BOARD01707

• Board Meeting Date: 9/27/1999
• Description: Construction Fund Borrower Creditworthiness and Financial Need Determination. ‎(Audit Item #8)‎
• Board Meetings - Doc Type: Memo

STATE OF COLORl\DO

. DIVISION OF LOCAL GOVERNMENT

Department of Local Affairs

September 15, 1999

RECEIVED
SEP 1 5 1999

William E, Green, PE
Manager of Planning
Project Planning and Construction
Colorado Water Conservation Board
13 13 Sherman Street, Room 721
Denver, CO 80203

CoIorad:J W<:lter
Conser..aticn Board

Re; CWCB Lending Policy

Dear Bill;

.

In response to your recent request for input on CWCB creditworthiness and financial need
policies, please accept the following information, The Division of Local Government evaluates
the creditworthiness and financial need of applicants to the Colorado Water Pollution Control
Revolving Fund, and the Colorado Drinking Water Revolving Fund, In conducting these
evaluations, applications are considered on a case-by-case basis, but with a similar set of criteria
generally being used for both programs. The review of creditworthiness tends to be summarized
in a table of "current indicators", which is presented below.

CURRENT INDICATORS Weak Average Strom!
Current Debt per Capita ($): >$2,000 $1,000 -2,000 <$1.000
Current +Ncw Debt/Capita ($): >$2,000 $1,000 - 2,000 <$1,000
Current Water DebtfTap ($): >$5,000 $2,500 - 5,000 <$2,500
Current Water + New Water
DebtfTap ($): >$5,000 $2,500 - 5,000 <$2,500
Current Debt/Assessed Yalue: >50% 25.50% <25%
Current + New Water Debt/Assessed
Value: >50% 25-50% <25%
CUrt + New Water Debt/Actual Value: >10% 5-10% <5%
New Total Water DcbtfTap/MHI: >20% 10-20% <10%
Water Fund Current Ratio(CAICL): <]00% 100-200% >200%
Water Fund Reserves/Current
Expense: <50% 50.100% >]00%
Water Operating Ratio (OR/DE): <100% 100-120% >120%
Coverage Ratio (TR-OE)/DS: <1[0% ] 10-]25% >]25%
Coverage Ratio With New Loan: <110% ] 10.125% >[25%
Current Annua[ Water Rates/MHI: >3.0% ~.5-3.0% <1.5%
Current Water Rates + New Water
Debt Scr:vice/MHI: >3.0% 1.5-3.0% <1.5%

These indicators may be modified or supplemented occasionally, depending upon the source of
revenue (such as sales or property tax) which the applicant is pledging to repay the loan.

With regard to financial need, our procedure is to evaluate an applicant's 10 year capital
improvement plan in light of its cash reserves and cash flow projections in order to form and
express some opinion on financial need.

.

Bill Qwens
Governor

Bob Brooks
Executive
Director

1313 Sherman Street, Room 521, Denver, Colorado 80203 [phone] FAX [phone] TDD [phone]