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~ ^' . tt STATE OF COLORADO 8 .. COLORADO WATER CONSERVATION BOARD Department of Natural Resources 721 State Centennial Building 1313 Sherman Street Denver, Colorado 80203 Phone: (303) 866.3441 Roy Romer Governor J. William McDonald Director David w. Walker Deputy Director MEMORANDUM TO: Members, CWCB FROM: Bill McDonald DATE: March 13, 1989 SUBJECT: Agenda Item 7, March 20-21, 1989, Board Meeting-- Town of Fruita--Request for Deferral of Loan Repayment Introduction At its March, 1987, meeting, the Board agreed to defer the 1987, 1988, and 1989 payments due from the City of Fruita in order to assist it in overcoming severe financial conditions. This deferral called for the city to advise the Board by November of this year of its circumstances and of its ability to resume payments in March, 1990. Discussion In the interim, and as part of the process of reSOlving its financial problems, the city sold its water system to the Ute Water Conservancy District. However, transfer of title was not accomplished because the Board holds partial title to the system as security for its loan. In an effort to resolve this problem, negotiations between the city, the Attorney General's staff, and the Board's staff have resulted in a proposed security arrangement wherein the city will pledge future sales tax revenues to the Board for its loan in exchange for the Board relinquishing its interest in title to the water system. That would clear title to the system and allow transfer to the Ute District. Further, the Board's loan would become secured by tax revenues, rather than a mortgage interest in a portion of a fixed asset. Letters from the city manager and the Ute District endorsing this change are enclosed. 9611E: