Laserfiche WebLink
<br />~<t{t~~.\:,.:!.~]L~~'~~'l;;'*~l.:.: .>:; ;;":":'~'~'':':'''':,,', ..~;\I"~;"~~:~l.;I.J.~!I,;i:>:,.'::...:..,.~: .!\-. L>.,_ ,_ _.._.......__ .:......_.\.~. ',.,.1_'"".:. i,,',."_.. . ........~,,~...~~.'-'-.........'---_......... .~.., "",.",""'-":1:5'7 <br /> <br />, <br /> <br />. <br />{') <br />...,,,. <br /> <br />. <br />.f.:'~ <br />'(;II <br /> <br />. <br />" <br /> <br />Interest Rate <br /> <br />The Board discussed interest rate issues surrounding a future loan to WESTERN in July <br />1999. The Board discussed the fact that federal power customel's are a mixture of municipalities <br />and rural customers and therefore the most appropriate interest rate wOljld be a biend of the <br />Board's Agricultural and Municipal Middle-Income rate. <br /> <br />In 1999, the Agricultural rate was 3.75 percent and the Municipal Middle-Income rate <br />was 4.75 percent. A blend of these two rates would have.resulted in an interest rate of 4.25 <br />percent. <br /> <br />In 2001, the Agricuitural rate is 3.5 percent and the Municipal Middle-Income rate is 5.5 <br />percent. Simply blending these two rates will result in an interest rate of 4.5 percent. <br /> <br />The 4.5 percent interest rate is higher than power customers anticipated based on the <br />1999 Board discussion. As a result, members of the Colorado River Energy Distributors <br />Association may consider preparing an analysis to demonstrate that rural users predominate over <br />municipal users and therefore a lower rate is justified. <br /> <br />Collateral <br /> <br />The loan to WESTERN will be secured by the full faith and credit of United States <br />government pursuant to 31 U.S.C.A. 3 I 23, that pledges that the federal government will pay its <br />obligations on public debt. <br /> <br />Term <br /> <br />Based on discussions with power customers, their preference is a loan with a 3D-year <br />term. Interest could begin accruing from the date the funds are disbursed, but no principal <br />payment would be due until 2012. <br /> <br />The accrued interest would be added to the principal and the loan amortized over 30- <br />years starting in 2012. WESTERN may elect to repay the CWCB in one lump sum at any time or <br />make periodic payments. There would be no prepayment penalties. <br /> <br />A provision in the contract shall also be included that wi II allow WESTERN to elect to <br />not remit a loan payment for the purpose of minimizing the impact of loan repayment on SLCA- <br />IP rates. This provision shall specify a date by which WESTERN must notify the CWCB of its <br />intent to not remit a loan payment and shall provide that interest shall continue to accrue. Late <br />charges would not applY: <br /> <br />The contract must also recognize that WESTERN's payments are contingent upon federal <br />funds being appropriated, budgeted, and otherwise made availabie. A non-payment would not <br />reduce or eliminate WESTERN's obligations to repay principal and interest. . <br /> <br />Recommendation <br /> <br />We recommend approving a loan not to exceed $5.5 million to the Western Area. Power <br />Administration for the purpose of constructing capital projects under the Upper Coiorado and <br />San Juan Endangered Fish Recovery Programs in accordance with PL 106-392. <br /> <br />We recommend a term of 30-years commencing on an agreed upon date in 2012. Interest <br />shall accrue until 2012 and be included in the principal. This amount shall then be amortized <br />over 3D-years, with a payment being due each veal'. <br /> <br />Flood Protection. Water Project Planning and Financin,. Stream and Lake.Protection <br />Waler Supply Protection. Conservation Planning <br />