Board Meeting 01/06/1983

• Board Meeting Date: 1/6/1983
• Description: CWCB Meeting - No mins.
• Board Meetings - Doc Type: Meeting

( 1 ) Revenue financing,

( 2) General obligation financing, and

(3) "Pay as you go" out of previously accumulated monies.

Revenue and general obliqation financing both enable goverrunental
entities to obtain capital from private financial markets. They
differ, however, in that revenue financinq relies on project
revenues to retire the indebtedness incurred for project
construction or rehabilitation, while future tax revenues must be
pledged toward retiring indebtedness incurred through general
obliqation financing. "Pay as you go" financing obtains capital
from the accumulation of previously collected taxes and therefore
involves no indebtedness. Table 1 summarizes these three
approaches.

TABLE 1
Means Source Source
of of of
Financinq Capital Repayment
Revenue Private Project
funds revenues
General Private Future
obligation funds taxes
"Pay as you go" Pre'Tiously None
collected required
taxes

It is important to note that financing for the construction
or rehabilitation of any given project is not necessarily limited
to only one of these three means. Indeed, one of the challenges
of financing future projects will be to identify situations in
which combinations of these three approaches can be used to raise
the caoital which will be required if Colorado is to proceed with
an agqressive and timely water project construction and
rehabilitation proqram.

Limitations on Revenue Financing

The availability and cost of revenue financing will be a
function of the revenues which a project may be expected to
generate, tax considerations, and the anticipated risks of the
expected revenues not materializing. Thus, the ability of a
project to generate sufficient revenues is the critical
determinant of whether project construction and rehabilitation
can be accomplished without use of tax revenues.

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