BOARD01160

• Board Meeting Date: 3/21/2002
• Description: CF Section - The Tunnel Water Company ‎(Laramie-Poudre Tunnel)‎ Borrower Request to Lower Interest Rate on Existing Loan
• Board Meetings - Doc Type: Memo

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Tunnel Water Co.
March 21-22, 2002,

Agenda Item 12

Discussion
Policy No.7 establishes the manner in which the CWCB sets lending rates,

Policy No.7, paragraph 7, states:

"For projects that include more than one purpose, a weighted average lending rate will be
established based on the percent of water supplied or on the percent ownership for each
particular purpose of the project. "

The policy allows a weighted average interest rate to be calculated based on the use or based
on the ownership of the shares. Staff consistently calculates weighted average interest rates
based on the ownership of the shares. Ownership criteria were used to calculate interest rates
for the two TWC loans, (Please see attached Policy No.7.)

State law establishes the conditions under which the CWCB may adjust the terms of an
existing loan.

CRS 37-60-120, Contractual Powers of the board, states:

"(3) The board may adjust the authorized interest rate, extend the authorized repayment period for
any project, and defer one or more annual payments if, in the board's opinion, the entity requesting
such adjustment, extension, and deferment demonstrates that it has encountered significant and
unexpected financial difficulties and that it has been duly diligent in its efforts to comply with the
repayment provisions of its contract with the board."

The TWC has not identified a significant and unexpected financial difficulty that would allow the
CWCB to consider adjusting the interest rate on these loans.

Conclusions
The CWCB properly set interest rates in accordance with established Board Policy NO.7,

State law allows the eWCB to adjust interest rates only in cases where the Borrower has
encountered "significant and unexpected financial difficulties."

Recommendation
Staff recommends no adjustment of the interest rates of the two loans made to the Tunnel Water
Company.

cc:

Fred Walker, President, Tunnel Water Co,
linda Bassi, AGO

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Attachmenls:

1, Tunnel Water Company Letter dated January 15, 2002
2, Tunnel Water Company Board Memo daled January 11,2001
3. Policy NO.7

C :IProj-Newl TunnelWaterCo302memo

L:lboardmemlmar02112 - Tunnel Water Co

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