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<br />141 <br /> <br />i <br />. <br /> <br />. <br /> <br />e <br /> <br />POLICY NUMBER: 6 <br /> <br />REVIEW OF REQUESTS FOR PARITY STATUS ON NEW <br />DEBT TO BE INCURRED BY EXISTING BORROWERS <br /> <br />SUBJECT: <br /> <br />EFFECTIVE DATE: October 1,1999 <br /> <br />POLICY: The Colorado Water Conservation Board may consent to parity on <br />new debt of a borrower based upon a specific request. Each request <br />will be reviewed and evaluated on a case-by-case basis and will be <br />approved or denied at the discretion of the Board. (Parity debt <br />means that the CWCB and a subsequent lender would share claims <br />to the borrower's assets, In the event of default, the two lenders <br />would divide the available assets on a pro-rata basis,) <br /> <br />PURPOSE: To provide a consistent method for evaluating requests for parity <br />on new debt. <br /> <br />APPLICABILITY: This policy and procedure applies to all loans from the CWCB <br />Construction Fund and Severance Tax Trust Fund Perpetual Base <br />Account. <br /> <br />PROCEDURE: <br /> <br />The CWCB will consent to parity status for a subsequent loan only <br />if the borrower meets the following conditions: <br /> <br />e <br /> <br />I. The borrower is currently and at the time of the issuance of the <br />parity debt in substantial compliance with aU of its long-term <br />obligations to the CWCB including, but not limited to, being <br />current on the annual payments due under all loan contracts <br />and in the accumulation of aU amounts then required to be <br />accnmulated in the borrower's debt service reserve fund(s). <br /> <br />e <br /> <br />2, The borrower provides to the CWCB a Parity Certificate from <br />an independent certified public accountant certifying that, <br />based on an analysis of the borrower's revenues for 12 <br />consecutive months out of the 18 months immediately <br />preceding the date of issuance of such parity debt, the <br />borrower's revenues are sufficient to pay: <br />a, its annual operating and maintenance expenses, <br />b, annual debt service on all outstanding indebtedness having <br />a lien on the pledged revenues, <br />c. the annual debt service on the proposed indebtedness to be <br />issued, and <br />d, all deposits to any reserve funds required by all CWCB <br />loan contracts or by the lender(s) of any indebtedness <br />having a lien on the pledged revenues. <br />