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<br />- 3- <br /> <br />April 02 <br /> <br />May 02 <br /> <br />The CWCB staff discovered that the Colorado Secretary of State has <br />administratively dissolved the Pinon Mesa Association as of August 1, 2000 for <br />failure to file its 2000 corporate report. <br /> <br />A project inspection by the CWCB staff found that the project conditions have <br />not changed since the last inspection and that the past president has moved and <br />is renting the property where the reservoir is located. <br /> <br />Discussion <br /> <br />The CWCB entered into a contract with Pinon Mesa for a loan in the amount of $206,000 on <br />October 9, 1997. As collateral for the loan, Pinon Mesa assigned a Certificate of Deposit account <br />(current value approximately $16,000) and a standard deposit account to the CWCB. By the terms of <br />those assignments, the bank will transfer the funds in those accounts to the CWCB upon notification <br />by the CWCB that Pinon Mesa is in default. <br /> <br />Pinon Mesa did not complete the project, and on June 1, 2000, the CWCB staff notified them <br />by letter that the CWCB considered them in default on the loan contract. The default was due to the <br />failure to complete the project within the time specified by the contract that had been extended and <br />subsequently expired. The letter also informed the Association that it owed interest accrued during <br />construction, and that the Association's fust loan payment would be due on June 1,2001. To date, the <br />Association has not submitted any of the payments due to the CWCB. Consequently, the Association <br />is in default on its contractual obligations to repay the loan to the CWCB. <br /> <br />The CWCB staff has recently discovered that the Colorado Secretary of State administratively <br />dissolved the Association on August 1, 2000 for failure to file its 2000 corporate report. The <br />dissolution of the Association raises questions as to whether the CWCB can exercise its rights under <br />the assignment, and what other actions the CWCB may take against the Association. <br /> <br />The CWCB Financial Policy #3 (attached) titled Construction Fund and Severance Tax Trust <br />Fund Perpetual Base Account Loan Delinquencv. Loan Restructuring and Collection states that: <br /> <br />"if a delinquency continues, and is at least one year past due, staff will recommend that the <br />Board either: <br /> <br />1. Refer the bad debt to Central Collections and! or the Attomey General's Office to take appropriate <br />legal action against the Project Sponsor <br /> <br />2. Forgive all or part of the loan <br /> <br />3. Continue to work with the Project Sponsor towards a successful re-payment schedule." <br /> <br />Relative to the dissolved status of the association and item #1 above, an administratively <br />dissolved corporation continues its corporate existence but may only cany on activities appropriate to <br />settle its affairs. Upon administrative dissolution of a nonprofit corporation, the Secretary of State <br />becomes the corporation's agent for service of process. Claims may be enforced against a dissolved <br />nonprofit corporation to the extent of its undistributed assets, and if its assets have been distributed in <br /> <br />Flood Protection. Water Project Planning and Financing. Stream and Lake Protection <br />Water Supply Protection. Conservation Planning <br />