BOARD02261

• Board Meeting Date: 3/24/2003
• Description: Financial Policy Revisions Policy #16 - Service Charges for Loans from Construction Fund and Severance Tax Trust Fund Perpetual Base Account
• Board Meetings - Doc Type: Memo

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STATE OF COLORADO

Colorado Water Conservation Board

Department of Natural Resources
1313 Sherman Street, Room 721
Denver, Colorado 80203
Phone: [phone]
FAX: [phone]
www.cwcb.state.co.us

MEMORANDUM

Bill Owens
Governor

Greg E. Walcher
Executive Director

TO:

Colorado Water Conservation Board Members

Mike Serlet, Chief ~~ r .
Water Supply Pl~~d Finance Section

Dan McAuliffe
Deputy Director

FROM:

Rod Kuharich
CWCB Director

DATE:

March 17, 2003

SUBJECT: Consent Agenda Item 3a - March 25-26, 2003, Board Meeting
Water Supply Planning and Finance Section - Financial Policy Revisions
Policy #16 - Service Charges for Loans from the Construction Fund and
Severance Tax Trust Fund Perpetual Base Account

Introduction/Backl!round

The Board approved Financial Policy #16 at their November 26, 2002 Board meeting. Upon
commencement of the new policy with the first loans approved in January, staff discovered an
accounting constraint that will effect the administration of the 1 % loan service charge. A minor
revision to the policy (see attached policy) regarding when the service charge will be collected is
necessary in order to alleviate this constraint.

Discussion

The proposed revision changes the collection of the loan service charge from the date of
contract execution to the date of substantial completion. It was found that a service charge collected
prior to the final disbursement of loan funds would be in excess of 1 % if the fmal10an disbursement
was less than the contracted loan amount. In that case, the service charge account balance could not
be reconciled until project substantial completion. In order to manage the 1% account more
efficiently therefore, it is recommended that the 1 % service charge be collected at the time of project
substantial completion.

Recommendation

e Staff recommends the Board approve a revision to financial policy #16 as shown in the
attached policy statement, changing the collection of the 1 % loan service charge from the date of
contract execution to the date of substantial completion.
Flood Protection. Water Supply Planning and Finance. Stream and Lake Protection
Water Supply Protection. Conservation and Drought Planning