offset depletions from well <br />pumping. The recommended term of the loan is 30 years and the recommended lending rate is 2.50% <br />per annum. As security for the loan, LAWMA will pledge revenues, including membership dues and <br />assessments on shares of LAWMA stock, backed by an assessment covenant, and the acquired <br />Keesee water rights. This is in compliance with CWCS Loan Policy #5 (Collateral). <br /> <br />Staff further recommends that final approval of the loan be conditioned upon all other standard <br />contracting provisions of the CWCB, including the 1% loan origination fee in accordance with CWCB <br />Policy #16. The maximum loan amount may be increased to $2,272,500 if the borrower elects to <br />finance the 1% loan service charge. <br /> <br />Further, staff recommends the following approval conditions: <br /> <br />1. The existing Loan No. C153768 shall be closed out at the current level of disbursal of <br />$1,875,583.50. The date of substantial completion of this loan will be the date of LAWMA's <br />closing on the purchase of the Keesee water rights. On the date of closing for the Keesee <br />water rights, LAWMA shall provide to CWCB payment for the amount of accrued interest, on <br />Loan No. C153768. <br /> <br />2. Prior to finalizing the contract for this loan, LAWMA shall conduct a special election of the <br />shareholders, (1) authorizing the Soard of Directors to execute the CWCB loan for the Keesee <br />water rights purchase, and (2) approving in concept the required share assessment levels <br />necessary to cover LAWMA's future expenses, including all CWCB loan repayments. Said <br />election shall be held in accordance with the Article III of the LAWMA Bylaws (adopted <br />September 10, 1998 and amended November 8, 2002), with the exception that the 15% quorum <br />requirement shall be increased to 50%, with approval requiring a 2/3 majority of the outstanding <br />shares of stock represented by shareholders present or by proxy. CWCB shall be provided <br />with the office notice of the special meeting and election, prior to the meeting, and the election <br />results shall be certified by the LAWMA Secretary and presented to CWCS. <br /> <br />Staff further recommends that final approval of the loan be conditioned upon all other standard <br />. contracting proviSions of the CWCB. <br /> <br />cc: William J. Grasmick, President, and Donald F. Higbee, Secretary, LAWMA <br />David Harrison & Richard Mehren, Moses, Wittemyer, Harrison and Woodruff, P.C. <br />Linda Bassi, AGO <br /> <br />Attachment <br /> <br />Page 7 of 8 <br />