BOARD02616

• Board Meeting Date: 3/29/1999
• Description: CF Section - Lower Arkansas Water Management Association Partial Release of Collateral
• Board Meetings - Doc Type: Memo

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Colorado Water Conservation Board
Department of Natural Resources
1313 Sherman Street
Denver, Colorado 80203
Phone: [phone]
FAX, (3031 866,4474

STATE OF COLORADO

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Bill Owens
Governor

MEMORANDUM

GregE. Walcher
Executive Director, DNR
Peter H. Evans
Director, ewes

TO:
FROM:

Colorado Water Conservation Board Members I. ~ ~~.

Bill Stanton, Section Chief, Co ction Fund Section \j\l.
Jan lilian, Contract Administrator .-

March 26, 1999 L---,--i

Agenda Item 18(b) March 29-30, 1999, Board Meeting
Water Project Construction Loan Program
Lower Arkansas Water Management Association Partial Release of Collateral

DATE:
SUBJECT:

INTRODUCTION. By letter dated March 22, 1999, the Lower Arkansas Water Management
Association is requesting a release of three of the eight wells used as collateral to secure Loan
Contract C153678.

Background

In May 1994, the Colorado Water Conservation Board entered into Contract No. C153678 with the
Association for the initial feasibility study loan of $65,000, The collateral for this loan includes the
Association's pledge of revenues and eight wells located in Prowers County, Colorado, The
Association started repayment of the loan in November 1996 and the current balance is
$54,069.65. The loan has a ten-year repayment term, so will be completely repaid by 2005.

The Association acquired the eight wells in the early '70s and pumped water into the Buffalo
Mutual Canal Company's Buffalo Canal in order to take the call off the Arkansas River. The
Association quit pumping the wells in the early '80s due to wet years, In the mid '80s, with the
Kansas lawsuit looming, the State Engineer's Office asked the Association to cease pumping,
None of the wells have been pumped since then,

, Discussion

The owner of the land on which the three wells are located has requested that the Association
convey the wells to him, In order to pump the wells, the owner will have to fully augment the
wells, The Association has no objection to conveying the wells to the landowner, Releasing the
three wells will leave five wells and a pledge of revenues (secured by a Security Agreement and a
UCC Financing Statement filed with the Secretary of State) as collateral for the loan. Due to the
relatively small loan amount and short repayment term, the remaining collateral appears to be
adequate to assure repayment of the loan.

STAFF RECOMMENDATION

Based upon the loan amount and repayment term, the fact that the Association has made three
loan payments, and the value of the remaining collateral, the staff recommends that the Board
approve the release of the three wells.