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<br />. <br /> <br />STATE CJCOLORI\DO <br /> <br />- <br /> <br />Colorado Water Conservation Board <br />Department of Natural Resources <br />721 Centennial Building <br />1313 Sherman Street <br />Denver, Colorado 80203 <br />Phone: (303) 866-3441 <br />FAX: (303) 866-4474 <br /> <br />Bill Owens <br />Governor <br /> <br />February 12, 1999 <br /> <br />Greg E, Walcher <br />Executiye Director, DNR <br /> <br />Mr. Walter Welton, President <br />The Consolidated Mutual Water Company <br />12700 West 27'h Avenue <br />Lakewood, Colorado 80215 <br /> <br />Peter H. Evans <br />Acting Director, eWeB <br /> <br />Re: Fortune Reservoir Project <br /> <br />Dear Mr. Welton: <br /> <br />I am writing to confirm that, at the January 27, 1999 meeting of the Colorado Water <br />Conservation Board, the Board recommended a Construction Fund loan of$10,000,000 to <br />The Consolidated Mutual Water Company for the construction ofthe Fortune Reservoir project. <br />The term of the loan is for up to 10 years and the approved lending rate is 4.75 percent. <br /> <br />The Board's action on the $10,000,000 loan request will be included in the 1999 CWCB <br />legislation (SB 99-173) and is subject to authorization by the General Assembly. If authorized by <br />the General Assembly, the proceeds for this loan should be available in mid-1999. <br /> <br />As security for the loan, it is expected that the Company will pledge revenues from service <br />charges and stock sales as well as some combination of assets consisting of water rights and/or <br />reservoir sites, including Fortune Reservoir and the two existing raw water reservoirs, for which <br />the total estimated value would be equivalent to the principal amount of the loan. <br /> <br />The Board also required that, prior to the execution of a loan contract: <br /> <br />1. The Company will prepare a revised feasibility study in accordance with the <br />requirements of the CWCB Construction Fund Guidelines; the study must be <br />reviewed and accepted by the CWCB staff. <br /> <br />2. The board of directors of the Consolidated Mutual Water Company will adopt a <br />resolution or resolutions approving the loan, the pledge of revenues and the <br />conveyance of a security interest in collateral that is equivalent in value to the <br />principal amount of the loan. <br /> <br />3. Any collateral pledged for the loan shall be free ofliens and encumbrances. <br /> <br />4. The CWCB Construction Fund loan shall have parity status with any existing debt of <br />the Company with respect to a pledge of revenues. <br />