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<br />- 2- <br /> <br />that the Board may impose a loan surcharge upon the covered entity that may be reduced or rebated <br />if the covered entity were to submit and adopt a conservation plan in compliance with the guidelines, <br />in a timely manner. <br /> <br />The general language in the approved guidelines needs clarification in terms of: 1) defining <br />an emergency, 2) establishing a surcharge amount, 3) defining a "timely manner" that would <br />qualify for a reduced or rebated surcharge, and 4) establishing a reduction or rebated surcharge <br />amount. <br /> <br />Discussion <br /> <br />For purposes of discussion, staff is offering the following: <br /> <br />1) When interpreting statutes that do not explicitly define "emergency," the Colorado Supreme <br />Court applies the definition found in Webster's Seventh New Collegiate Dictionary: "1: an <br />unforeseen combination of circumstances or the resulting state that calls for immediate action 2: a <br />pressing need: EXIGENCY." Fogg v. Macaluso, 892 P.2d 271, 275 (Colo. 1995). The <br />determination of the emergency would be determined by the Board at a regular meeting or via a <br />special phone meeting, based on the above definition and specific project circumstances. A <br />feasibility study would be required as part of the application, as well as all other CWCB contracting <br />requirements before funds for the loan could be disbursed. It should be noted that the contract for <br />these types of projects would not be a standard contract, and would therefore extend the contract <br />processing time. <br /> <br />2) The loan surcharge would be in the form of a cash fee, rather than as an increased loan <br />interest rate. The surcharge should be high enough to motivate the applicant to complete and adopt a <br />water conservation plan, yet not so low as to make the value of the conservation plan to the Board <br />appear negligible. The surcharge should not be a percentage of the loan since the cost of completing <br />the plan is not dependent on the cost of any particular project. The surcharge should therefore be a <br />set fee based on the typical cost of completing a water conservation plan. The average cost of a plan <br />is difficult to determine since many entities complete their plan using existing staff and do not use <br />outside consultants. Assuming a cost of $10,000 per plan (to be further investigated by staff), the <br />surcharge should be two to three times that amount, say $25,000. The surcharge would be charged <br />to the applicant upon execution of the loan contract. <br /> <br />3-4) As a suggestion, a fifty percent reduction (rebate) in the surcharge would be available to the <br />applicant if the water conservation plan were to be completed on or before the date of project <br />substantial completion. The remaining surcharge would be used to offset staff time in preparing the <br />required amended contract documents and to show future applicants that the Board values water <br />conservation plans. The rebate would be applied to the final loan disbursement after project <br />substantial completion. <br /> <br />Recommendation <br /> <br />Staff recommends the Board direct staff to prepare a Policy relative to their discussions and <br />conclusions associated with this memo. <br /> <br />Flood Protection. Water Project Planning and Financing. Stream and Lake Protection <br />Water Supply Protection. Conservation Planning <br />