C153521 Contract

• Contract/PO #: C153521
• Contractor Name: Grand Valley Water Users' Association
• Contract Type: Loan
• Water District: 0
• County: Mesa
• Bill Number: SB 000
• Loan Projects - Doc Type: Contract Documents

.

.

J. William McDonald, Director
June 24, 1988
Page Two

You will note by the adopted Resolution that all of the details
of the loan have been left to the Board of Directors because I
was uncertain of the final loan amount and the other details. The
Board has a regular meeting scheduled for July 7. If it is possible
for us to finalize our agreement by that time, the Board would
be able to approve the terms of the loan at that meeting. They
also have a meeting early in August and perhaps that would be the
one at which we should finalize the transaction because that will
then give us until August 17 to make remittance.

As you know, the payoff changes each month because of adjustments
in the discount. We would anticipate that it will be the desire
of the Board to borrow the full cost of the repurchase of both
contracts. As indicated in my letter of May 27, we anticipate
that to be $285,000, more or less.

We also would anticipate payment of the loan precisely in
accordance with the obligation for repayment as it now exists.
Currently, on our large loan we pay $16,750 on June 1 and December 31
of each year and on our smaller loan we pay $1,500 on June 1 and
December 31 of each year.

I know you are familiar with the fact that there is a power
plant operated by the Public Service under contract with the United
States. For many years, the Grand Valley Water Users Association
was a third party to that contract. In 1986 the long term contract
expired and a temporary contract was signed between the united
States, Public Service, Grand Valley Water Users Association and
Orchard Mesa Irrigation District. We are still negotiating a permanent
contract but not too diligently because until Congress gives approval
the Bureau cannot do anything other than proceed on the temporary
basis.

I discuss the power plant because certainly it is a source
of revenue. Currently, there is $130,000, more or less, in escrow.
A strict reading of the Plan for Repurchase as published by the
Bureau would indicate that if we could afford to pay that money
on the contracts it would apply against the discounted amount and
materially lessen the amount we would have to borrow. While we
would hope that we ultimately will be benefitted in that fashion,
we would prefer not to agree to apply that money on the contract
at the present time.

The Association has other concerns in connection with the
operation of its project and also income tax considerations with
respect to the repurchase. Currently, we are of the opinion that