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January 26, 1999 TO: Members, Colorado Water Conservation Board, and Peter Evans FROM: Daniel L. Law, Executive Director RE: Director's Report Small Water Resources Proiects An application from the Town of Cedaredge for $1 million of improvements to its water system is currently under review. Other potential borrowers are being contacted. No schedule has been set for the next bond issue. Water Pollution Control Revolvino Fund House Joint Resolution 99-1004 has been introduced and is scheduled to be heard before the House Ag Committee on Thursday, January 28. This resolution adds 53 projects to the eligibility list and deletes 33 projects. The resulting demand for the 158 projects on the list will be approximately $425 million, but approximately $190 million of that amount has either been funded or determined to be not needed. To date the WPCRF has received over $123 million in grants from EPA. Ofthis amount, approximately $103 million has been obligated to loans and $6.7 million to the DWRF. With the remainder of these funds plus the FY1999 grant of $10 million and re-Ioan funds, the 1999 loan capacity of the WPCRF is over $95 million. A bond issue, to fund approximately $43 million in loans, is currently scheduled on or around June 2. The issue would include Aurora ($24 million for reuse plant), Fremont Sanitation District ($8 million for sludge and maintenance facilities), Grand County Water and Sanitation District NO.1 ($4 million for treatment plant), and Steamboat Springs ($7.5 million for treatment plant). A direct loan for Fraser Sanitation District ($1 million for treatment plant) is expected later this year. Drinkina Water Revolvina Fund House Joint Resolution 99-1005 has been introduced and is scheduled to be heard before the House Ag Committee on Thursday, January 28. The resolution adds 49 projects to the eligibility list and deletes 22. The 1999 list will contain 217 projects representing over $500 million of need. On January 20 the Board of Health approved the "Transfer" and "Cross-collateralization" sections of the 1999 Drinking Water Intended Use Plan. The ''Transfer'' section permits, subject to authorization by the Governor, the transfer of $6,666,667 of Clean Water capitalization grant to the Drinking Water Revolving Fund. The Governor is expected to authorize this transfer in the next two weeks. The "Cross-collateralization" section discusses the potential cross-collateralization or cross-securitization of the two revolving funds. This credit enhancement mechanism would allow both funds to receive "AAA" ratings from at least two of the three credit rating agencies. This should save the borrowers under the DWRF approximately $80,000 to $100,000 for every $10 million loan. On February 5, the Authority's Board will decide whether or not to implement cross- collateralization between the two revolving funds.