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<br /> <br />e <br /> <br />e <br /> <br />e <br /> <br />- 2- <br /> <br />This proposed policy revision is in accordance with section 37-60-119(2) C.R.S. that states: <br />"Interest charges shall be recommended by the board at between zero and seven percent on the basis <br />of the project sponsor's ability to pay and the significance of the project to the development and <br />protection ofthe water supplies of the state." <br /> <br />Discussion <br />For purposes of this discussion, the Board should focus on the question of whether a for- <br />profit agricultural entity whose water project benefits very few water users should be charged an <br />interest rate higher than a non-profit agricultural entity whose water project benefits many water <br />users, <br /> <br />The Board currently has financial policies in place that relate to Section 37-60-119(2) C.R.S. <br />regarding the borrower's ability to pay and the significance of a proposed water project. <br /> <br />Financial Policy #7 establishes interest rates for agricultural borrowers. municipalities and <br />commercial borrowers. The cOmniercial borrowers are in business for a profit and are charged the <br />highest interest rates. Therefore. it could be argued that the agricultural entity that is a for-profit <br />entity should be charged an interest rate higher than the non-profit agricultural entity. <br /> <br />Financial Policy #14 establishes that projects of statewide impact or importance are eligible <br />for non-reimbursable funding. A project of statewide impact benefits the entire population of the <br />state and therefore receives the benefit of the Board's best financial terms. It would then follow that <br />a water project benefiting many people would have a higher significance than one benefiting only a <br />few people, and thus be eligible for more favorable financial terms. <br /> <br />Examples of for-profit entities benefiting few water users would be: <br />Solely Owned or Family Owned Corporations Partnerships <br />Limited Liability Corporations Limited Partnerships <br />Joint Ventures Individuals <br /> <br />Examples of non-profit entities benefiting many water users would be: <br />Ditch and Reservoir Companies Mutual Ditch Companies <br />Water User Associations Water Conservation Districts <br />Water Conservancy Districts Irrigation Districts <br /> <br />If the Board decides to approve the addition of a for-profit agricultural lending category that <br />is charged a higher interest rate, the rate should have a neutral impact on the Construction Fund. The <br />target growth rate of the fund established through financial policy #13 (attached) rounded to the <br />nearest one quarter of one percent, or currently 4.25% would meet these criteria. To make this <br />lending category consistent with the other categories in this interest rate range, financing should be <br />limited to 75% of the total eligible project costs. <br /> <br />The higher interest rate and loan terms for the for-profit agricultural entity would still be <br />capable of attracting those entities currently taking advantage of the extremely low agricultural <br />interest rates. <br /> <br />Flood Protection. Water Project Planning and Financing. Stream and Lake Protection <br />Water Supply Protection. Conservation Planning <br />