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Collateral <br />As security for the loan, the Company is willing to pledge revenues from service chazges <br />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 exisring raw water reservoirs, for <br />which the total estimated value would be equivalent to the principal amount of the loan. <br />Conclusion <br />Staff fmds the proposed Fortune Reservoir Project to be economically, fmancially and <br />technically feasible subject to verification in the applicanYs final feasibility study. <br />Recommendation <br />Staff recommends that the Boazd recommend to the General Assembly a Construction <br />Fund loan of ten million dollars to the Consolidated Mutual Water Company of <br />Lakewood for the construction of the Fortune Reservoir Project as described in this <br />memo. The recommended lending rate is 4.75 percent for a term of ten years. <br />Staff further recommends that the following conditions be met prior to the execution of a <br />loan contract with Consolidated Mutual: <br />1. The applicant 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 />2. The board of directors of the Consolidated Mutual Water Company will adopt <br />a 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 />3. Any collateral pledged for the loan shall be free of liens and encumbrances. <br />4. The CWCB Construction Fund loan shall have parity status with any existing <br />debt of the Company with respect to a pledge of revenues. <br />Attachments <br />Cc: Walter Welton, Cons. Mutual <br />Linda Bassi, AGO <br />