BOARD02363

• Board Meeting Date: 5/24/2004
• Description: CF Section - Policy Revisions - Policy #5 - Collateral for Construction Fund and Perpetual Base Account Project Loans
• Board Meetings - Doc Type: Memo

Page 2 - Policy # 5
Co llateral

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Entity Types are defined as:
Public (Governments):
Municipalities
Enterprises
Counties
Federal Govt.
Private (Incorporated):
Mutual Ditch Co.
Homeowners Assoc.
Non-profit Corp.

Public (Districts):
Special
Water/San.
Conservancy
Irrigation
Private (Unincorporated):
Individuals *
Partnerships
Sole Proprietors

*Borrowers that are individuals, or entities that have been
incorporated for less than three years, shall only offer real
property as collateral, either land or water rights, where the
Loan/Appraised Value ratio is not greater than seventy five
percent (75%).

Rate and assessment covenants are a standard provision in all
CWCB loan contracts. The covenants require the borrower to levy
rates or assessments that are adequate to repay the loan and to .
cover all operating expenses as well as debt service reserve
requirements.

Annual financial reporting will be required in all contracts with
public entities as of the date this policy is adopted and will entail
the submittal of an annual audit report and a certificate of debt
service coverage by a Certified Public Accountant at the time that
the annual audit report is submitted to the CWCB staff; or, in the
absence of an audit, annual financial reports normally filed by the
entity, or as such other information as the Director may require.

Section 37-60-120(1), C.R.S. gives the CWCB discretion to
determine what constitutes sufficient collateral that will assure
repayment of CWCB Construction Fund and Severance Tax loans.
To assure the repayment of such loans, the Board will require a
first lien on revenues and other collateral pledged as security, or a
parity lien if the borrower meets the existing lien holder's parity
requirements. Collateral requirements will be related to the
creditworthiness and repayment capacity of each potential
borrower. The Board will determine the adequacy of collateral for
each individual funding request.

For any specific funding request, the Board may instruct the .
CWCB Director to make a final determination on the adequacy of
collateral, based on guidance provided by the Board. In such