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<br />Implementation Plan <br /> <br />We have outlined the following tasks as part of our implementation strategy to "require <br />verification beginning 8/98:" <br /> <br />. <br /> <br />. Require evidence that applicants have explored other sources of funding in every loan <br />application considered by the Board. <br /> <br />. Present implementation issues for consideration to the Board and interested constituencies <br />beginning at the November 1998 meeting. <br /> <br />. Determine acceptable level of risk between a borrowers need for state assistance and the <br />assurance of timely repayment. <br /> <br />. Consult with the water community to revise statutes as necessary [37-60-121 (b) (V), CRS]. <br /> <br />Discussion <br /> <br />Requiring the fund to function only as a "lender oflast resort" could undermine its integrity. There <br />is no statutory requirement that the CWCB be a lender of last resort, although the statutes do provide <br />that all other means of financing shall be thoroughly explored before use is made of fund moneys <br />[37-60-121(b) (V), CRS]. <br /> <br />In order to protect the long-term integrity ofthe Construction Fund, the Board tries to maintain a <br />balance between the more risky loans for borrowers that would not otherwise be able to borrow . <br />enough money to develop an adequate water supply, and investments in the more financially sound <br />borrowers. <br /> <br />In setting priorities, the Board has given preference to projects that involve other cooperative funding <br />sources. The Guidelines indicate that, in general, Construction Fund loans will be utilized to <br />supplement those funds which could be made available to the project sponsor from other sources <br />[Section 1.3.2, Lending Policy, paragraph g, page 4]. <br /> <br />The Guidelines also state that preference for funding will be given to those projects which are most <br />cost effective, which demonstrate the greatest need for assistance in financing, and which best relate <br />to the Board's Long Range Plan [Section 1.3.2, Lending Policy, paragraph f, page 4]. <br /> <br />Our marketing brochure for the Loan Program states that preference for Construction Fund low <br />interest loans will be given to those who find it difficult or impossible to obtain the needed funding <br />elsewhere (page 1, bottom of column 2]. <br /> <br />Recommendation <br /> <br />I recommend that the Board provide feedback to the staff on the issue of alternative funding sources <br />either during a brief discussion at the November meeting and/or through written comments and <br />continued discussion at the January meeting. <br /> <br />. <br /> <br />L:\BOARDMEM\NOV98\12b - Alternative.doc <br />